Figure 7-7 -Refer to Figure 7-7. at Output Level Y_K

Multiple Choice

Figure 7-7
-Refer to Figure 7-7. At output level Y_K,

A) the economy is not in equilibrium because it operates with an output gap.
B) the economy is in short-run equilibrium and it operates with an inflationary gap.
C) the economy is in short-run equilibrium and it operates with a recessionary gap.
D) the economy is not in equilibrium because the unemployment rate is below the natural rate of unemployment.