Use the Following to Answer Questions

Multiple Choice

Use the following to answer questions .
Exhibit: Using the Aggregate Demand/Aggregate Supply Model 2
-(Exhibit: Using the Aggregate Demand/Aggregate Supply Model 2) 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.