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Refer to the Graph Shown

Question 118

Multiple Choice

Refer to the graph shown. In the graph, an inflationary gap exists if the price level is: Refer to the graph shown. In the graph, an inflationary gap exists if the price level is: A) P<sub>0</sub> and the aggregate demand curve is AD<sub>0</sub>. B) P<sub>0</sub> and the aggregate demand curve is AD<sub>1</sub>. C) P<sub>1</sub> and the aggregate demand curve is AD<sub>0</sub>. D) P<sub>1</sub> and the aggregate demand curve is AD<sub>1</sub>.


A) P0 and the aggregate demand curve is AD0.
B) P0 and the aggregate demand curve is AD1.
C) P1 and the aggregate demand curve is AD0.
D) P1 and the aggregate demand curve is AD1.

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