Use the Following to Answer Questions

Multiple Choice

Use the following to answer questions:
Figure: An Increase in Aggregate Demand
-(Figure: An Increase in Aggregate Demand) Refer to Figure: An Increase in Aggregate Demand. At the Y₂ level of real GDP:

A) an inflationary gap equal to the sum of Y₂ and Y_P occurs.
B) an inflationary gap equal to the difference between Y₂ and Y_P occurs.
C) the solution at Y₂ is a long-run equilibrium.
D) a recessionary gap equal to the difference between Y₂ and Y_P occurs.