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Suppose the Economy's Short-Run Equilibrium Level Is at a Point

Question 134

Multiple Choice

Suppose the economy's short-run equilibrium level is at a point to the left of Natural Real GDP.Which of the following statements is true?


A) The economy is in an inflationary gap.
B) The economy is in a recessionary gap.
C) The economy is in long-run equilibrium.
D) This situation is actually impossible.

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