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Question 65

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Use the following to answer questions: Use the following to answer questions: -(Figure: Inflationary and Recessionary Gaps) Refer to Figure: Inflationary and Recessionary Gaps.The level of income associated with Y<sub>1</sub> in panel (b) : A) is equal to potential output. B) reveals an inflationary gap compared with Y<sub>P</sub>. C) is a long-run equilibrium. D) is caused by flexible wages and prices.
-(Figure: Inflationary and Recessionary Gaps) Refer to Figure: Inflationary and Recessionary Gaps.The level of income associated with Y1 in panel (b) :


A) is equal to potential output.
B) reveals an inflationary gap compared with YP.
C) is a long-run equilibrium.
D) is caused by flexible wages and prices.

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