Exhibit 10-5 -If the Economy Is at Point M in Exhibit 10-5

Multiple Choice

Exhibit 10-5
-If the economy is at point M in Exhibit 10-5,

A) the actual price level is lower than expected with a $200 billion expansionary gap
B) the actual price level is lower than expected with a $200 billion contractionary gap
C) the actual price level is higher than expected with a $200 billion contractionary gap
D) the short-run supply curve will shift to SRS₁₀₉ and the expansionary gap will be eliminated
E) the economy is in equilibrium in the short run and the long run