Use the Following to Answer Questions

question 36

Multiple Choice

Use the following to answer questions .
Exhibit: Aggregate Demand and Aggregate Supply and the Great Depression
-(Exhibit: Aggregate Demand and Aggregate Supply and the Great Depression) Suppose the U.S. economy is at point j. With the onset of World War II, expansionary fiscal policies forced by the war pushed into an inflationary gap. Which of the following best illustrates this event?

• A) expansionary fiscal policies shifted the aggregate demand curve, creating an inflationary gap equal to (Y_n - Y_P).
• B) expansionary fiscal policies shifted the aggregate demand curve, creating an inflationary gap equal to (Y_m - Y_P).
• C) expansionary fiscal policies shifted the aggregate demand curve, creating an inflationary gap equal to (Y_m - Y_j).
• D) expansionary fiscal policies shifted the aggregate demand curve, creating an inflationary gap equal to (Y_n - Y_j).

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Definitions:

Earnings Ratio

A financial metric that compares a company's earnings to another value, such as the price of its stock or the earnings of another industry.

Labor Force Participation

The percentage of the population that is working or actively looking for work, excluding those not seeking employment.

Earnings Difference

The disparity in income earned between different individuals, occupations, or time periods.

Married Men

Adult males who are legally joined in marriage to a spouse.