The Table Below Shows Data for India?s Economy The Economy Is Experiencing___________ Gap and Firms Will ___________

question 109

Multiple Choice

The table below shows data for India?s economy. Real GDP is measured in millions of rupees. Suppose that full employment occurs when real GDP is 27,000 million rupees. $$\begin{array} { | l | l | l | l | } \hline & \text { Price level } & \begin{array} { l } \text { Real GDP } \\\text { supplied in the short } \\\text { run }\end{array} & \text { Real GDP demanded } \\\hline \text { a } & 114 & 23,501 & 35,898 \\\hline \text { b } & 120 & 25,355 & 32,341 \\\hline \text { c } & 125 & 27,670 & 27,670 \\\hline \text { d } & 131 & 30,366 & 18,569 \\\hline \text { e } & 138 & 33,164 & 15,898 \\\hline\end{array}$$ The economy is experiencing___________ gap and firms will ___________ .

• A) a recessionary gap; increase production
• B) a recessionary gap; decrease money wages paid to workers
• C) an inflationary gap; increase production
• D) an inflationary gap; increase money wages paid to workers

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