The Diagram Below Shows an AD/AS Model for a Hypothetical

question 17

Multiple Choice

The diagram below shows an AD/AS model for a hypothetical economy.The economy begins in long-run equilibrium at point A.
FIGURE 24-3
-Refer to Figure 24-3.A negative shock to the economy shifts the AD curve from AD1 to AD2.The initial effect is

• A)a recessionary output gap of 100.
• B)a recessionary output gap of 300.
• C)a recessionary output gap of 550.
• D)an inflationary output gap of 200.
• E)an inflationary output gap of 100.

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