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:

Equilibrium Quantity

The quantity of goods or services supplied that is equal to the quantity demanded at the market equilibrium price.

Rent Control

Governmental regulation of the amount landlords can charge for residential housing, intended to make housing more affordable.

Equilibrium Level

A condition where the supply and demand in the market are equal, leading to steady prices and amounts.

Supply Curve

A visual chart that illustrates how the price of a product correlates with the amount suppliers are prepared to manufacture and sell.