Using the Aggregate Expenditure-Output Model, Assume the Aggregate Expenditures (AE)

question 88

Multiple Choice

Using the aggregate expenditure-output model, assume the aggregate expenditures (AE) line is above the 45-degree line at full-employment GDP. This vertical distance is called a(n) :

• A) inflationary gap.
• B) recessionary gap.
• C) negative GDP gap.
• D) marginal propensity to consume gap.

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