During an Inflationary Gap

question 294

Multiple Choice

During an inflationary gap,

• A)real GDP is less than potential GDP.
• B)the aggregate demand curve and the aggregate supply curve intersect at potential GDP.
• C)the aggregate demand curve and the aggregate supply curve intersect at a level of real GDP that exceeds potential GDP.
• D)the aggregate demand curve and the aggregate supply curve do not intersect.
• E)the price level will fall to restore the long-run equilibrium.

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