-Refer to the Graph in the Exhibit

question 147

Multiple Choice

-Refer to the graph in the exhibit.Suppose the economy is at point M.Which of the following characterizes the actual price level and the resulting gap?  

• A) The actual price level is lower than expected, with a $200 billion recessionary gap.
• B) The actual price level is higher than expected, with a $200 billion recessionary gap.
• C) The actual price level is lower than expected, with a $200 billion expansionary gap.
• D) The actual price level is higher than expected, with a $200 billion expansionary gap.