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

question 26

Multiple Choice

The diagram below shows an AD/AS model for a hypothetical economy which is initially in a short-run equilibrium at point A. FIGURE 24-6
-Refer to Figure 24-6.In the initial short-run equilibrium,there is ________ output gap of ________ but this gap could be closed by a ________.

• A)a recessionary; 100; fiscal contraction
• B)a recessionary; 200; fiscal expansion
• C)a recessionary; 200; fiscal contraction
• D)an inflationary; 100; fiscal contraction
• E)an inflationary; 200; fiscal expansion

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