If the SRAS and AD Curves Intersect at an Output

question 108

Multiple Choice

If the SRAS and AD curves intersect at an output level to the left of the LRAS curve,

• A) there is an expansionary gap,with Y > Y*.
• B) there is a recessionary gap,with Y < Y*.
• C) there is an expansionary gap,with Y < Y*.
• D) there is a recessionary gap,with Y > Y*.
• E) there is no output gap and Y = Y*.