If the SRAS and AD Curves Intersect at an Output

question 112

Multiple Choice

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

• 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*.

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Definitions:

Withdrawal Account

An account used in partnership accounting to record the amounts drawn out of the business by the partners for personal use.

Relative Ease

The level of simplicity or difficulty with which a task can be completed when compared to other tasks.

Formation

The process of legally creating a company or other organization; involves registration with relevant authorities and may include drafting a constitution or by-laws.

Corporation

A legal entity recognized by law as distinct from its owners that can own property, incur debts, sue, or be sued.