-Refer to the Graph Above to Answer This Question

question 107

Multiple Choice

-Refer to the graph above to answer this question.If this economy is experiencing a recessionary gap,which of the following could be correct?

• A)Real GDP is Y₁ and there is a budget deficit.
• B)Real GDP is Y₁ and there is a budget surplus.
• C)Real GDP is Y₂ and there is a balanced budget.
• D)Real GDP is Y₁ and there is a balanced budget.

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Definitions:

Flexible Exchange Rates

A currency system where the value of a country's currency is allowed to fluctuate according to the foreign exchange market's demand and supply forces.

Japanese Yen

The official currency of Japan, widely used in international finance and trading.

U.S. Dollar

The recognized monetary unit of the United States, extensively employed as a standard in global commerce and financial activities.

British Enterprise

Entities engaged in commercial, industrial, or professional activities within the United Kingdom.