Use the Following to Answer Questions

question 49

Multiple Choice

Use the following to answer questions :
Figure: Fiscal Policy Choices
-(Figure: Fiscal Policy Choices) Look at the figure Fiscal Policy Choices. In panel (a) , the economy is initially at output level Y₁ and there is:

• A)an inflationary gap.
• B)a recessionary gap.
• C)equilibrium at full employment.
• D)no gap.