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An astronaut on the Moon simultaneously drops a feather and a hammer.The fact that they land together shows that:
Expansionary Gaps
Situations where actual GDP exceeds potential GDP, leading to inflationary pressure due to high demand.
Contractionary Gaps
Contractionary gaps occur when an economy’s actual output is lower than its potential output, often leading to unemployment and underutilized resources.
Aggregate Demand
The total demand for all goods and services within an economy at various price levels, in a given time period.
Expansionary Gap
A situation where the actual economic output exceeds the potential output, often leading to inflation.
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