Question

If equilibrium level of real Gross Domestic Product (GDP) is less than the full -employment real Gross Domestic Product (GDP) consistent with the position of the economyʹs long -run aggregate supply (LRAS) curve, then the difference between full -employment real Gross Domestic Product (GDP) and current equilibrium real Gross Domestic Product (GDP) is

A) an aggregate demand shock.

B) an aggregate supply shock.

C) a recessionary gap. D) an inflationary gap.

Answer

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