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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

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BuyFindarrow_forward

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

Diagrammatically represent an economy in (a) an inflationary gap, (b) a recessionary gap, and (c) long-run equilibrium.

 (a)

To determine

Estimate the diagrammatic explanation for an inflationary gap.

Explanation

Inflationary gap:

If an economy is in an inflationary gap, then the economy produces output more than the full employment level. In this case, the actual unemployment rate is lower than the natural unemployment rate...

(b)

To determine

Estimate the diagrammatic explanation for a recessionary gap.

(c)

To determine

Estimate the diagrammatic explanation for the long-run equilibrium.

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