Question

If the SRAS curve intersects the AD curve to the right of natural real GDP, the economy is:

a) In a recessionary gap
b) In either a recessionary gap or an inflationary gap, but we need more information to determine which one
c) In an inflationary gap
d) At full-employment real GDP

Answer 1

If the SRAS curve intersects the AD curve to the right of natural real GDP, the economy is either in a recessionary gap or an inflationary gap, but we need more information to determine which one.

Step-by-step explanation:

If the SRAS curve intersects the AD curve to the right of natural real GDP, the economy is in either a recessionary gap or an inflationary gap, but we need more information to determine which one. The SRAS curve represents the total supply of goods and services in the economy, while the AD curve represents the total demand for goods and services. When the SRAS curve intersects the AD curve to the right of natural real GDP, it suggests that the economy is operating at a level higher than its potential, indicating either a recessionary or an inflationary gap.