Question : The gap between E and B represents- Option 1: Deflationary gap Option 2: Inflationary gap Option 3: Investment gap Option 4: Output gap

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Question : The gap between E and B represents-

Option 1: Deflationary gap

Option 2: Inflationary gap

Option 3: Investment gap

Option 4: Output gap

Team Careers360 15th Jan, 2024

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Answer (1)

Team Careers360 22nd Jan, 2024

Correct Answer: Deflationary gap

Solution :

Deflationary gap is the gap where actual AD falls short of the AD required to establish full employment equilibrium.

The gap between Eand G is deflationary gap.
Hence, Option A is correct.

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