passwella.
Menu

JAMB Economics 2004 Question 27

Question 27

National Income

The excess of aggregate expenditure over full employment level of output is referred to as

  1. A.GNP gap
  2. B.deflationary gap
  3. C.inflationary gap
  4. D.recessionary gap
Show the answer and explanation

Answer: C (inflationary gap)

Explanation

When spending is more than the economy can produce at full employment, the excess pushes prices up: an inflationary gap.