Figure 9-4
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In Figure 9-4, if the economy faces an inflationary gap, what must happen to reach potential GDP?

A. The expenditure level must rise and/or the price level must rise.
B. The expenditure level must rise and/or the price level must fall.
C. The expenditure level must fall and/or the price level must fall.
D. The expenditure level must fall and/or the price level must rise.


Answer: D

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