Inflationary and deflationary gap

Which categories does the following factor affecting?

Groups:

(a) Consumption (C)

,

(b) Investment (I)

,

(c) Net export (NX)

,

(d) SRAS

• •Profit taxes

• •Disposable income

• •Business prospects

• •Price level of trading partners

• •Expectation of price level

• •Wealth

• •National income of trading partners

  •Trade policies

• •Factor costs

• •Desire to save

• •Exchange value of trading partners

• •Supply shocks

When there is an inflationary gap, the aggregate demand curve will automatically shift leftwards to close the gap.

• True

• False

An inflationary gap does not result in an increase in output level in the long run

• True

• False

When there is a deflationary gap, the long run aggregate supply will increase.

• True

• False

What did you learn?