If injections are less than withdrawals at the full-employment level of national income, there is ?
Correct answer: C. A deflationary gap
- A. an inflationary gap
- B. hysteresis
- C. A deflationary gap
- D. hyperinflation
Explanation
Withdrawals exceeding injections reduce aggregate expenditure and income below the full-employment level, creating a deflationary gap. An inflationary gap occurs when injections exceed withdrawals at full employment.
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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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