Once the economy reaches its potential output level

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Once the economy reaches its potential output level, and the AD Curve, the SAS Curve, and the LAS Curve are all intersecting at the same point:

A. an increase in aggregate demand will cause a recessionary gap to develop in the economy.

B. a decrease in aggregate demand will cause an inflationary gap to develop in the economy.

C. an increase in aggregate demand will cause an inflationary gap to develop in the economy.

D. the AD Curve cannot shift at all.

Reference no: EM131007243

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