Inflationary and Deflationary Gap (With Diagram)
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![thank youu _).pdf - (a) Explain how a deflationary gap might occur. [10] Answers may include: definition of deflationary gap Keynesian or monetarist/new | Course Hero](https://www.coursehero.com/thumb/42/9e/429e90c7aed108022a671fc4e3425c0555827912_180.jpg "thank youu _).pdf - (a) Explain how a deflationary gap might occur. [10] Answers may include: definition of deflationary gap Keynesian or monetarist/new | Course Hero")
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An economy is facing the inflationary gap shown in the accompanying diagram. a. To eliminate the gap, should the central bank use expansionary or contractionary monetary policy? b. How will the interest
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