Economics (AS & A Level) · Feb / March 2025 · Paper 32 · Question 19

The diagram shows a closed economy with no government. It is in initial equilibrium when the national income is $1000 million. If the full employment national income occurs at $800 million, what is the value of the inflationary gap?

1. A$40 million
2. B$160 million
3. C$260 million
4. D$840 million

As printed in the paper