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Suppose that the current situation in country A is represented by the following ...

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Suppose that the current situation in country A is represented by the following diagram:

 

Which of the

following best describes country A situation?

        

            

(i)        

There is an expansionary output gap

          

(ii)        

There is a contractionary output gap

         

(iii)        

Utilisation rates for labour and

capital are below normal rates

         

(iv)        

Utilisation rates for labour and

capital are above normal rates

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