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Suppose an economy has an inflationary gap. a. Illustrate this using a graph with LRAS, SRAS, and AD curves. Identify the equilibrium price level, real GDP, and the output gap in your
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Explain the meaning of inflationary gap and deflationary gap. Explain any one measure by which these gaps can be reduced.
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![Inflationary and Deflationary gap [A Level]](https://www.dineshbakshi.com/images/stories/economics_diagrams/deflationary-gap.jpg "Inflationary and Deflationary gap [A Level]")
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Distinguish between inflationary gap and deflationary gap. Can deflationary gap exist at equilibrium level of income? - Zigya
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