(Caffa+( ), - All ( Gabba ). = AD 12 L A recessionary gap exists when the economy produces an Income/GDP level of $1,400 billion 1,090 1,200, 1:400 a. .True False C. False, the economy is at equilibrium and stable '. d. Cannot be determined 23 5 An inflationary gap exists when the economy.produces .. . an income of $1200 billjon a. . The b. False ' C. There is macrofailure d. 'a and c wehove . . 2 * A recessionary gap of $50 billion exists when the coonomy produces an income of$1000.billions a, Pine b. False: it should be $ 200-billion False : it should be $ 300 billion d. Cannot be determined. Mancy 26. Consider the graph above right. If the money supply is currently at Mal and the Federal Reserve chooses to buy bonds, then there will be a a. Shift of the Ms curve for the economy to the left and raises interest rates in the economy. b. Shift the supply of Loanable funds for banks from $2 to SI, raising interest charged by individual banks C. Shift the supply of loanable funds (banks $1 to $2 lowering the interest rates charged by individual banks d. None of the above is correct