A recessionary gap means that short- run macroeconomic equilibrium GDP
A)is more than full- employment GDP.
B)is less than full- employment GDP.
C)equals full- employment GDP.
D)may be less than, more than, or the same as full- employment GDP depending on the level of potential GDP.

Question

Quizplus · Accepted Answer

A recessionary gap occurs when the actual GDP is less than the full-employment GDP, indicating underutilization of resources in the economy.

A Recessionary Gap Means That Short- Run Macroeconomic Equilibrium GDP