Figure 5-1

Figure 5-1 plots potential and real output for a hypothetical economy. Based on this graph, the recession occurred
A) between years 1 and 2.
B) between years 2 and 3.
C) between years 3 and 4.
D) after year 4.

Question

Figure 5-1

Figure 5-1 plots potential and real output for a hypothetical economy. Based on this graph, the recession occurred
A) between years 1 and 2. 
B) between years 2 and 3. 
C) between years 3 and 4. 
D) after year 4.

Quizplus · Accepted Answer

The recession occurred between years 2 and 3 as real output decreases below potential output during this period.

Figure 5-1 Figure 5-1 Plots Potential and Real Output for a Hypothetical