A recessionary gap is the amount by which
A)potential GDP exceeds real GDP.
B)demand will increase to achieve full employment at a given price level.
C)the supply curve must increase to achieve full employment at a given price level.
D)the price level must adjust to achieve full employment.
E)real GDP exceeds potential GDP.

Question

Quizplus · Accepted Answer

A recessionary gap occurs when potential GDP exceeds real GDP, indicating that the economy is producing below its full capacity.

A Recessionary Gap Is the Amount by Which