For policymakers, the problem with a recessionary gap is ________ and the problem with an expansionary gap is ________.
A)a tendency for inflation to increase; wasted resources
B)wasted resources; a tendency for inflation to increase
C)an increase in cyclical unemployment; an increase in structural unemployment
D)an increase in structural unemployment; an increase in cyclical unemployment

Question

Quizplus · Accepted Answer

A recessionary gap wastes resources because workers and capital are not producing output. An expansionary gap leads to demand for output that exceeds firms' capacity and drives up prices.

For Policymakers, the Problem with a Recessionary Gap Is ________