If the output gap equals −3.2 percent, then:
A)cyclical unemployment equals the sum of structural and frictional unemployment.
B)there is a recessionary gap.
C)there is no cyclical unemployment.
D)potential GDP is lower than actual GDP.

Question

Quizplus · Accepted Answer

When the output gap is negative, the economy is producing less than its potential. This is a called a recessionary gap.

If the Output Gap Equals −3.2 Percent, Then