In Macroland,potential GDP equals $8 trillion and actual GDP equals $7.52 trillion.Macroland has a(n)_________ gap equal to _________% of potential GDP.

Question

Quizplus · Accepted Answer

The output gap is calculated by subtracting actual GDP from potential GDP and then dividing the result by potential GDP.

Output Gap = (Potential GDP - Actual GDP) / Potential GDP

Output Gap = (8 trillion - 7.52 trillion) / 8 trillion

Output Gap = 0.48 / 1 = 0.06 or 6%

Since the actual GDP is lower than the potential GDP, this represents a recessionary gap. Therefore, the correct answer is D) recessionary; 6.0.

In Macroland,potential GDP Equals $8 Trillion and Actual GDP Equals