The size of the output gap depends on which of the following?

Question

Quizplus · Accepted Answer

The size of the output gap is determined by how far an economic downturn has destroyed economic capacity in a country. This refers to the long-term damage caused by the recession, such as depletion of productive resources or the loss of skilled workers that cannot be easily replaced. The other choices may affect the level of unemployment or economic activity, but they do not directly determine the size of the output gap.

The Size of the Output Gap Depends on Which of the Following