A decrease in a recessionary GDP gap will most likely be associated with a decrease in
A)Structural unemployment.
B)Cyclical unemployment.
C)The price level.
D)Frictional unemployment.

Question

Quizplus · Accepted Answer

A recessionary GDP gap represents a situation where the actual GDP is lower than the potential GDP. This indicates a significant level of cyclical unemployment in the economy, which is caused by the lack of demand for goods and services. Therefore, a decrease in the recessionary GDP gap will likely result in a decrease in cyclical unemployment as the demand for goods and services starts to pick up again.

A Decrease in a Recessionary GDP Gap Will Most Likely