If the full-employment level of income in Figure 9.7 is $300 billion,there is
A)A recessionary gap of $50 billion per year.
B)A recessionary gap of $100 billion per year.
C)An inflationary gap of $500 billion per year.
D)Achievement of macro equilibrium.

Question

If the full-employment level of income in Figure 9.7 is $300 billion,there is 
A)A recessionary gap of $50 billion per year. 
B)A recessionary gap of $100 billion per year. 
C)An inflationary gap of $500 billion per year. 
D)Achievement of macro equilibrium.

Quizplus · Accepted Answer

In Figure 9.7, the equilibrium level of income is $250 billion, which is below the full-employment level of $300 billion. Therefore, there is a recessionary gap of $50 billion per year. The correct choice is B as it reflects the size of the recessionary gap.

If the Full-Employment Level of Income in Figure 9