The Great Depression, in which real GDP fell and unemployment rose, can be characterized as a
)
A) long- run equilibrium
B) recessionary gap
C) full- employment equilibrium
D) inflationary gap

Question

Quizplus · Accepted Answer

The Great Depression was a period of significant economic decline, with real GDP falling and unemployment rising. This situation is commonly characterized as a recessionary gap, as there was an overall shortfall of demand in the economy leading to decreased economic activity and job losses. A long-run equilibrium would not be appropriate as this suggests stability and balance in the economy, which was not the case during the Great Depression. Full-employment equilibrium and inflationary gap are also not appropriate as they suggest either full utilization of resources or an excess of demand, neither of which were present during the Great Depression.

The Great Depression, in Which Real GDP Fell and Unemployment