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

Question

Quizplus · Accepted Answer

The Great Depression was marked by a significant contraction in output and a rise in unemployment, which indicates a recessionary gap. A recessionary gap occurs when actual output is lower than potential output, which leads to high unemployment and low inflation.

The Great Depression, in Which Real GDP Fell and Unemployment