When equilibrium real GDP falls short of potential GDP, there is a(n)

Question

Quizplus · Accepted Answer

When equilibrium real GDP falls short of potential GDP, there is a recessionary gap. This means that the economy is underperforming and has not reached its full potential. There is a gap between what the economy is producing and what it could potentially produce. This often results in high unemployment and a lower standard of living for individuals in the economy.

When Equilibrium Real GDP Falls Short of Potential GDP, There