When the economy is experiencing a negative output gap:
A) people and capital are unemployed.
B) the economy may be in a recession.
C) there is little inflationary pressure due to low demand.
D) All of these statements are true.

Question

Quizplus · Accepted Answer

When the economy is experiencing a negative output gap, there is a lack of demand for goods and services, which can lead to unemployment and potentially a recession. This can also lead to little inflationary pressure as there is low demand for goods and services. Therefore, all of the given statements are true.

When the Economy Is Experiencing a Negative Output Gap