Figure 10-4

-A recessionary gap exists when
A)real GDP exceeds nominal GDP.
B)nominal GDP exceeds real GDP.
C)real GDP exceeds potential GDP.
D)potential GDP exceeds real GDP.

Question

Figure 10-4
​ 
-A recessionary gap exists when
A)real GDP exceeds nominal GDP. 
B)nominal GDP exceeds real GDP. 
C)real GDP exceeds potential GDP. 
D)potential GDP exceeds real GDP.

Quizplus · Accepted Answer

A recessionary gap occurs when potential GDP (the level of GDP attainable when the economy is operating at full employment) exceeds actual real GDP, indicating that the economy is not utilizing all of its resources efficiently, leading to unemployment and underproduction.

Figure 10-4 ​

Figure 10-4