A negative GDP gap can be caused by either a decrease in aggregate demand or a decrease in
aggregate supply.

Question

Quizplus · Accepted Answer

A negative GDP gap occurs when actual GDP is lower than potential GDP. This can be caused by a decrease in aggregate demand, meaning that consumers and firms are purchasing less goods and services, or a decrease in aggregate supply, meaning that producers are producing less output due to factors such as natural disasters, supply chain disruptions, or decreased productivity.

A Negative GDP Gap Can Be Caused by Either a Decrease