If actual GDP is $500 billion and there is a negative GDP gap of $10 billion, potential GDP is
A) $510 billion.
B) $490 billion.
C) $10 billion.
D) $990 billion.

Question

Quizplus · Accepted Answer

A negative GDP gap indicates that the actual GDP is less than the potential GDP. Therefore, if the actual GDP is $500 billion and there is a negative gap of $10 billion, the potential GDP would be $500 billion + $10 billion = $510 billion.

If Actual GDP Is $500 Billion and There Is a Negative