The amount by which actual GDP falls short of potential GDP is one measure of the
A) natural rate of unemployment.
B) macroeconomic cost of unemployment.
C) difference between real and nominal GDP.
D) potential to produce outside the nation's PPC.

Question

Quizplus · Accepted Answer

The amount by which actual GDP falls short of potential GDP is referred to as the "output gap." This output gap indicates the macroeconomic cost of unemployment because it means that the economy is not producing as much as it could, leading to lower employment opportunities and potentially lower living standards.

The Amount by Which Actual GDP Falls Short of Potential