The figure given below shows the macroeconomic equilibrium of a country.
Figure 10.7

-Given a potential GDP level of $3,000, the recessionary gap in Figure 10.7 equals _____.

Question

The figure given below shows the macroeconomic equilibrium of a country.
Figure 10.7
 
-Given a potential GDP level of $3,000, the recessionary gap in Figure 10.7 equals _____.

Quizplus · Accepted Answer

A recessionary gap is the difference between potential GDP and actual GDP when actual GDP is less than potential GDP. If the potential GDP is $3,000 and the recessionary gap is $500, it means the actual GDP is $2,500.

The Figure Given Below Shows the Macroeconomic Equilibrium of a Country