A recessionary gap:
A)is of little consequence in a capitalist economy.
B)represents actual physical output lost.
C)implies an equilibrium level of output less than the full-employment level.
D)is associated with rising labor prices.
E)will automatically close, according to the Keynesian model.

Question

Quizplus · Accepted Answer

A recessionary gap implies that the economy's equilibrium level of output is below the full-employment level, meaning that resources, including labor, are underutilized.

A Recessionary Gap