To what does the "GDP gap" refer?
A) The difference between real and nominal GDP.
B) The difference between this year's real GDP and last year's GDP.
C) The difference between "full-employment" real GDP and actual real GDP.
D) The difference between real GDP in the prior trough and real GDP in a current trough of the business cycle.

Question

Quizplus · Accepted Answer

The "GDP gap" refers to the difference between the potential or "full-employment" level of real GDP and the actual level of real GDP. This can indicate whether an economy is operating at its full potential or if there is room for growth and improvement.

To What Does the "GDP Gap" Refer