The GDP gap is the difference between:

Question

Quizplus · Accepted Answer

The GDP gap is the difference between actual real GDP and full-employment real GDP. Full-employment real GDP is the level of real GDP that would exist if the economy were producing at full employment. Therefore, option C correctly identifies the difference between full-employment real GDP and actual real GDP. Option A is incorrect because seasonal unemployment is not directly related to the GDP gap. Option B is incorrect because the unemployment rate and real GDP deflator are not directly related to the GDP gap. Option D is incorrect because the real GDP deflator is a measure of the overall price level, which is not directly related to the GDP gap.

The GDP Gap Is the Difference Between