The GDP gap is the difference between:

Question

Quizplus · Accepted Answer

The GDP gap measures the difference between the potential output of the economy (full-employment real GDP) and the actual output of the economy (actual real GDP). Therefore, option C is correct. Option A is incorrect because it mixes nominal and real GDP. Option B is incorrect because it compares full-employment real GDP to nominal real GDP, which doesn't make sense. Option D is also incorrect because it doesn't compare GDP to anything related to employment or potential output.

The GDP Gap Is the Difference Between