Which of the following is correct if real GDP is $20.5 trillion and spending is $20 trillion?
A) Spending is greater than output by $0.5 trillion.
B) Spending is less than output by $0.5 trillion.
C) Spending is greater than output by $20.5 trillion.
D) Spending is less than output by $20.5 trillion.
E) Spending is equal to output.

Question

Quizplus · Accepted Answer

Real GDP measures the total output of an economy, while spending refers to total expenditure. If spending is less than the real GDP, it means that there is a gap between what is produced and what is being spent. Therefore, the correct answer is B - spending is less than output by $0.5 trillion.

Which of the Following Is Correct If Real GDP Is