How much is the output gap if short-run output is $18.2 trillion and potential output is $18.0 trillion?
A) $18.2 trillion
B) $18.0 trillion
C) +$0.2 trillion
D) -$0.2 trillion
E) $0

Question

Quizplus · Accepted Answer

The output gap is calculated as the difference between the short-run output and the potential output. In this case, it is $18.2 trillion - $18.0 trillion = $0.2 trillion. Since the short-run output is higher than the potential output, the output gap is positive, indicating an expansionary gap.

How Much Is the Output Gap If Short-Run Output Is