Exhibit 10.1

-Refer to Exhibit 10.1, which shows the short-run aggregate supply curve of an economy. In this Exhibit, a recessionary gap would be represented by the distance between _____
A) Y₁ and Y₂.
B) Y₁ and Y₃.
C) Y₂ and Y₃.
D) P₃ and P₁.
E) P₃ and P₂.

Question

Exhibit 10.1
 
-Refer to Exhibit 10.1, which shows the short-run aggregate supply curve of an economy. In this Exhibit, a recessionary gap would be represented by the distance between _____
A) Y₁ and Y₂. 
B) Y₁ and Y₃. 
C) Y₂ and Y₃. 
D) P₃ and P₁. 
E) P₃ and P₂.

Quizplus · Accepted Answer

A recessionary gap occurs when the actual output (Y₁) is less than the potential output (Y₂), indicating underutilized resources in the economy.

Exhibit 10.1 -Refer to Exhibit 10.1, Which Shows the Short-Run Aggregate Supply