If potential GDP is $26.5 trillion and actual GDP is $27.49 trillion, the output gap is:
A)3.74%.
B)3.98%.
C)-3.98%.
D)-3.74%.

Name: If potential GDP is $26.5 trillion and actual GDP is $27.49 trillion, the output gap is: A)3.74%. B)3.98%. C)-3.98%. D)-3.74%.
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Question

Quizplus · Accepted Answer

The output gap is the difference between potential GDP and actual GDP, expressed as a percentage of potential GDP. In this case, the output gap is ($27.49 trillion - $26.5 trillion) / $26.5 trillion * 100 = 3.74%.

If Potential GDP Is $26