Refer to the following table. What was the approximate output gap in 1971?
$$\begin{array} { | l | c | c | }
\hline \text { Year } & \begin{array} { c }
\text { Real GDP } \
\text { (billions of \$) }
\end{array} & \begin{array} { c }
\text { Potential GDP } \
\text { (billions of \$) }
\end{array} \
\hline 1970 & 93 & 90 \
\hline 1971 & 96 & 94 \
\hline 1972 & 105 & 99 \
\hline 1973 & 109 & 104 \
\hline 1974 & 100 & 107 \
\hline
\end{array}$$

Question

Refer to the following table. What was the approximate output gap in 1971?
$$\begin{array} { | l | c | c | } 
\hline \text { Year } & \begin{array} { c } 
\text { Real GDP } \
\text { (billions of \$) }
\end{array} & \begin{array} { c } 
\text { Potential GDP } \
\text { (billions of \$) }
\end{array} \
\hline 1970 & 93 & 90 \
\hline 1971 & 96 & 94 \
\hline 1972 & 105 & 99 \
\hline 1973 & 109 & 104 \
\hline 1974 & 100 & 107 \
\hline
\end{array}$$

Quizplus · Accepted Answer

The output gap is calculated as $\frac{\text{Real GDP} - \text{Potential GDP}}{\text{Potential GDP}} \times 100$. For 1971, this is $\frac{96 - 94}{94} \times 100 = 2.1\%$.

Refer to the Following Table A)33% B)2

Refer to the Following Table A)33%
B)2