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

Question

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

Quizplus · Accepted Answer

Output gap is calculated as actual GDP - potential GDP / potential GDP x 100. In 1974, actual GDP was $1,572 billion and potential GDP was $1,678 billion. Plugging these values into the formula, we get an output gap of approximately -6.5%.

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

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