-Refer to the graph in the exhibit.What is the term for the distance between Y₁ and Y₂?
A) an expansionary gap
B) a recessionary gap
C) an increase in potential output
D) a decrease in potential output

Question

-Refer to the graph in the exhibit.What is the term for the distance between Y₁ and Y₂?  
A) an expansionary gap 
B) a recessionary gap 
C) an increase in potential output 
D) a decrease in potential output

Quizplus · Accepted Answer

The distance between Y₁ and Y₂ represents a recessionary gap, which occurs when an economy's actual output is less than its potential output, indicating underutilized resources.

-Refer to the Graph in the Exhibit