If the short-run macroeconomic equilibrium occurs with real GDP less than Y*,the economy is
A)at its full-employment level of output.
B)experiencing a recessionary gap.
C)experiencing an inflationary gap.
D)threatened with an acceleration of inflation.
E)operating at full capacity.

Question

Quizplus · Accepted Answer

A short-run macroeconomic equilibrium with real GDP less than Y* represents a situation where the economy is operating below its potential output. This means that there are unemployed resources, leading to a recessionary gap.

If the Short-Run Macroeconomic Equilibrium Occurs with Real GDP Less