If the current Real GDP is less than Natural Real GDP,then the economy is
A) in long-run equilibrium.
B) in a recessionary gap.
C) in an inflationary gap.
D) possibly in short-run equilibrium.
E) b and d

Question

Quizplus · Accepted Answer

When the current Real GDP is less than Natural Real GDP, it indicates that the economy is not producing at its full potential, leading to a recessionary gap. This situation can also be consistent with short-run equilibrium, where the economy has adjusted to a temporary situation but is not in its long-run equilibrium state.

If the Current Real GDP Is Less Than Natural Real