Statement I: When equilibrium GDP and full employment GDP are equal,there is no inflationary gap and no deflationary gap.
Statement II: Equilibrium GDP is an ideal goal that can never be attained.

Question

Quizplus · Accepted Answer

Statement I is true because when equilibrium GDP equals full employment GDP, there is neither a surplus nor a shortage of labor and production capacity, which means that there is neither inflationary gap nor deflationary gap. 
Statement II, on the other hand, is false because an economy can attain equilibrium GDP, which occurs when aggregate demand intersects with aggregate supply, thereby resulting in macroeconomic stability.

Statement I: When Equilibrium GDP and Full Employment GDP Are