In a recessionary expenditure gap, the equilibrium level of real GDP is:
A)less than planned investment.
B)equal to full-employment GDP.
C)greater than full-employment GDP.
D)less than full-employment GDP.

Question

Quizplus · Accepted Answer

In a recessionary expenditure gap, aggregate expenditure plans fall short of full-employment GDP, resulting in firms producing less than what they intended to. This means that the equilibrium level of real GDP is less than full-employment GDP, hence the correct answer is D.

In a Recessionary Expenditure Gap, the Equilibrium Level of Real