What is a recessionary gap?
A)The difference between nominal and Real GDP.
B)The difference between actual and potential Real GDP when the economy is below its potential.
C)The difference between the quantity of goods and services demanded and supplied.
D)The difference between actual and potential Real GDP when the economy is above full employment.

Question

Quizplus · Accepted Answer

A recessionary gap occurs when actual Real GDP is less than potential Real GDP, indicating that the economy is not producing at its full capacity. This gap represents the difference between what the economy is capable of producing and what it is actually producing, and can result in high unemployment and low economic growth.

What Is a Recessionary Gap