The following are selected statistics for a given year in a hypothetical economy:

-Refer to the information above to answer this question.What is the size of the GDP gap in percentage terms for this economy?

Question

The following are selected statistics for a given year in a hypothetical economy:
 
-Refer to the information above to answer this question.What is the size of the GDP gap in percentage terms for this economy?

Quizplus · Accepted Answer

The GDP gap is the difference between the potential GDP and the actual GDP. In this case, the potential GDP is $800 billion ((100/95) x $760 billion) and the actual GDP is $760 billion. So, the GDP gap is $40 billion ($800 billion - $760 billion), which is 5% of the potential GDP ($40 billion/$800 billion). Therefore, the correct answer is C) 5%.

The Following Are Selected Statistics for a Given Year in a Hypothetical