If current output is
Billion and potential output
Billion,then the economy is in a(n)__________ and
Is about __________.
A)recession;-4.7 percent
B)boom;4.7 percent
C)boom;-4.7 percent
D)recession;- 5 percent
E)boom;5 percent

Question

If current output is 
Billion and potential output 
Billion,then the economy is in a(n)__________ and 
Is about __________.
A)recession;-4.7 percent 
B)boom;4.7 percent 
C)boom;-4.7 percent 
D)recession;- 5 percent 
E)boom;5 percent

Quizplus · Accepted Answer

Based on the given information, the current output is lower than the potential output, indicating a recessionary gap. The difference between the two outputs is around 4.7 percent (as the only differing part in the numbers is in the third section, which is in billions). Therefore, the correct answer is A, recession with a -4.7 percent output gap. Option B, C, D, and E are incorrect as they suggest a positive output gap or a boom.

If Current Output Is