For the following questions use the information in Table 10.1,which shows real GDP and potential real GDP for the years 2001-2010.
-According to the data in Table 10.1,what years did the Bush administration enjoy an expansionary gap?
A)2005 and 2006
B)2007-2009
C)2001,2005,2006
D)2002,2003,2007
E)2001

Question

For the following questions use the information in Table 10.1,which shows real GDP and potential real GDP for the years 2001-2010. 
-According to the data in Table 10.1,what years did the Bush administration enjoy an expansionary gap?
A)2005 and 2006 
B)2007-2009 
C)2001,2005,2006 
D)2002,2003,2007 
E)2001

Quizplus · Accepted Answer

An expansionary gap occurs when real GDP exceeds potential real GDP, indicating an overheating economy with rising inflationary pressures. Looking at the table, we see that potential real GDP steadily increases over the years, while real GDP fluctuates around it. We can see that in 2001, real GDP was slightly above potential, so there was a small expansionary gap that year. Then, in 2005 and 2006, real GDP was significantly above potential, indicating large expansionary gaps during those years. Therefore, the correct answer is C, as these are the years in which the Bush administration enjoyed expansionary gaps. The other answer choices do not reflect the data presented in Table 10.1.

For the Following Questions Use the Information in Table 10