The GDP gap is the difference between:

Question

Quizplus · Accepted Answer

The GDP gap is a measure of the difference between potential or full-employment real GDP and actual real GDP, and it represents the shortfall in economic output or resources relative to what the economy could potentially produce if all resources were fully and efficiently utilized. Choice A is incorrect because nominal GDP refers to the value of goods and services produced in the economy at current prices and is not directly related to the level of employment. Choice B is incorrect because the full employment rate refers to the level of unemployment consistent with a stable inflation rate and the real GDP chain price index measures changes in the prices of goods and services produced in the economy, but neither of these measures capture the difference between actual and potential output. Choice D is incorrect because seasonal unemployment refers to the fluctuation in employment that occurs due to seasonal variations in demand for labor in certain industries, and it is not directly related to the level of GDP.

The GDP Gap Is the Difference Between