The difference between the equilibrium level of real GDP and how much the economy could be producing if it were operating at full employment on its long-run aggregate supply curve is known as the
A)demand shock.
B)supply shock.
C)recessionary gap.
D)expansion gap.

Question

Quizplus · Accepted Answer

The difference between the equilibrium level of real GDP and how much the economy could be producing if it were operating at full employment on its long-run aggregate supply curve is known as the recessionary gap. This means that the economy is producing at a level below its potential, which indicates an economic recession.

The Difference Between the Equilibrium Level of Real GDP and How