Exhibit 10-8
-If the economy is at point H in Exhibit 10-8,there is a(n)

Question

Exhibit 10-8 
-If the economy is at point H in Exhibit 10-8,there is a(n)

Quizplus · Accepted Answer

At point H, the potential GDP is higher than the actual GDP, which indicates a contractionary gap. The size of the gap is $300 billion, as the vertical distance between the potential GDP line and the actual GDP line is equal to $300 billion. Therefore, option B is correct. Options A, D, and E are incorrect because they suggest an expansionary gap, which is not the case at point H. Option C is incorrect because it indicates a gap of 10, which is not a relevant measure.

Exhibit 10-8 -If the Economy Is at Point H in Exhibit 10-8,there