The _____ is the difference between potential real GDP and the equilibrium level of real GDP.
A)employment gap
B)inflationary gap
C)GDP gap
D)fiscal gap
E)monetary gap

Question

Quizplus · Accepted Answer

The GDP gap is the difference between potential real GDP (the maximum level of output an economy can produce with its existing resources) and the equilibrium level of real GDP (the level of output produced when aggregate demand equals aggregate supply). It is also known as the output gap. The inflationary gap (B) is the amount by which the equilibrium level of output exceeds the level of potential output, leading to inflationary pressures. The employment gap (A) refers to the difference between the number of people who are actually employed and the number of people who are willing and able to work. The fiscal gap (D) refers to the difference between government spending and revenue, which can lead to budget deficits or surpluses. The monetary gap (E) is not a commonly used term in economics.

The _____ Is the Difference Between Potential Real GDP and the Equilibrium