The table given below shows the real GDP, aggregate expenditures, saving, and imports of an economy. Table 10.4
Refer to Table 10.4.Suppose the economy is currently in equilibrium and the potential GDP of the economy is $6, 000.The current GDP gap equals _____.

Question

The table given below shows the real GDP, aggregate expenditures, saving, and imports of an economy. Table 10.4
 Refer to Table 10.4.Suppose the economy is currently in equilibrium and the potential GDP of the economy is $6, 000.The current GDP gap equals _____.

Quizplus · Accepted Answer

The GDP gap is the difference between actual GDP and potential GDP. To calculate the GDP gap, we need to find the difference between potential GDP and current GDP. Potential GDP is given as $6,000, and current GDP is calculated by adding consumption expenditure, investment expenditure, government purchases, and net exports.

Current GDP = $3,000 + $1,500 + $1,200 + (-$300) = $5,400

GDP gap = Potential GDP - Current GDP = $6,000 - $5,400 = $600

Therefore, the GDP gap is $2,000 (Choice C).

The Table Given Below Shows the Real GDP, Aggregate Expenditures