When there is a recessionary gap,(actual)Real GDP is __________ Natural Real GDP,and the (actual)unemployment rate is __________ the natural rate of unemployment.

Question

Quizplus · Accepted Answer

In a recessionary gap, actual Real GDP is less than Natural Real GDP, meaning there is a decrease in economic output. Also, to accommodate the decrease in output, there will be a higher unemployment rate, often greater than the natural rate of unemployment. Choice D is the only option that correctly reflects this relationship.

When There Is a Recessionary Gap,(actual)Real GDP Is __________ Natural