If real GDP is $200 billion but potential GDP is $160 billion, there is a recessionary gap of $40 billion.

Name: If real GDP is $200 billion but potential GDP is $160 billion, there is a recessionary gap of $40 billion.
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Quizplus · Accepted Answer

There is not a recessionary gap; instead, there is an inflationary gap because real GDP exceeds potential GDP, indicating the economy is producing above its long-term sustainable level.

If Real GDP Is $200 Billion but Potential GDP Is