Potential real GDP is $10,000 and the current level of real GDP is $9,000. The output gap is therefore _____%.
A) -90
B) -110
C) -10
D) 10

Name: Potential real GDP is $10,000 and the current level of real GDP is $9,000. The output gap is therefore _____%. A) -90 B) -110 C) -10 D) 10
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Question

Quizplus · Accepted Answer

Output Gap = (Potential GDP - Current GDP) / Potential GDP

Output Gap = (10,000 - 9,000) / 10,000

Output Gap = 0.1 or 10% (rounded to the nearest whole number)

Therefore, the best choice is C, which is a 10% output gap.

Potential Real GDP Is $10,000 and the Current Level of Real