A recessionary output gap exists when equilibrium aggregate expenditure is _______ full employment GDP.
A) below
B) equal to
C) above
D) unchanging relative to

Question

Quizplus · Accepted Answer

A recessionary output gap occurs when equilibrium aggregate expenditure is below full employment GDP. This means that there is a gap between actual output and potential output, with resources being underutilized and unemployment being higher than necessary.

A Recessionary Output Gap Exists When Equilibrium Aggregate Expenditure Is