Which of the following would be evidence that a recessionary gap exists?
A) rapid deflation during a period in which plant capacity utilization is below average
B) steady price level, and a 5 percent unemployment rate
C) less help-wanted advertising than usual, and a lower consumer price index than expected
D) markedly higher inflation, and the TSX at record levels

Question

Which of the following would be evidence that a recessionary gap exists?  
A) rapid deflation during a period in which plant capacity utilization is below average 
B) steady price level, and a 5 percent unemployment rate 
C) less help-wanted advertising than usual, and a lower consumer price index than expected 
D) markedly higher inflation, and the TSX at record levels

Quizplus · Accepted Answer

A recessionary gap is characterized by lower demand for labor and goods, which can lead to less help-wanted advertising and a lower consumer price index than expected, as indicated in option C.

Which of the Following Would Be Evidence That a Recessionary