If potential output for an economy equals $8 billion, and actual output equals $7 billion, then this economy has a(n):
A)budget deficit.
B)trade deficit.
C)expansionary gap.
D)recessionary gap.

Name: If potential output for an economy equals $8 billion, and actual output equals $7 billion, then this economy has a(n): A)budget deficit. B)trade deficit. C)expansionary gap. D)recessionary gap.
Brand: Quizplus
Rating: 4.8 (44 reviews)

Question

Quizplus · Accepted Answer

A negative output gap or "recessionary gap" occurs when potential output exceeds actual output (Y < Y*).

If Potential Output for an Economy Equals $8 Billion, and Actual