The difference between full-employment output and the amount of output demanded at current price levels is known as the:
A) GDP gap.
B) Deficit gap.
C) Structural deficit.
D) Natural rate of unemployment.

Question

Quizplus · Accepted Answer

The term "GDP gap" refers to the difference between the actual level of output in an economy and the potential output that could be produced if all resources (including labor) were fully employed. It represents the shortfall between what an economy is capable of producing and what it is actually producing at a given point in time.

The Difference Between Full-Employment Output and the Amount of Output