The difference between full-employment output and the amount of output demanded at current price levels is equal to the:
A) Real GDP.
B) Multiplier.
C) Potential GDP.
D) GDP gap.

Question

Quizplus · Accepted Answer

The difference between full-employment output and the amount of output demanded at current price levels is known as the GDP gap. This represents the gap between the current level of production and the potential level of production, which is determined by the maximum amount of goods and services that can be produced with existing resources and technology. The GDP gap can be positive (when output is below potential) or negative (when output is above potential).

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