Which of the following statements about the GDP gap is not true?
A)It widens during recessions and narrows during expansions.
B)When the GDP gap equals zero, the economy operates on its production possibilities curve.
C)It is a measure of output lost as a result of unemployment.
D)There are more goods and services available as the gap widens.
E)It is equal to potential real GDP minus actual real GDP.

Question

Quizplus · Accepted Answer

The statement "There are more goods and services available as the gap widens" is not true. The GDP gap is a measure of the difference between potential and actual output, but it does not directly reflect the quantity of goods and services available. Additionally, the other statements are all true - the GDP gap widens during recessions and narrows during expansions, when the GDP gap equals zero the economy operates on its production possibilities curve, and it is a measure of output lost as a result of unemployment.

Which of the Following Statements About the GDP Gap Is