If full employment GDP is $8 trillion and equilibrium GDP is $7 trillion

A) there is definitely an inflationary gap.
B) there is probably an inflationary gap.
C) there is definitely a recessionary gap.
D) there is probably a recessionary gap.

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Isabella Ferrone · Accepted Answer

Final Answer : C, Explanation :  When equilibrium GDP ($7 trillion) is less than full employment GDP ($8 trillion), it indicates that the economy is not producing at its full potential, leading to a recessionary gap. This means there are unused resources and higher unemployment than at full employment.

If full employment GDP is $8 trillion and equilibrium GDP is $7 trillion

A) there is definitely an inflationary gap.
B) there is probably an inflationary gap.
C) there is definitely a recessionary gap.
D) there is probably a recessionary gap.

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Learning Objectives

Related questions

If full employment GDP is $8 trillion and equilibrium GDP is $7 trillionA) there is definitely an inflationary gap.B) there is probably an inflationary gap.C) there is definitely a recessionary gap.D) there is probably a recessionary gap.

Definitions

Learning Objectives

Learning Objectives

Related questions

If full employment GDP is $8 trillion and equilibrium GDP is $7 trillion

A) there is definitely an inflationary gap.
B) there is probably an inflationary gap.
C) there is definitely a recessionary gap.
D) there is probably a recessionary gap.