A Recessionary Gap Occurs When

question 315

Multiple Choice

A recessionary gap occurs when

• A) high rates of inflation occur.
• B) nominal GDP is greater than potential GDP.
• C) nominal GDP is less than potential GDP.
• D) real GDP is less than potential GDP.

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Definitions:

Absolute Advantage

A condition where a country, company, or individual can produce a good or service more efficiently than another entity, using fewer resources.

Corn Laws

The tariffs, subsidies, and restrictions enacted by the British Parliament in the early nineteenth century to discourage imports and encourage exports of grain.

Imports

Products or services imported from one country into another for the purpose of selling or utilization.

Exports

Goods or services produced in one country and sold to buyers in other countries.