Assume an Economy Is Currently in Equilibrium with Real GDP

question 183

Multiple Choice

Assume an economy is currently in equilibrium with Real GDP at $500 billion.If potential Real GDP (LAS) is $400 billion,which of the following is true?

• A)There is a recessionary gap of 100 percent.
• B)There is a recessionary gap of $100 billion.
• C)There is an inflationary gap of 100 percent.
• D)There is an inflationary gap of $100 billion.

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Definitions:

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Medical Model

A framework in psychiatry and clinical psychology that considers mental disorders as akin to physical diseases, focusing on biological factors and treatments.

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