AP Macroeconomics Question 16: Answer and Explanation
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4. A recessionary gap exists when the short-run equilibrium level of real GDP
- A. decreases over time
- B. equals the full-employment level of real GDP
- C. is above the full-employment level of real GDP
- D. is below the full-employment level of real GDP
- E. increases over time
Correct Answer: D
D A recessionary gap is when the equilibrium GDP is below full employment level. Therefore the answer is (D).