Question

Complete the following statement: At below full employment equilibrium: ......... GDP exceeds .......GDP 

and there is …… gap.

A. potential, real, inflationary

B. real, potential, recessionary

C. real, potential, natural rate of unemployment

D. potential, real, recessionary

Answer 1

The Correct answer is E. real, potential, inflationary

Full employment equilibrium is an equilibrium in which real GDP exceeds potential GDP.

The amount by which real potential GDP is called an inflationary gap.