Answer to Question #59604 in Macroeconomics for ali

Question

AS/AD Model.
AD: P = 90 - 3Y.
AS: P = 15.
PO: Y = 30.
What is the Recessionary Gap??

Answer 1

Find macroeconomic equilibrium, when total demand=total supply
AD = AS
P=90-3Y=15
Y (actual GDP) =25
When actual GDP is below the potential GDP the economy has negative output gap, also called as recessionary gap.
Recessionary Gap = Potential GDP-Actual GDP=30-25=5
We received negative gap, also called as recessionary gap.
The recessionary gap equals 5.