Answer to Question #251204 in Economics for Millicent

Question #251204

A (n) __________ exists when aggregate demand is less than potential output.

Select one:

a. inflationary gap

b. long-run equilibrium

c. short-run equilibrium

d. recessionary gap

Expert's answer

A recessionary gap exists when aggregate demand is less than potential output.

So, the correct answer is d.

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