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Define the unique characteristics of the GDP gap and the aggregate demand shortfall measure.

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Joshua Stredder
Joshua StredderLv10
28 Sep 2019

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Related questions

How are aggregate demand and GDP related? What is the role of aggregate demand in the GDP gap?

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1. An inflationary expenditure gap is the amount by which

a. aggregate expenditures at the full-employment GDP exceed those required to achieve the full-employment GDP.

b. aggregate expenditures at the full-employment GDP equal those required to achieve the full-employment GDP.

c. aggregate expenditures at the full-employment GDP are divided by the multiplier equal to those required to achieve the full-employment GDP.

d. aggregate expenditures at the full-employment GDP fall short of those required to achieve the full-employment GDP.

 

2. A positive GDP gap is associated with

a. a recessionary expenditure gap.

b. an inflationary expenditure gap.

c. a consumption expenditure gap.

d. a production expenditure gap. 

 

3.  A negative GDP gap is associated with

a. an inflationary expenditure gap.

b. a consumption expenditure gap.

c. a production expenditure gap.

d. a recessionary expenditure gap.

 

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