ECONOMICS
AGGREGATE DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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when ouput falls below potential
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when output exceeds potentional
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when output increases
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when unemployment decreases
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Detailed explanation-1: -Essentially, a recessionary gap refers to the difference between actual and potential production in an economy, with the actual being lower than the potential, which puts downward pressure on prices in the long run.
Detailed explanation-2: -The gap between the level of real GDP and potential output, when real GDP is less than potential, is called a recessionary gapThe gap between the level of real GDP and potential output, when real GDP is less than potential..
Detailed explanation-3: -A negative output gap occurs when actual output is less than what an economy could produce at full capacity. A negative gap means that there is spare capacity, or slack, in the economy due to weak demand.
Detailed explanation-4: -Negative Output Gap This occurs when actual output is less than potential output gap. This is also called a deflationary (or recessionary) gap. In this situation, the economy is producing less than potential. There will be unemployment, low growth and/or a fall in output.
Detailed explanation-5: -A recessionary gap is the difference between the amount of goods and services produced at full employment and during a recession when employment is lower.