- CFA Exams
- CFA Level I Exam
- Topic 2. Economics
- Learning Module 10. Aggregate Output, Prices, and Economic Growth
- Subject 6. Equilibrium GDP and Prices
CFA Practice Question
A recessionary gap is more likely to be observed when ______
A. real GDP is above potential GDP.
B. employment is above full-employment equilibrium.
C. real GDP is below potential GDP.
Explanation: A below full-employment equilibrium is a macro-economic equilibrium in which potential GDP exceeds real GDP. The amount by which potential GDP exceeds real GDP is called the recessionary gap.
User Contributed Comments 0
You need to log in first to add your comment.