Question

a. A recessionary expenditure gap is the amount by which aggregate expenditures at the full-employment GDP...

a. A recessionary expenditure gap is the amount by which aggregate expenditures at the full-employment GDP


  • fall short of those required to achieve the full-employment GDP.

  • divided by the multiplier equal those required to achieve the full-employment GDP.

  • equal those required to achieve the full-employment GDP and net exports.

  • exceed those required to achieve the full-employment GDP.

b. An inflationary expenditure gap is the amount by which aggregate expenditures at the full-employment GDP

  • fall short of those required to achieve the full-employment GDP.

  • equal those required to achieve the full-employment GDP.

  • divided by the multiplier equal those required to achieve the full-employment GDP.

  • exceed those required to achieve the full-employment GDP.

c. A positive GDP gap is associated with

  • an inflationary expenditure gap.

  • a production expenditure gap.

  • a consumption expenditure gap.

  • a recessionary expenditure gap.

d. A negative GDP gap is associated with

  • a recessionary expenditure gap.

  • an inflationary expenditure gap.

  • a production expenditure gap.

  • a consumption expenditure gap.

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Answer #1

(a)  A recessionary expenditure gap is the amount by which aggregate expenditures at the full-employment GDP fall short of those required to achieve the full-employment GDP. Hence, option(A) is correct.

(b) An inflationary expenditure gap is the amount by which aggregate expenditures at the full-employment GDP exceed those required to achieve the full-employment GDP. Hence, option(D) is correct.

(c) A positive GDP gap is associated with an inflationary expenditure gap. Hence, option(A) is correct.

(d) A negative GDP gap is associated with a recessionary expenditure gap. Hence, option(A) is correct.

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