Recessionary Gap
3 important questions on Recessionary Gap
What occurs when actual output is less than potential output?
A recessionary gap occurs when actual output (Y) is less than potential output (Y*).
What does a recessionary gap indicate about resources?
Resources like workers, machines, and land are underutilized due to insufficient demand.
Why are resources not fully utilized during a recessionary gap?
Resources are not fully utilized because there is not enough demand for goods and services.
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