An economy producing below potential output is considered to be operating in a(n) Blank______ gap.Multiple choice question.recessionaryinflationaryexpansionaryconcessionary

When an economy's output is than its potential output, the gap is known as a recessionary gap.

Consider the following two alternative definitions of a recession:(1) A period of negative output growth and (2) A period when the output level is below the country’s potential level.Now consider a country that has been producing a lot of oil, and whose oil wells have suddenly run out. This results in both its potential and actual output falling.Which of the following statements are correct?Select the two correct answersGroup of answer choicesAccording to the second definition, the country may not be in a recession.The policymaker using the first definition may underreact to the slowing outputAccording to the first definition, the country is now unambiguously in a recession.According to the second definition, the country’s actual output is unambiguously below its potential output

Use Figure: AD–AS. Consider an economy that is producing an aggregate output of Y1. The economy faces a(n) _____ gap, which can be closed by _____ fiscal policy.Choose one answer from the options below.recessionary; expansionaryinflationary; contractionaryinflationary; expansionaryrecessionary; contractionary

An economy's potential output is also known as Blank______.Multiple choice question.maximized-employment outputfull-employment outputfiscal-employment outputbusiness-employment output

Starting from a long-run equilibrium, a reduction in potential output leads to _____ gap in the short run and to ___ rates of inflation in the long run.Group of answer choicesan expansionary; lowerno output; higheran expansionary; highera recessionary; higher