Ask Question
3 April, 12:01

When potential real GDP is equal to 70, this economy is in recession. The amount of the shortfall in planned aggregate expenditure is equal to A. the amount of actual real GDP. B. the amount of potential real GDP. C. the horizontal distance between potential real GDP and actual real GDP. D. the vertical distance between AE and the 45degrees line at the level of potential real GDP.

+1
Answers (1)
  1. 3 April, 15:49
    0
    Answer: Option (D) is correct.

    Explanation:

    If the potential GDP is 70 and economy is in recession. Potential GDP is the GDP of an economy which can be achieved with the best utilization of economy's resources.

    The amount of the shortfall in planned aggregate expenditure is equal to the vertical distance between the 45 degree line and the AE = Y, at a level of potential real GDP.

    This is also shown by an arrow in the diagram.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “When potential real GDP is equal to 70, this economy is in recession. The amount of the shortfall in planned aggregate expenditure is equal ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers