What does the output gap tell us about the state of the economy in 1999 and 2000? Real GDP was ____ potential GDP and the economy had come through a business cycle ____.A. below; expansionB. below; recessionC. above; expansionD. above; recession Here is the output gap.Real GDP falls belowpotential GDP in arecession...... and rises to orabove potential GDPin an expansion.ResetOutput gap (percentage of potential GDP)20-2-4-6-8-101981-1982 1990-1991recessionrecession2001recessionCOVID-19recessionGreatrecession1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 2020Year✪

Answered: the state of the economy in 1999 and…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Question

What does the output gap tell us about the state of the economy in 1999 and 2000? Real GDP was ____ potential GDP and the economy had come through a business cycle ____.

A. below; expansion

B. below; recession

C. above; expansion

D. above; recession

Here is the output gap.
Real GDP falls below
potential GDP in a
recession...
... and rises to or
above potential GDP
in an expansion.
Reset
Output gap (percentage of potential GDP)
2
0
-2
-4
-6
-8
-10
1981-1982 1990-1991
recession
recession
2001
recession
COVID-19
recession
Great
recession
1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 2020
Year
✪

Expert Solution

Step 1

As in 1999 & 2000, the output Gap was positive (Actual GDP - Potential GDP) and the real GDP was above the potential output level, the economy was in expansionary stage of Business cycle.

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions