Chapter 15, Problem 7P

To determine

Concept Introduction:

Economic Recession: This period is the early stage of depression, in this period the economy is in the declining stage where a slow-down is seen in the stock market, consumer good market as well as there is an increase in unemployment.

Inflationary Gap: At the level of full employment, if the value of the real GDP is greater than the value of the potential GDP, it leads to an emergence of the inflationary gap.

Recessionary Gap: At the level of full employment, if the value of the potential GDP is greater than the value of the real GDP, it leads to an emergence of the recessionary gap.