Final answer:
A recessionary gap occurs when capital and labor are not used to their full capacity due to excess supply, leading to a situation where firms do not hire all willing workers, causing high unemployment.
Step-by-step explanation:
When there is a recessionary gap, capital and labor resources are not being fully utilized. This situation is characterized by excess supply, where the quantity supplied of labor and goods exceeds the quantity demanded at the existing wage or price. Because of this excess supply, firms cannot sell what they intend to at the existing market price, leading to undesired inventory build-up and do not wish to hire all who are willing to work at the existing market wage, leading to higher unemployment rates. This is depicted in economic models where the level of aggregate expenditure is too low for GDP to reach its full employment level, as seen in scenarios where real GDP like Eo is below potential GDP, leading to high unemployment.