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An economy producing below potential output is considered to be operating in a(n) ______ gap.

-recessionary
-inflationary
-expansionary
-concessionary

User Zhrist
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Final answer:

An economy producing below potential output is considered to be operating in a recessionary gap. This leads to high unemployment and reflects an underutilization of resources in the economy.

Step-by-step explanation:

In a Keynesian cross diagram, when an economy is producing below potential output, it is considered to be operating in a recessionary gap. A recessionary gap refers to a situation where the equilibrium level of real GDP is below the potential GDP. This leads to high unemployment and reflects an underutilization of resources in the economy.

User ImDarrenG
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