Question

When the current state of the economy is such that Real GDP is greater than Natural Real GDP, the economy is in a(n) ____________________ gap. In this situation, the (actual) unemployment rate is ___________ than the natural unemployment rate, and there is a ________________ in the labor market. Question 3 options: recessionary; greater; shortage inflationary; less; shortage inflationary; greater; surplus recessionary; greater; surplus recessionary; less; shortage

Answer 1

inflationary; less; shortage.

Step-by-step explanation:

A country's economy is said to be experiencing inflationary gap, when the current state of the economy is such that Real Gross Domestic Products (GDP) is greater than the Natural Real Gross Domestic Products (GDP). Under this condition, the (actual) unemployment rate is less than the natural unemployment rate, and there is a shortage in the labor market.

Hence, an inflationary gap, also known as the expansionary gap in economics is used to measure the difference between the gross domestic product (GDP) and the current level of Real Gross Domestic Products that exists when a country's economy is gauged at a full employment rate. This eventually causes the price of goods and services to go up with a low income level among the people living in the country.