Calculating the Size of a Contractionary Gap


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question 1 of 3

What is the size of this contractionary gap?

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1. What is a contractionary gap?

2. What is potential output?

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About This Quiz & Worksheet

The questions on this quiz and worksheet are all in multiple-choice format, and one gives you a practice problem to solve about finding the size of the contractionary gap. You'll also need to understand related terminology, like potential output.

Quiz & Worksheet Goals

Challenge yourself with questions on the following:

  • How to calculate the size of a contractionary gap in a given problem
  • The definition of 'contractionary gap'
  • What 'potential output' means
  • The benefit of a contractionary gap
  • What it's called when the AD, SRAS and LRAS are in particular positions

Skills Practiced

  • Reading comprehension - ensure that you draw the most important information from the related lesson on calculating the contractionary gap size
  • Interpreting information - verify that you can read information regarding the silver lining to a contractionary gap and interpret it correctly
  • Problem solving - calculate the contractionary gap in a sample problem

Additional Learning

The associated lesson, Calculating the Size of a Contractionary Gap, provides further details. This lesson covers the following topics:

  • Economic potential vs. output
  • GDP
  • LRAS, SRAS and AD
  • Graphs of the contractionary gap