Lesson 2.5.2

2.5.2 Output gaps Quiz: Pearson Edexcel Economics, Unit 2

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson 2.5.2, Output gaps: 20 multiple choice questions for the Pearson Edexcel Economics (9EC0), Unit 2: Theme 2: The UK economy – performance and policies, written with Revision Ninja.

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The 20 questions

  1. An output gap is the difference between actual real GDP and what?

    • The trade balance
    • Potential real GDP
    • Nominal GDP
    • Gross national income

  2. What does a negative output gap indicate about an economy?

    • Spare capacity exists
    • Overheating occurs
    • High inflation persists
    • Demand exceeds supply

  3. What is the primary macroeconomic pressure caused by a positive output gap?

    • Inflationary pressure
    • Falling interest rates
    • Deflationary pressure
    • Rising unemployment

  4. On an AD/AS diagram, where is short-run equilibrium during a negative output gap?

    • Right of LRAS
    • Above the SRAS
    • Left of LRAS
    • On the LRAS

  5. On an AD/AS diagram, where does short-run equilibrium lie during a positive output gap?

    • On the LRAS
    • Right of LRAS
    • Left of LRAS
    • Below the SRAS

  6. Why are output gaps difficult for policy-makers to measure accurately?

    • Unknown inflation rates
    • Unchanged tax rates
    • Unobservable potential output
    • Unrecorded import values

  7. If actual GDP is 1,080 and potential GDP is 1,000, what is the output gap as a percentage of potential output?

    • 1.08%
    • -8%
    • 8%
    • 80%

  8. A recession leaves GDP at 950 against potential GDP of 1,000. What is the output gap as a percentage of potential?

    • 5%
    • -0.95%
    • -50%
    • -5%

  9. What usually happens to unemployment when an economy has a large negative output gap?

    • It remains unchanged
    • It reaches zero
    • It increases
    • It falls

  10. What type of macroeconomic policy is typically used to close a positive output gap?

    • Supply-side deregulation
    • Quantitative easing
    • Contractionary policy
    • Expansionary policy

  11. What short-run change is most likely to cause a positive output gap?

    • Lower consumer spending
    • Higher aggregate demand
    • Higher aggregate supply
    • Higher interest rates

  12. Why is calculating the exact size of an output gap difficult?

    • Unreliable tax receipts
    • Fluctuating exchange rates
    • Unobservable potential GDP
    • Changing inflation targets

  13. If actual output is 2,000 and potential output is 2,100, what exists?

    • Positive output gap
    • Negative output gap
    • Trade surplus
    • Balanced budget

  14. Why are output gap estimates often unreliable for macroeconomic policymaking?

    • Constant exchange rates
    • Fixed inflation targets
    • Frequent data revisions
    • Predictable consumer habits

  15. Potential output is 500 billion and actual output is 525 billion. What is the output gap as a percentage of potential output?

    • +0.05%
    • -5%
    • +25%
    • +5%

  16. Actual GDP is 1,200 and potential GDP is 1,250. What is the output gap as a percentage of potential GDP?

    • -50%
    • -0.4%
    • 4%
    • -4%

  17. What main pressure is created when a positive output gap occurs?

    • Demand-pull inflation
    • Structural unemployment
    • Cost-push deflation
    • Cyclical unemployment

  18. What type of output gap is created during an economic recession?

    • Trend output gap
    • Zero output gap
    • Negative output gap
    • Positive output gap

  19. What economic feature is measured by an output gap?

    • Budget balance size
    • Income inequality level
    • Foreign exchange reserves
    • Spare productive capacity

  20. What happens to the output gap if potential output grows while actual output remains unchanged?

    • Becomes more positive
    • Remains completely unchanged
    • Becomes more negative
    • Disappears entirely

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