A recessionary gap develops:

A) when actual output exceeds potential output.
B) when resource prices are "sticky" upward.
C) only when the economy is in recession.
D) only when GDP grows by more than 4 percent.
E) only when unemployment exceeds its natural rate.

Recessionary Gap

A situation where an economy's actual production is less than its potential output, often leading to unemployment and underused resources.

Potential Output

The level of productivity an economy can achieve with full employment and resources utilization, without causing inflation.

Natural Rate

The Natural Rate often refers to the natural rate of unemployment, where the unemployment rate is at a level expected in a fully efficient market without cyclical or short-term unemployment.