The diagram below shows the economic cycle of an economy, where the dashed line represents the trend rate of economic growth (potential output) and the solid line represents actual real GDP.
Which of the following statements about the output gap at different stages of the economic cycle is correct?
At point CCC, there is a negative output gap, indicating that actual GDP is below the economy's potential output level and cyclical unemployment is high.
At point DDD, a positive output gap exists because actual real GDP is rising.
At point AAA, the economy has a negative output gap as actual GDP is at its peak.
At point BBB, a negative output gap has emerged because real GDP is falling.