Final answer:
The US output gap in early 1975 was likely negative due to a protracted economic recession characterized by high unemployment rates and inflation.
Step-by-step explanation:
The question asks about the output gap in the US in early 1975. The term 'output gap' refers to the difference between the actual economic output of a country and its potential output under conditions of full employment.
In early 1975, the United States was experiencing an economic downturn, and as such, the output gap was likely negative, indicating that the economy was performing below its potential level.
This period saw a protracted recession affected by high unemployment rates and inflation, with prices increasing by more than 10 percent a year. Moreover, economic restructuring away from manufacturing and changes in economic policies also influenced the widening of the output gap in subsequent years.