A point (representing the state of the economy) between the institutional PPF and the physical PPF means that we are in a

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First, let's restate the question and the options to ensure understanding.
Question: A point between the institutional PPF and the physical PPF means that we are in a
Options: recessionary gap; inflationary gap; long run equilibrium.
Now, evaluate each option one by one. 
Option 1: recessionary gap. If the economy’s actual output lies between the institutional (perhaps lower, constraint-driven) PPF and the physical (higher-capacity) PPF, this suggests resources are not being used fully relative to potential output under optimal conditions. In classic terms, a recessionary gap occurs when actual output is below the full-employment (potential) level, indicating underutilized resources. Therefore, being between the two PPFs aligns with underutilization, consistent with a recessionary gap. 
Option 2: inflationary gap. An inflationary gap corresponds to output exceeding the economy’s potential, typically represented as actual output above the full-employment PPF. Since the point described is between two bounds with underuse rather than excess capacity, this option does not fit. 
Option 3: long run equilibrium. Long-run equilibrium usually sits on the production possibilities frontier corresponding to full employment and optimal use of resources. A point between two PPFs, indicating underutilization, would not generally be characterized as a long-run equilibrium. 
To summarize the reasoning for why the other options mismatch: the inflationary gap implies over-utilization of resources beyond potential, which is not suggested by being between the two PPFs; long-run equilibrium implies on or at potential output with efficient resource use, not between bounds indicating underuse.
Therefore, the most consistent interpretation is that the point represents a recessionary gap, reflecting underutilized resources relative to potential.

Princip of Econ-Macroeconomics Chapter 9 Homework

A point (representing the state of the economy) between the institutional PPF and the physical PPF means that we are in a

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