1.4 Interaction of AS and AD Flashcards
1
Q
Define negative output gap
A
Where actual output is lower than potential output
2
Q
Define positive output gap
A
Where actual output is greater than the potential output (only be reached in SR)
3
Q
Where does equilibrium occur
A
where AD meets AS
4
Q
What is an increase in LRAS known as
A
cost-push inflation
5
Q
What is an increase in AD known as
A
demand-pull inflation
