2.5.2 Output gaps

Question 1

Negative output gaps

Answer 1

an economy has a large amount of spare productive capacity. when actual GDP is below estimated potential GDP

Question 2

Output gap

Answer 2

Difference between actual and potential national output

Question 3

Positive output gap

Answer 3

means that an economy is working beyond its normal productive capacity

Question 4

Trend growth

Answer 4

The long run average growth rate - mainly determined by changes in the stock of available factor inputs and also improvements in productivity