2.5.2 Output gaps Flashcards
1
Q
Long term growth trend rate
A
The average sustainable rate of growth over a period of time. ->Relatively stable
1
Q
Actual growth trend rate
A
The annual percentage increase in real GDP.
-> Highly volatile
2
Q
Output gap
A
Difference between the actual level of GDP and the
estimated potential.
3
Q
Positive output gap
A
Actual GDP exceeds potential GDP
-> Some resources are working above usual capacity (e.g. overtime, or extrashifts)
4
Q
Negative output gap
A
Actual GDP is below potential GDP
-> Economy is Underutilizating resources
5
Q
Difficulties of measurement:
A
