2.5.2- Output Gaps Flashcards
1
Q
What is an output gap?
A
The difference between the actual level of gdp and the estimated long term value of GDP
2
Q
What is long run trend rate of growth?
A
The average sustainable rate of economic growth over a period of time
3
Q
Why are output gaps difficult to measure?
A
The position of LRAS is unknown and initial estimates of real GDP are often inaccurate
