Aggregate Equilibrium Flashcards
1
Q
What is Yp and Ple?
A
Real gdp equilibrium and price level equilibrium
2
Q
What is the deflationary gap?
A
This is the gap between the equilibrium and full output. Shows the size of unemployment in the economy. The economy is currently operating below the LRAS.
3
Q
What is the inflationary gap?
A
This is when the equilibrium is to the right of the LRAS. Meaning that the economy is operating beyond the LRAS.
