Output Gaps Flashcards
1
Q
What is a positive output gap?
A
This is when more is being demanded than can be produced, this is caused on the diagram by a right shift in AD and no movements in supply. Prices will rise (inflation)
What is a positive output gap?
This is when more is being demanded than can be produced, this is caused on the diagram by a right shift in AD and no movements in supply. Prices will rise (inflation)