Asked by Desirea Moore on May 31, 2024
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Is this an inflationary gap or a recessionary gap?
Inflationary Gap
The difference between the actual output of an economy and the output it would produce without inflation, indicating an overheated economy.
Recessionary Gap
A situation where the real GDP is lower than the potential GDP at full employment, indicating underutilized resources.
- Identify the distinctions between inflationary and recessionary gaps and understand their effects on the economy.
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Learning Objectives
- Identify the distinctions between inflationary and recessionary gaps and understand their effects on the economy.