When no output gap exists actual output ________ potential output and the rate of inflation will tend to ________.
A)exceeds; increase
B)exceeds; decrease
C)is less than; decrease
D)equals; remain the same

Question

Quizplus · Accepted Answer

If there is no output gap, the economy is at full-employment equilibrium. In this case there is no tendency for the price level to change but rather to remaining roughly the same.

When No Output Gap Exists Actual Output ________ Potential Output