The inflationary GDP gap differs from the AD excess when

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The inflationary GDP gap occurs when the economy is producing at a level above its potential GDP, which typically results in upward pressure on prices. This differs from the AD excess, which occurs when aggregate demand exceeds potential GDP, and can be caused by a variety of factors including changes in autonomous spending or the multiplier effect. However, in both cases, the slope of the aggregate supply curve is an important factor that affects the extent to which the gap can be closed through changes in output and employment. If the aggregate supply curve is upward-sloping, then attempts to close the gap by increasing output may be limited by inflationary pressures, whereas if the curve is horizontal, then there may be no limit to the increase in output that can be achieved without causing inflation. The time lag in the implementation of fiscal policy is a related factor that can affect both the inflationary GDP gap and the AD excess, as delays in implementing policy can lead to increased uncertainty and reduce the effectiveness of policy responses.

The Inflationary GDP Gap Differs from the AD Excess When