In macroeconomics,the "output gap" is the difference between
A)output in the current year and output in the base year.
B)output and employment.
C)potential real national income and actual real national income.
D)real GNP and real GDP.
E)real and nominal national income.

Question

Quizplus · Accepted Answer

The output gap is the difference between potential or full employment output and actual output in the economy. It measures the extent to which an economy is operating below its potential capacity. Potential real national income refers to the maximum level of output that an economy can produce with its available resources and technology. Actual real national income, on the other hand, is the actual level of output produced in the economy. Therefore, the output gap is the difference between these two measures, i.e., potential real national income minus actual real national income.

In Macroeconomics,the "Output Gap" Is the Difference Between