The output gap can be used to estimate the extend to which the Fed misses its goal of

Question

Quizplus · Accepted Answer

The output gap is the difference between actual output and potential output in the economy. This means that when the output gap is positive, there is slack in the labor market, and hence maximum employment is not being attained. Thus, the output gap can be used to estimate the extent to which the Fed misses its goal of maximum employment.

The Output Gap Can Be Used to Estimate the Extend