The output gap is the
A) difference between actual inflation and core inflation.
B) percentage deviation of real GDP from potential GDP.
C) difference in graduation levels between high school and college.
D) percentage increase in the economic growth rate of real GDP.

Question

Quizplus · Accepted Answer

The output gap is the percentage deviation of real GDP from potential GDP. It represents the difference between how much the economy is producing and how much it could potentially produce if it were operating at full capacity. A positive output gap indicates that the economy is producing more than its potential, while a negative output gap indicates that the economy is producing less than its potential.

The Output Gap Is the