The output gap is the difference between
A)output demand and output supply.
B)the market-clearing level of output and the actual level of output, Ym - Y*.
C)the Bank of Canada's output target and the market-clearing level of output.
D)nominal output and real output.
E)current and future total factor productivity.

Question

Quizplus · Accepted Answer

The output gap measures the difference between the actual level of output in the economy and the level of output that would exist if all resources were being used in their most efficient way, known as the market-clearing level of output. Mathematically, this can be expressed as Ym - Y*, where Ym is actual output and Y* is potential output.

The Output Gap Is the Difference Between