The output gap is positive when:
A)monetary policy actions exceed fiscal policy actions.
B)actual GDP surpasses potential GDP.
C)actual GDP is lower than potential GDP.
D)potential GDP meets actual GDP.

Question

Quizplus · Accepted Answer

The output gap is the difference between actual GDP and potential GDP. A positive output gap occurs when actual GDP surpasses potential GDP, which means that the economy is producing more than its long-term potential.

The Output Gap Is Positive When