If the adjustment process that eventually eliminates output gaps works very slowly, so that actual output differs from potential output for protracted periods of time, then active:

Question

Quizplus · Accepted Answer

Monetary policy can help stabilize output and inflation by adjusting interest rates and influencing the money supply, which can help bring actual output closer to potential output over time, especially when the adjustment process is slow.

If the Adjustment Process That Eventually Eliminates Output Gaps Works