Defining Yt as current output,
as potential output,and
as short-run fluctuations,the equation
is defined as the percentage deviation of current output from potential output.

Question

Defining Yt as current output,  
as potential output,and  
as short-run fluctuations,the equation  
is defined as the percentage deviation of current output from potential output.

Quizplus · Accepted Answer

The equation defined is the output gap, which measures the difference between current output and potential output as a percentage of potential output.

Defining Yt as Current Output