The amount by which the equilibrium level of real GDP exceeds the long-run equilibrium level as given by LRAS is referred to as

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The amount by which the equilibrium level of real GDP exceeds the long-run equilibrium level as given by LRAS is referred to as an inflationary gap. It represents an overheating of the economy, leading to higher demand, increased prices, and inflation. To address this issue, policymakers usually implement contractionary monetary or fiscal policies to decrease aggregate demand and reduce inflationary pressures.

The Amount by Which the Equilibrium Level of Real GDP