If output is above potential, so that $\tilde { Y } _ { t }$ is positive, the change in the inflation rate will be negative, so inflation will fall over time.

Question

If output is above potential, so that $\tilde { Y } _ { t }$  is positive, the change in the inflation rate will be negative, so inflation will fall over time.

Quizplus · Accepted Answer

When output is above potential, $\tilde { Y } _ { t }$ is positive, indicating an economy operating above its capacity, which typically leads to upward pressure on inflation, causing it to rise over time.

If Output Is Above Potential, So That Y~t\tilde { Y } _ { t }Y~t​

If Output Is Above Potential, So That $\tilde { Y } _ { t }$