An inflationary output gap is defined to be when the current level of output is:
A) below full employment GDP.
B) above full employment GDP.
C) equivalent to full employment GDP.
D) high enough to cause an unexpected amount of inflation.

Question

Quizplus · Accepted Answer

An inflationary output gap is when the current level of output is above full employment GDP. This means that the economy is producing more than its potential, which can put upward pressure on prices and cause inflation.

An Inflationary Output Gap Is Defined to Be When the Current