The language of output gaps - recessionary gaps and inflationary gaps -
A) applies only to outcomes of demand shocks.
B) applies only to outcomes of supply shocks.
C) applies to outcomes of both demand shocks and supply shocks.
D) does not apply to outcomes of demand shocks or supply shocks.
E) applies only to economic growth.

Question

Quizplus · Accepted Answer

Output gaps, such as recessionary and inflationary gaps, are primarily associated with demand shocks, as they reflect the difference between actual and potential output due to changes in aggregate demand.

The Language of Output Gaps - Recessionary Gaps and Inflationary