If real GDP is $200 billion but potential GDP is $260 billion, there is an inflationary gap of $60 billion.

Name: If real GDP is $200 billion but potential GDP is $260 billion, there is an inflationary gap of $60 billion.
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An inflationary gap occurs when real GDP exceeds potential GDP, not the other way around. Therefore, if real GDP is $200 billion but potential GDP is $260 billion, there is actually a recessionary gap of $60 billion ($260 billion - $200 billion).

If Real GDP Is $200 Billion but Potential GDP Is