When actual output equals potential output, there is ______ output gap and the inflation rate will ____.
A)an expansionary; exceed the expected rate of inflation
B)an expansionary; be lower than the expected rate of inflation
C)no; be equal to the expected rate of inflation
D)a recessionary; exceed the expected rate of inflation

Question

Quizplus · Accepted Answer

When actual output equals potential output, there is no output gap, and the inflation rate will be stable, equating to the expected rate of inflation.

When Actual Output Equals Potential Output, There Is ______ Output