An inflationary gap is occurs when
A) real GDP is less than potential GDP.
B) the economy is at full employment.
C) real GDP equals potential GDP.
D) real GDP exceeds potential GDP.

Question

Quizplus · Accepted Answer

An inflationary gap occurs when real GDP exceeds potential GDP, indicating that the economy is producing beyond its sustainable capacity and leading to upward pressure on prices and inflation.

An Inflationary Gap Is Occurs When