When the output gap is positive, it represents___________ gap, and when it is negative, it represents___________ gap.
A) an employment;an unemployment
B) an inflationary; an employment
C) an inflationary;a recessionary
D) a recessionary; an inflationary

Question

Quizplus · Accepted Answer

A positive output gap means that the economy is producing above its potential, which can lead to inflationary pressures. Conversely, a negative output gap means that the economy is below its potential, which can lead to a recessionary gap where unemployment is high.

When the Output Gap Is Positive, It Represents___________ Gap, and When