Defining $Y _ { t }$ as current output, $$\bar { Y } _ { t }$$ as potential output, and $\tilde { Y } _ { t }$ as short-run fluctuations, the equation $\tilde { Y } _ { t } = \left( Y _ { t } - \bar { Y } _ { t } \right) / \bar { Y } _ { t }$ is defined as the percentage deviation of current output from potential output.

Question

Defining $Y _ { t }$   as current output, $$\bar { Y } _ { t }$$ as potential output, and $\tilde { Y } _ { t }$  as short-run fluctuations, the equation $\tilde { Y } _ { t } = \left( Y _ { t } - \bar { Y } _ { t } \right) / \bar { Y } _ { t }$  is defined as the percentage deviation of current output from potential output.

Quizplus · Accepted Answer

The equation $\tilde { Y } _ { t } = \left( Y _ { t } - \bar { Y } _ { t } \right) / \bar { Y } _ { t }$ calculates the percentage deviation of current output from potential output by expressing the difference as a fraction of potential output.

Defining YtY _ { t }Yt​ As Current Output Yˉt\bar { Y } _ { t }Yˉt​

Defining $Y _ { t }$ As Current Output $\bar { Y } _ { t }$