Answer to Question #312324 in Macroeconomics for Turkee

Question

is the economy experiencing a recessionary out gap of inflationary output gap?

Answer 1

Q312324

is the economy experiencing a recessionary out gap of inflationary output gap?

Answer

Yes. A recessionary out gap corresponds to a positive GDP gap where actual GDP is less than potential, while an inflationary output gap corresponds to a negative GDP gap where actual GDP is greater than potential.

• An inflationary gap measures the difference between the actual real gross domestic product (GDP) and the GDP of an economy at full employment while recessionary out gap occurs when a country's real GDP is lower than its GDP if the economy was operating at full employment.