Economics · Macroeconomics
The output gap is defined as (Actual Output - Potential Output). A positive output gap implies that:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Investment exceeds savings creating an equilibrium gap
- 2The economy is in a recession with rising unemployment
- 3The economy is producing above its potential, causing inflationary pressure✓
- 4The economy is producing below its potential, causing deflation
Correct answer
The economy is producing above its potential, causing inflationary pressure
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