Principles of Macroeconomics / Unit 8 MAC 0724 short lesson, about 20 seconds
Self-Correction
Captions available
The idea
Gaps close on their own eventually. In a recessionary gap wages fall, so short-run supply shifts right until output returns to potential. An inflationary gap works in reverse.
In practice
The mechanism is the labor market: the real wage returns toward natural employment.
Where people slip
Eventually is doing heavy work there, and unit ten takes the sequence apart step by step.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
Something wrong in this lesson? Flag it · Sources for Principles of Macroeconomics