Principles of Macroeconomics / Unit 9 MAC 0830 short lesson, about 20 seconds
The Two Gaps, Measured
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The idea
Unit eight named the two gaps. Here they are distances. A recessionary gap is equilibrium output below potential GDP; an inflationary gap is output above it.
In practice
With equilibrium at 6,750 and potential at 7,000, the recessionary gap is 250 billion.
Where people slip
The gap is the distance in output, not the policy needed to close it.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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