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Actual output vs potential output

Actual output vs potential output

An output gap compares actual real GDP with potential output, not just whether GDP is rising or falling. Actual real GDP is inflation-adjusted output now, while potential output Y∗Y^*Y∗ is the level the economy can sustain without accelerating inflation.

2.5.2 Output gaps Lesson

  1. A Level
  2. /Economics
  3. /2.5.2 Output gaps