Answer to Question #59603 in Macroeconomics for ali
AD: P = 90 - 3Y.
AS: P = 15.
PO: Y = 30.
What is the Inflationary Gap?
Find macroeconomic equilibrium, when total demand=total supply P=90-3Y=15 Y (actual GDP) =25 When actual GDP is below the potential GDP the economy has negative output gap, also called as recessionary gap. Inflationary Gap = Actual GDP- Potential GDP=25-30=-5 We received negative inflationary gap, also called as recessionary gap. The inflationary gap equals minus 5.