Answer to Question #59606 in Macroeconomics for ali
AD: P = 48 - 2Y.
AS: P = 8.
PO: Y = 16.
What is the Inflationary Gap
Find macroeconomic equilibrium, when total demand=total supply AD=AS P=48-2Y=8 Y (actual GDP) =20 When actual GDP is above the potential GDP the economy has positive output gap, also called as inflationary gap. Inflationary Gap = Actual GDP- Potential GDP=20-16=4