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Theme 2
2.5: Economic Growth
2.5.2: Output gaps
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Created by
Kendrick Lamar
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Cards (8)
Positive
output gap: Where actual GDP is above potential GDP
Negate output gap: Where
actual
GDP is
below
potential
GDP
A
negative
output gap suggests that there is some spare
capacity
in the economy
A
positive
output gap suggests that resources in the economy are
under strain
, as the economy is operating above full capacity
Sustainable growth
: Growth that can be continued into the
long
run
Inclusive growth: Growth where all people experience an increase in
income
and living
standard
Reason the output gap is difficult to measure: Potential
output
cannot be measured exactly
Reason
the output gap is difficult to measure: Factors like technological advancement change the gap