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Sagot :
The gap between real GDP and potential GDP is the output gap. When real GDP exceeds potential GDP, the output gap is called an inflationary gap.
Real GDP is a degree of a country's gross domestic product that has been adjusted for inflation. contrast this with nominal GDP, which measures GDP using current expenses, without adjusting for inflation.
Potential GDP is a theoretical construct, an estimate of the value of the output that the financial system could have produced if hard work and capital had been employed at their maximum sustainable charges—that is, quotes which are regular with constant increase and stable inflation.
An inflationary gap measures the difference between the present day level of real GDP and the GDP that would exist if an economic system turned into running at full employment. For the space to be taken into consideration inflationary, the current real GDP should be higher than the potential GDP.
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