Topic Videos
Key Diagrams - The Output Gap
- Level:
- A-Level, IB
- Board:
- AQA, Edexcel, OCR, IB, Eduqas, WJEC
Last updated 31 May 2022
In this short revision video we walk through the output gap diagram.
The output gap is a measure of the difference between actual output (Y) and estimated potential output (YP).
A positive output gap means GDP is above the long term trend which might be a sign of rising inflationary pressure
A negative output gap means GDP lies below potential output – this is often the result of an economic downturn which leaves an economy with spare capacity.
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