AP MacroeconomicsThe Business Cycle
Output Gap
The output gap is the difference between actual real GDP and potential real GDP.
The output gap can be positive (an inflationary gap) or negative (a recessionary gap). It represents the amount by which an economy's actual output differs from its potential output. Policymakers often try to minimize the output gap.
Interactive graph
AD/AS Model →
Drag the curves and see it for yourself.
Study module
Aggregate Demand & Supply →
Full lesson, practice questions, and flashcards.