An inflationary gap occurs when the actual level of output in an economy exceeds its potential level, leading to rising prices and increased inflation.
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Aggregate Supply: The total amount of goods and services that producers are willing and able to supply at different price levels.
Monetary Policy: Actions taken by central banks to control money supply, interest rates, and credit availability in order to influence economic conditions.
Cost-Push Inflation: A type of inflation caused by increases in production costs such as wages or raw materials.