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An expansionary gap is a negative output gap, which occurs when actual output is higher than potential output.

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16y ago

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What do you refer to when actual output is higher than potential output?

expansionary output gap has occured.


What is the definition of expansionary fiscal policy?

Expansionary fiscal policy refers to policies aimed at increasing demand and thus output. This is done by expanding/increasing government expenditure, reducing taxes or doing a bit of both.


What does a contractionary gap imply about the actual rate of unemployment relative to the natural rate of unemployment?

Assume certeris paribus, an expansionary gap is where real GDP is above the full employment, and a contractionary gap is where real GDP is below the full employment.


Why does the government sometimes use an expansionary fiscal policy?

to encourage growth and try to stop or prevent a recession


What is expansionary mode?

Expansionary mode is the growth of the economy during a recession


What word belongs to this definition move across a gap?

If it's a synaptic gap then the answer would be neurotransmitter.


How does an expansionary gap occur?

An expansionary gap occurs when an economy's actual output exceeds its potential output, typically during periods of strong economic growth. This situation arises when aggregate demand increases significantly, often due to factors like increased consumer spending, government stimulus, or investment. As businesses respond to heightened demand, they may hire more workers and increase production, leading to higher employment and output levels. However, this can also result in inflationary pressures as resources become scarce.


Why would an expansionary gap lead to a change in inflation Why would a recessionary gap lead to a change in inflation?

Assuming that the aggregate demand curve does not move, the only way for the gap to be closed is by a shift in aggregate supply. These gaps cause a change in inflation expectations, moving the AS curve left (exp) or right (rec) back to long term equilibrium and changing the inflation rate.


Who determines the expansionary period?

The fed


What is the definition of income gap?

The income gap is the gap between the rich and the poor. We call that gap the middle class.


What is the definition for Gap in math terms?

the distance between two or more numbers


Expansionary fiscal policy?

is a policy that have no demand