output gap |
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Definition
The difference between the actual output (such as GDP) of an economy and the output that the economy would be at under full capacity or maximum efficiency (the potential output). A negative output gap, in which actual production is lower than efficient production, indicates that resources are not properly allocated. A positive output gap indicates that GDP is higher than what can be supported by existing labor and capital resources, and is a leading indicator of inflation.
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output gap is in the Economics, Politics, & Society subject.
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