EXPANSIONARY GAP: The difference between the equilibrium real production achieved in the short-run aggregate market and full-employment real production the occurs when short-run equilibrium real production is more than full-employment real production. An expansionary gap, also termed an inflationary gap, is associated with a business-cycle expansion, especially the latter stages of an expansion. This is one of two alternative output gaps that can occur when short-run production differs from full employment. The other is a contractionary gap. See also | aggregate market | short-run aggregate market | full employment | full-employment real production | real production | inflationary gap | recessionary gap | business cycle | inflation | expansion | self correction |
