OUTPUT GAPS: Recessionary and inflationary gaps created by differences between equilibrium real production achieved in the short-run aggregate market and full-employment real production. A recessionary gap occurs if short-run equilibrium real production is less than full-employment real production. An inflationary gap results if short-run real equilibrium production is greater than full-employment real production. See also | recessionary gap | inflationary gap | full employment | real production | short-run aggregate market | inflation | unemployment | business cycle | contraction | expansion |
