RECESSIONARY 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 less than full-employment real production. A recessionary gap, also termed a contractionary gap, is associated with a business-cycle contraction. This is one of two alternative output gaps that can occur when short-run production differs from full employment. The other is an inflationary gap. See also | short-run aggregate market | short-run equilibrium | macroeconomics | full-employment real production | price level | recession | contraction | business cycle | unemployment | output gaps | inflationary gap |
