Wize University Macroeconomics Textbook > Aggregate Demand and Supply

Output Gaps (Economic Fluctuations)

Output Gaps (Economic Fluctuations)

Automatic (Self) Adjustment to a Recessionary Gap

Image illustrating Output Gaps (Economic Fluctuations)

\boxed{\text{Output Gap = Y - Yc* }}

In a recessionary gap there is an excess ________ of labor.
In the long run, workers are willing to work for ________ so wages ________
AS shifts to the ________ . The output ________ and price level

Automatic (Self) Adjustment to an Inflationary Gap

Image illustrating Output Gaps (Economic Fluctuations)

In an inflationary gap there is an excess ________ for labor.
Wages ________
AS shifts to the ________ . The output ________ and price level ________.