Question

Inflationary gap and deflationary gap

Answer 1

Inflationary gap -
the amount by which the actual aggregate demand exceeds aggregate supply at level of employment .

Deflationary gap -
the difference between potential output at full level of employment and the actual level of output of the economy .

this comes with unemployment and low level of output

Answer 2

Answer:

Deflationar gap is the shortfall in AD from the level required to maintain full employment in the economy.

Inflationary gap is the excess of AD over and above its level required to maintain full employment equilibrium in the economy

Explanation: