Negative output gap
What Negative output gap means in Economics A-Level, as defined for AQA.
Definitions of Negative output gap
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Reference: AQA
Occurs when actual real GDP falls below the economy's productive potential, typically during a recession, indicating spare capacity with under-utilised resources, cyclical unemployment and downward pressure on prices.
An intersection below the full employment level of output on a Keynesian LRAS curve, where the economy is in equilibrium but experiencing cyclical unemployment.
A situation created when an economy reaches equilibrium below full employment, with idle resources such as cyclical unemployment.
A situation where actual GDP is less than potential GDP, indicating spare capacity in the economy.
Occurs when actual GDP is below potential GDP, indicating spare capacity in the economy.
Topics that use Negative output gap
- Aggregate demand and aggregate supply analysis (AQA A-Level)
- Economic growth and the economic cycle (AQA A-Level)
- Employment and unemployment (AQA A-Level)
- Possible conflicts between macroeconomic policy objectives (AQA A-Level)
- The circular flow of income (AQA A-Level)
Related terms
- Macroeconomic performance
- Supply-side policies
- Aggregate demand
- Aggregate supply
- Cyclical unemployment
- Economic growth
- Inflationary pressures
- Living standards
Using Negative output gap in the exam
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