recessionary gap

What Happens When Potential GDP Increases?

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What Happens When Potential GDP Increases? When potential GDP increases, aggregate supply increases and the AS curve shifts rightward. The potential GDP line also shifts rightward. Short-run aggregate supply changes and the AS curve shifts when there is a change in the money wage rate or other resource prices. Does GDP fluctuate? GDP fluctuates because

What Are The Fiscal Policy Options To Reduce An Inflationary Gap?

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What Are The Fiscal Policy Options To Reduce An Inflationary Gap? Policies that can reduce an inflationary gap include reductions in government spending, tax increases, bond and securities issues, interest rate increases, and transfer payment reductions. What is inflationary fiscal policy? Inflation is a period of rising prices. The primary policy for reducing inflation is