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    Inflationary and Recessionary Gaps

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    Dear OTA: Could you please explain the following to me. I am struggling with economics. Thanks

    ***Please compare and contrast the concepts of inflationary and recessionary gaps.

    ***Please discuss the effects of an increase and decrease in productivity on aggregate supply.

    Thank you

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    inflationary and recessionary gaps and aggregate supply
    Dear OTA: Could you please explain the following to me. I am struggling with economics. Thanks

    ***Please compare and contrast the concepts of inflationary and recessionary gaps.
    Inflationary gap refers to the sum by which the aggregate expenditure schedule must move downwards to decrease the GDP to equilibrium. When the aggregate demand is greater than the economy's capacity, there is an inflationary gap.. In this time it is expected that there will be increasing inflation and a deteriorating trade situation. In such cases the economy has been growing leading to an escalation of inflationary pressure with an increase in demand. Inflationary gaps happen when the economy has expanded for some time because of the high levels of ...

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