When the macroeconomic equilibrium is such that real GDP exceeds potential real GDP, the economy is suffering from ________, and the government policy to eliminate this gap will ________ real GDP and ________ the price level.?
Base on my research, the gap that is stated in the problem is the inflationary gap. This is the amount of the real GDP go beyond potential full-employment GDP. Upon eliminating this gap the government forms a policy that will allow the potential GDP to be equal to the real GDP and higher the price level.
