AS WE KNOW THAT GDP GROWTH OF USA IS 3 PER AND INFLATION IS 7 PER IN USA THE DIFFERENCE BETWEEN GDP GROWTH AND INFLATION. IN KNOW AS INFLATIONARY GAP .
Is my assessment is right or wrong . Please justify above statement.
Please briefly explain why you feel this question should be reported.
Please briefly explain why you feel this answer should be reported.
Please briefly explain why you feel this user should be reported.
According to my knowledge your assessment is incorrect.
The difference between GDP growth and inflation is not known as an inflationary gap. An inflationary gap refers to a situation where the economy is producing above its potential output level, leading to upward pressure on prices and increasing inflation.
In your example, the United States has a GDP growth rate of 3% and an inflation rate of 7%, which means there is a negative difference of 4% between the two. This negative difference is not an inflationary gap but rather an indicator of a possible recession or economic slowdown, as the economy is not growing as fast as prices are rising.
It is important to note that inflationary gap and the difference between GDP growth and inflation are two separate economic concepts and should not be used interchangeably.