An inflationary gap, in economics, is the amount by which the real Gross domestic product, or real GDP, exceeds potential GDP. The real GDP is also known as GDP "adjusted for inflation", "constant prices" GDP or "constant dollar" GDP, because it measures the aggregate output in a country's income accounts in a given year, expressed in base-year prices. On the other hand, the potential GDP is the quantity of real GDP when a country's economy is at full-employment. It is one type of output gap, the other being a recessionary gap.
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