12-22-2004, 02:33 PM
in the case of inflationary gap, the real national income does not change and thus the change in real national income is zero, leaving price levels as the only means for measure of inflationary gap.
in the case of deflationary gap, i am also confused because there is also a difference b/w national income at full employment and the equilibrium national income in addition to a difference in price levels.
i am trying to study from study text and samuelson. i also check with haleem khwaja for help on presentation.
if u get more info on this topic, plz do post it here.
moreover, we measure inflation as a %age change in CPI and CPI is a measure of price levels. -ve inflation is deflation.
Regards,
Ice Blue
