understanding financial jargon
The output gap is the difference between the actual output of an economy (or its Gross Domestic Product) and the potential output if all industries and their resources were fully employed at optimum efficiency. The output gap can be either positive, when all economic resources are working harder than they should be, or negative when the economy has some slack and could produce more. With a positive gap there is the risk of inflation, and with a negative gap there is the risk of deflation, since demand is less than optimum, and businesses will start 'moth-balling' their un-required resources.
What to do if you need more help
If you need more help with your specific commercial loan, mortgage or insurance requirement please speak to a professional financial adviser.
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