Question

the fact that output gaps will not last indefinitely, but will be closed by rising or falling prices is the economy's:

Answer 1

The economy's self-correcting property is the fact that output gaps won't last indefinitely, but will be closed by rising or falling prices.

The output gap is the difference, expressed as a percentage of gross domestic product, between an economy's actual output and its highest potential output. An output gap can be either favorable or negative for a nation.

A negative output gap indicates that the economy's actual output is below its maximum capacity, whereas a positive output gap indicates that the economy is beating expectations because its actual output is higher than its acknowledged maximum output. The output gap helps paint a picture of how the economy is doing because the gross domestic product is used in its computation.

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