If you’re a macroeconomist who wants to grumble about the current state of the economy, look no farther than the inflationary gap: the hypothetical gap based on hypothetical full employment vs actual employment.
The inflationary gap is hypothetical GDP if the workforce was currently at full employment (which means everyone who wants a job has one) minus the current real GDP.
If current real GDP is higher than GDP would be at full employment, it means the gap between the two is made up of inflation. A nation’s central bank may decide to decrease the amount of money in circulation to keep that inflation in check.
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Finance: What Is a Real Return?67 Views
finance- a la shmoop. what is a real return? like is there a fake return? you
know like the news? well kinda .real return refers to an [man frowns talking to camera]
investment return mapped against inflation. so let's say you invest in a
bond that pays five percent a year for ten years and then pays you back your
principal .boring but nice- you know like a good doctor visit. your nominal return
over that period was 5% but since inflation was 3% a year during that
period on average your real return was only 2% a year- meaning that the
performance of your investment only eked out a 2% net gain against the price of [equation]
milk gas and you know knocked off iPhones. so don't be a chump who thinks
that they're making more money than they really are, and you know keep on keeping
it real. [man sitting in chair, talks to camera]
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