In the 16th reading of the LVL 2019 curriculum, it is stated that:
“The output gap is the difference between the value of GDP estimated as if the economy were on its trend growth path (sometimes referred to as potential output) and the actual value of GDP. A positive output gap opens in times of recession or slow growth”
This would imply: Output gap = Potential Output - Actual GDP.
However, I found numerous legit sources online where output gap is defined as Actual GDP-Potential Output.
Is there a reason why CFAI has reversed the equation?
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