In January 2020, the Bank of Canada released its Monetary Policy Report and reported that its latest measures of the output gap (the difference between actual output and the maximum potential output) indicated a small amount of economic slack. What type of output gap does this refer to? For this type of output gap what do you think would be happening to the following macroeconomic variables: (1) the unemployment rate, (2) wages and (3) the inflation rate? In the last six months, what changes do you think have occurred to the output gap? 

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The output gap referred to in this scenario is a positive output gap meaning actual output is slig... View the full answer