Hello, miss you doing great. You're okay. You seem a bit harassed. You're right. Yeah, Yeah. Good, good, good, good, good, good. Okay. Ready from for some elastics? Let's go. Let's go. Let's find them. Do you remember where we got up to? We haven't done that one. We haven't done tei know that. Yeah, but about that, I want to know about the another one or for that of another topic is the actual and potential economic growth and the output gap. Okay, hold on. I'll see if I can find anything on questions. Do you want to go through the topic, the output gap, or you want to go through questions on it? Actually, at first to me, I want to I want to know some something. Maybe I want to know the definition about the potential and and actual economic growth and emoabout how it can use. How we use it. Yeah how we use it. And the question. Okay, so what do you know? What do you know at the moment or nothing? Nothing okay. Okay. So an output gap is the difference between an economy's actual output and its potential output. Okay. So what do you think the actual output is? Actual output the actual output. Is that a real output? Yeah, this is the actual output is the. So the actual GDP, okay, so if we look at the output of China, the actual output is whatever it is, however many billion or whatever it is, trillion. You know if we look at the GDP of Canada, this is its actual output. What is it actually at the moment? Okay. And then what do you think its potential output is? For what actual output that is a real potential output. So first, if the actual output is output is has now what it is producing real GDP. So is that not producing GDP? Yeah, kind of what's the potential? If you say something's got potential, it's kind of what it could be. So it's kind the potential output definition yeis this. And this is the key point for capacity. Potential output is a maximum sustainable level of goods and services and economy can produce with its available resources, labor, capital, technology and full capacity. So I'm not understand. Yeah, you are. Yeah, you are this one. Because these points you are on the ppf. Yeah. This one. You're possibly here. Why? Because actually you are not using all of your land, labor, capital and technology at full capacity. So there might be people unemployed, there might be technology that's not being used, there might be land that's not being utilized. Okay? So you are not operating at your full capacity. Your potential output is what an economy could achieve at full capacity. So. At full capacity that in the in the maximum value of capacity. So in this one, the potential output is that means moving upkward is like a ppf. It will moving upward. And there's another point. It could be no, the potential Yeah the potential output is what it could be. Yes, Yeah it could be that the potential output, you're right, could be shown us you know here. And if they used everything properly, they could then reach that potential output. Yeah. Yeah. So I mean, if you put numbers to it, we let's just say a very small economy, you've got their GDP is 1 million pounds a year and the potential GDP is 1000200 zero a year, then the output gap is Yeah the output gap is 200000. Yeah. The difference between what we could potentially get and what we're currently getting is the output gap. No. Is that the maximum? The maximum is 1000 thousand 1 million. Is that Yeah maybe that is Yeah, Yeah, Yeah. The maximum would be if that is 1 million. So if that is 1 million, and so but it can be produced in. Well it will now it will be produced in 11.2 million. So the potential output is the two it is 200000. Yeah, no, not the potential output. The output gap is 200000. You're exactly right. The output gap, the difference between them is 200000. So this is what we are now 200. So Yeah, that so the potential is that Yeah, a full comity. Yeah. So the bit we are missing, the difference between the two numbers is that and that's what's called the output gap. 啊。Right. Okay, a different one. Different one. So we have an economy. Yeah, I got it. Yeah, Yeah, Yeah, I got it. I think maybe that is the potential in economic growth or actual economic growth. And now I know that that is an output gap. So Yeah, I understand that. So now the actual output is that in fact we can produce 1 million, but we can but the potential output maximum level of oil. But now about let me say again, firstly it is produce firstly we now we can produce 1 million but in fact the maximum I mean our limitation is our maximum value is 1.2 million. So the difference of them is output gap is 200000 over. Exactly perfect. Absolutely perfect. Yeah. So it's just the difference between where we are now and what we could possibly be. You've then got negative output gap which we have here. This is where actual output is less than potential output. Pardon, so hang on. So you have one of the things you have is you have a negative output gap. Okay? So this is where actual output this one output now is less than potential output is less than this one which is what we've got here. So that what this indicates. So that means in fact we can produce 1.2 million but our maximum value is 1 million. Is that possible? No, no, no, no, that's no. This is the one negative output gap is what the example we've got here. Our actual output is 1 million. And our potential output is 1.2 million. And we're saying that 1 million is less than 1.2. And that's what scenario we have here is called the negative output gap. So there's an output gap, but this is a negative. It indicates that we have spare resources, spare capacity. We're not using everything we could have. High unemployment, low inflation, may, and it often occurs during recessions. Okay. So this scenario is called a negative output gap. What we are currently doing is less than what we could potentially do. So is opening for efficient capacity with stable prices, but often across during recessions of weak growth period. Growth period period, period just means time over a set third. So basically, our economy is not growing. It's likely that it's not growing. So not growing. The. But now the extra output is more than potential output. Ts is the fact value is over the maximum value. No, not in this one. No, it's the other way round. The actual output is less than potential output. It's this exact scenario we've shown here. Extra output is less than potential output. Extra output is less than potential output. This is now. This is now can't right this is now okay, let me see again. Yeah so first stly is a positive output gap is that that is we can beyond owned the regulation and assessment of our value in the textbook. But now the negative output is that we haven't beyond it the maximum value. We are still below in maximum value and zero output gap is that boom, they are equal. Our our fact value is equal to our maximum. And the positive output gap, you're right, is where the actual output is bigger than potential output. Now in theory, that shouldn't be able to happen. It's a lot rarer, but this is where it's working above what is sustainable. So it's it's overheating, okay? You can't do it long term. It is not able to continue. Long term. So positive output is actual as bigger than potential, which seems crazy, doesn't make a lot of sense in your head. Is there any difference? Yeah, you're right. Positive output. Okay, Hanon, let's write it in a wait. Can you scroll why this won't is? Let me scroll down. I want to scroll down. Can you scroll it so that the chalkboards like this all disapppears up? No, no, no, I can't. Why is it not letting us do it? Then why is that gone? Normally we can scroll it, can't you? And you can just like so maybe maybe I got it for that. So firstly, that is the ppf surpoint. This point this point is negative output gap because it doesn't reach the maximum value. And this one is their output. They try their best. And this one is the shift to the to upkward to use ppf and this one that will lead to the positive output gap. And the output gap is between this one, the this value and the maximum value is this value? Yeah over yes. Yeah, it's just a way of saying is the economy performing well? Is the economy performing badly? You and most economies are in this section. Why? In this this section one because why most economies are negative and I would just say this is your reason again their highest the maximum value because maybe is that because of they cannot working if 20 47Yeah I mean that's one other thing but but I would say not working 20 47 would be not sustainable so it probably not the working 20 47 but think about workers what do we always have in an economy or what always seems to be the case and when you look at these models they don't account for. Does everybody work like they should? So that will open a course during recessions of a weak growth period by employment and low inflation and deflation. I not understand for this why most country has seloutput gap because there will always be under utilized resources. There will always be or most often than not, resources that are not used. Think about remember, we talked about different types of unemployment. Can you remember seasonal and frictional and all those sort of other types of unemployment? And if you've got if you've got people unemployed, you're not at your actual your capacity, are you? Because you're not using those resources those people aren't working so this some people are not working Oh Yeah maybe Yeah Yeah Yeah Yeah maybe because some so these factors is that most the country has most of country have has disease earthquake or like that or or maybe Yeah especially for Japan Yeah especially for Japan already as quick Yeah Yeah anything like that would mean that and examine maybe some maybe Yeah maybe some resources can. Are still not finding or cannot use or negative value. Oh Yeah. Yeah, good. Is there anything else you want to do on output? Gaare you happy with what it is? But is there anything else you want to do on negative output gap for you? I want to I want to know more for firstly, I want to know the definition of actual and potential economic growth, and then I can do the output gap question extra and potential economic growth or potential output or potential economic growth. Is this one. Potential economic growth and actual economic growth is any difference miss economic growth or economic output? Because then output gaps about output, not growth. Do you want growth or output? Gross why tell me what the question is? Are you sure you don't want economic output if it's about the output gap? The definition for the economic growth, but for no, no, no, not for economic growth. See that that is. Before breathe that. That is for the extra and potential economic growth. But I'm not understand now I'm not understand when it is actual, when it is potential. Oh, when it's potential economic growth and when it's extra economic growth, Yeah imagine ing it's four times a year. Okay, okay, okay. It's only because we were talking about. This and this isn't economic growth that I was kind of like right okay let me just open a word document so I can write on it because otherwise we're gonna to be writing all over where's the thing I had open we've run out of space actually I'll just change color and should be right hide it right of the bond okay so extra economic growth is just additional economic growth any additional economic growth? Potential economic growth is what you could get potential is how much you could grow. So potential economic growth is let me find a nice one. Okay, so potential economic growth is the maximum, okay? The potential is all about the highest rate you could get to the maximum. Yeah extra economic growth is just any increase in economic growth from where you are to somewhere else. So if there was extra economic growth, it's just the difference between a and b, it's that extra growth. But the potential is what is the maximum you can get to? So for example, if we were looking at a ppf, right, okay, this is where we are. Let's assume this is the potential. This is the maximum we could get to. That's our maximum where everythingfully employed. Well, extra economic growth might just be the movement from the light blue to here. It's just any increase. Extra economic growth is just any increase and the potential is the maximum. All resources ency fully and efficiency employed. So I say that if all if all resources are fully used, the GDP increase, that increase is increasing and that is the potential economic growth. Is that the potential economic growth? Yeah. Yeah, the potential Yeah, the potential Yeah the extra is just any increase. It doesn't have to get to the potential. Extra tras just a little bit more than where you are now. Little bit, a little bit more than where you are now. So potential, obviously, verpotential economic growth is the maximum rate, and economic can suit, can able, can increase its output, output GDP earlier GDP increase is GDP when all resources increases, all GDP all increasand subability. So that is the maximum increasing rate of GDP when all resources are fully employed. Yes. So the maximum rate, the maximum rate is the greatest speed of increasing GDP. Okay. And an canomic growth? Yes. And extra economic growth is just here I am now. And actually, it could just be a small increase. It's just a bit extra. It's not being necessarily at its maximum rate. It's just any extra increase. So your but listen listen your potential in maths is to do a degree in maths. That's your potential. That's your potential maths growth. Yeah that's your highest rate. Let's just pretend your highest rate is to do a degree in maths. But any extra that you become better at maths isn't meaning you go from where you are now straight to your potential. It's just you moving a little bit that's extra growth and the potential is where you can get to at the top. Okay let I want a mess okay function is about ads Yeah so the top one is the potential is the potential economic growth is the maximum value it can get over. Yeah. Yeah the maximum that you could achieve and anything before that is just growth, but it's not you're not at the maximum, you're not at the potential. Okay. Is that okay? Yeah the maximum rate Yeah the maximum rate of increasing GDP R Yeah potential Yeah what is the best you can be basically Yeah. Oh, got it. All right, if you got that on a screenshot or anything, it's a bit of a mess. Sorry. Yeah. So the top one is not the maximum value, that is the maximum speed. Well, the output gap is about value and the growth is about speed. Yeah Yeah so just because you are asking about growth, which isn't necessarily the output gap, if you see what I mean, they're two different things. Yeah Yeah, I got it. So how about the extra economic growth? That's just any growth. You're well extra. Here you are. Here's your economic growth and you're gonna to do extra. You're going to do a bit more. So itbe like you doing extra homework. You've done a bit more than you were doing now. Yeah, I'm not here. Okay. So actual economic growth is Additionally greater is the greater rate and economic can subincrease its output when all resources body and efficiency. And so greater greater increase the rate greater increasing rate of GDP over Yeah Yeah but it isn't where everything is fully used. It's just it's being used better or it's being used a little bit more. It's being you know growth is happening a bit faster. Because remember, the potential is your highest point. Yeah. So Yeah got it has a greater speed the greater the greater increasing rate of GDP. It is greater than now over yes, perfect. Yeah is there anything else you want to go what anything else you've got on your list of things you want to go through? So maybe then may maybe the output gap. I want to see some exam questions. Okay, let me see if I can find some. Let me see if I can find some. Hang on. Okay. Let me just see, it's in economic growth. Hang on, just trying to find it. Right? In this, it's in economic growth. I don't know if we've done economic growth before. Hold on, let me just have a look. No, okay, it's in economic growth, but it's only part of economic growth. So let me just download the economic growth one. Hold on, wait 2s. But they're not all just output gap questions. Okay. So it just falls us apart in that just so you know. Okay. Hold on, let me just upload it. Wait two. I think we have done it before. Hang on, you'll remember better than me. I think we have unless I uploaded it, we didn't do it. Let's look. But this is definitely where the outlook gap questions are. Well, sorry, it's uploaded. Here we go. Come on. So. Gross income, gross national income. Recession. Where did I see output gap? Hang on. Illustrate the output gap, illustrate a negative output gap on the diagram below. Get that. Will you just get that back to where is it? There we go, right? So illustrate a negative output gap on the diagram below. So what do we remember is a negative output gap. Active output gap on the diagram below. Yeah, I see. You can remember which way around the negative the output gap was. Output gap. Same price. Is that same price miss? It's not about price with jso. It is no output, real output. Real output. So maybe there is no relevance about 80, maybe it is about a. So how do you draw it? So. What do you think what you think you're going to? So first of all, what is what is a negative output gap? So when actual output is less than what an economy can produce, isn't it? Oh, so is that Shiis that let as shift to left? Shift to left. Is that shito your left right? Oh, hang on. No wheel output. No wheel output. Hang on. No, no, no, no, no, look. Real output is less. Then it should be. So where are you going to. So you need to shift the equilibrium. No, this one that is shipped to the ad, shipped to the ad, you in the same price, in the same price that is less real output. Yeah. And it's only one mark, so it's just showing. So basically, negative output gap is. Actual is less than credential. Oh, if we can spell. Okay. Which is just one mark Yeah it's just one mark, one line. Okay, okay, wait, overthinking it. I'm sure I saw more output gap questions. Hold on. I think I've missed one. Oh, here go. Yeah, I thought I'd missed one. I'm sure when I scanned it earlier, I saw more. Okay, have a look at this one. Have a look at this question. Just scroll up a little bit. Sorry, you're better at control. Lling it on me. Okay, that is illustrate negative output. Which one output trend and actual trend. Okay, trend, trend abc and d. So this one. Wait home mark, one mark. Okay. One mark, I choose be yoube, right? Okay, we're looking for more. I'm just scanning through for any more output gap questions. Real GDP holder. Because they're kind of hidden in here. Hang on. What's this? It's not a common exam question, so there aren't that many of them. Hang on, just planning ning through sieves anymore, though. If you see one shout. Now we did this one. We did happiness. We haven't looked at this. There's ephalopsee. There's one in here. No breastandards. I know that. No. You can see there aren't many output gap questions too likely reasons. So the growth note. So I think we're going to find many more output gap questions sold on. Just keep looking. Notice the questions tend to focus around GDP and real GDP. They don't tend to be hang on, hang on, what was that one? The third quarter can be the strongest five year, but economy is small. That was fall up no. You can see they don't ask many. It's all about recession, GDP, maybe I overthink it. Oh, here we go. Oh, we found one. We found one. That's how rare they are. Okay. With reference to figure one, we'll have a look at figure one. Explain why economists might consider that a negative output get up existed in 2008 to the 2009. Use an appropriate diagram in your answer. I don't know what number we're on. So figure one, where's figure one head? Here, okay? You control it because you're better than me. So have a look at figure one. Bigger one see bigger one gtp growth weight. So the question says that which one? Yeah this one that 22008 to nine I why 2008 to 2089? Yeah the gtp growth, the real gtp growth is Yeah, we can see that that is a negative value. And for example, in the beginning of the 22008 is that is is that zero? Is that -0.3 minus 0.2 here where e's 2008 does 2008 start here and end here? Okay, not 25. Not 25. Firstly, and in the end of the 20, 29 is that 2009? 2009 are back. It is back. Yeah the end of 2009Yeah that is. This one the end on sorry, the end -2.2%. Okay. So what was the question? Why? What was the question? Why economists might consider that a negative output gap. Existed in 2008 to 2009. So the first thing we're going to do is. Define negative output gap. If I night at net negative negative output gap, sorry negative output gap. Negative Negative Negative output p negative definnegative output gap Yeah okay. You can minimize it. It's there. Look, you can minimize this. Yeah, Yeah, Yeah, I know, I know, I know, I know. Oh, the GDP. P, no, maybe not. Maybe I'll GDP. So what is that? Is a. The increasing rate of g tp doesn't get the maximum value. Yep, but Yep, there's a difference between actual and potential. So. Right now you can draw a diagram. I would suggest your easiest one to draw. I've lost it. How have I done that? Is draw me a. Showing actual and potential use the ppf as the potential. For ppc production possibility curve, production possibility frontier, it's a point. Pbf Yeah Yeah with this though, use use your line as your potential and use your actual as your dot here your inward dot don't do the one outside. Don't do this one. Use the use the line as your potential this one and this one not. Yes, yes, yes, yes, you're exactly right. Let me this one this one is point. Gap is there and there is the gap. Good. And just if you were doing this in the diagram, this is your output. Output? Yeah this is your actual output. Actual output. Yeah. And then you would just have, I don't know, product day doesn't matter what you label them. B doesn't matter, you know, just long as you label it. But that is exactly right. Okay. Your other one you could draw, which I quite like, is the one we've just seen. I like this one the most as well. Where is it? Yeah. Hang on, I'll show you it because if I draw it, itjust be a mess. And I just want to show you it, and then you can draw it, because if I draw it, you won't understand. Or I'm drawing it was the wiggly one where you chose point b. This with sorry with me so that that question I see I sorry sorry that quick to get that diagram. So you can see that diagram and you can also draw that and use that to illustrate the negative output gap. So this is the negative output gap here, isn't it? So real GDP. And time. Yep, so you can draw that like that. So let's go back drares a real GDP, and it's a time and a drares a wave, that's it. And then show the negative, the negative output gap on it. Hang on, because I think that's the easy one. And they like that in this example, they like the wiggggly one. Okay. So draw that. See if you can draw that for me. You're better at drayou. Can see why. If I drew that, you wouldn't have known what I was drawing. The reason I'm making you draw diagrams is because it's specifically said with use of diagram, you know, so you need to make sure you put diagrams in there. Real GDP. Time ing. Threatened very good economic rose. No. Yep, that showed me an output gap. Okay, so this point from there to there, very nice. That is selective outpup gap. Very good. Yeah. P, Yeah. It's very like it's very like physics because physigraph is like. Like that Yeah the wave diagram of wave Yeah one is station is stationary one is another one progressive maybe or I don't know physics is not my thing, but I think that's a nice diagram to put in there. And I think it's quite a nice diagram as well to show anything in the economies don't tend to grow in a linear way, do they? They can tend to grow like you say, more of a wave. So it's a decent diagram. You can put in quite a lot of things. Okay, so that would be our two diagrams. We then need to include some figures in our answer. So we've done our definition. Why might economists consider that a negative output gap existed? Is this because it's got can't even remember the diagram did have negative economic growth at the time. Is that what it was in their diagram? Oh Yeah. So why would they think this was a negative output grab? Let's use the data to tell me. Remember, we've got put some data in there. We've done our diagrams, we've done our definitions. Now we've got to run on about the data. Yep. So tell me what you see about the data. So about this one Yeah I see this this this diagram so this diagram shows that there is a decrease in the GDP rate and then rise it again and that is very itable that is very suitable for this for that graph I draw because this wise, because this why mm, hmm. So how to. So. So yes, this the lowest number is this one and the beginning number is this one. So negative output gap is that is. Then -2.5, 2.8, -2.8. Is that 2.8? 2.8? No, not 2.8. I'd say 2.3. Is it between minus? The figures are not very easy to read, are they? -2.3. So Yeah, yoube saying 25, -25. Yeah is that -215? Yeah. Yeah, about -2.5. It's quite difficult to read, isn't it? I don't know whether zeros in the middle of the line or whether zero is on the line. Do you see what I mean? It's not very easy graph because maybe that is a difference between zero and the and the difference Yeah the difference between zero. But what this is saying is if you look at the shape of this diagram, it's very like the diagram you've drawn. You know your wavy diagram. Yeah, it's very like that. And this section here with these numbers is where the negative output gap would be. So you could use some of those numbers in here. So if you were drawing that, you could say that this point was, what was it, two point -2.5? Yeah so that -2.5Yeah I see. Got it. Copy. Yeah Yeah Yeah. Can you see? Yeah, good. Okay. Just so you know, negative output gap is not a massive topic on the syllabus as you've seen, but I think you've got two diagrams that you can successfully draw, haven't you? Yeah, Yeah, you've understand it. We've looked at exam questions. Have you got any other questions about it? No, no. All right, then okay, well, I will see you soon. You have a lovely rest of your week. Okay? Bye, miss. Take care.