Explanation:

An inflationary gap is a macroeconomic concept that describes the difference between the current level of real gross domestic product (GDP) and the anticipated GDP that would be experienced when an economy is at full employment, also referred to as the potential GDP. The inflationary gap is so named because the relative increase in real GDP causes an economy to increase its consumption. If real GDP > Potential real GDP (full employment GDP), then an inflationary gap exist.