Inflationary gap : lower unemployment :: higher inflation : ?

An inflationary gap occurs when the economy is producing more than its potential output, often leading to lower unemployment rates. When there is higher demand for goods and services, businesses hire more workers, which can reduce unemployment. However, this increased demand can also lead to higher prices, resulting in inflation. So, if we think about the relationship, higher inflation can lead to a situation where the economy is overheating, which might cause the central bank to raise interest rates to cool things down. For example, if a country sees a rapid increase in prices for everyday items like groceries, it may indicate that the economy is growing too fast, and steps might need to be taken to stabilize prices.