Describe any two measures by which a Central Bank can attempt to decrease the gap.
Answer: Central bank can decrease this gap by adopting two measures illustrated below:
Bank rate: Central Bank must reduce the bank rate. The decrease in bank rate lowers the rate of interest and credit becomes low-priced. Consequently, the demand for credit expands and aggregate demand rises.
Open Market Operations: By purchasing the government securities Central Bank injects extra purchasing power into the system that outcomes in the expansion of credit. As an outcome aggregate demand rises.