Does a high positive output gap relate to high unemployment rates? I have read that high output gaps (GDP gaps) are directly related to high unemployment rates. However, I did not find any source clarifying whether this "rule" apply to both positive and negative gaps or just to one of them. I can see how this relate to recessionary (negative) gaps, but I am not sure about the inflationary (positive) gaps. Some articles say that positive gaps cause unemployment rates to fall, but I just found a graph showing a rise in such rates also when positive gaps increase:



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As denesp said, you're looking at a graph with no output gap.

A positive output gap usually does lead to employment being higher than the natural rate (=unemployment is lower than the natural rate).

Reading these lecture notes might help: http://eml.berkeley.edu/~jaya/lecture/Econ1_lecture9.pdf