Advertisements
Advertisements
प्रश्न
What is meant by inflationary gap?
Explain the concept of Inflationary Gap
What is 'inflationary gap'?
Define inflationary gap.
उत्तर
Inflationary gap
Excess demand occurs in a situation when aggregate demand is more than aggregate supply corresponding to full employment. It leads to the reduction in inventories and inflation in the economy. This situation is considered an inflationary gap—the difference between aggregate demand beyond full employment and aggregate demand at full employment.
Aggregate demand is the AD curve and aggregate supply is the AS curve (as shown in the diagram below). While the aggregate demand curve and the aggregate supply curve intersect each other, the full employment equilibrium is attained at Point E. OY is the full employment level of output, and EY is the aggregate demand at full employment level of output. If the aggregate demand increases beyond the full employment level of output from EY to FY, then the economy will have excess demand, i.e. situation of an inflationary gap (FY − EY = FE).
APPEARS IN
संबंधित प्रश्न
Explain national income equilibrium through aggregate demand and aggregate supply. Use diagram. Also explain the changes that take place in an economy when the economy is not in equilibrium
State components of Aggregate demand ?
Aggregate demand can be increased by ______
State whether the following statement is true or false.
The equality between aggregate demand and aggregate supply determines the equilibrium level of employment.
Write Short note on:
Average Propensity to Consume
Discuss the working of the adjustment mechanism in the following situations:
Aggregate demand is greater than the aggregate supply.
Answer the following question.
Describe the adjustments that may take place in an economy when ex-ante Aggregate Demand is greater than ex-ante Aggregate Supply.
Choose the correct from given options
When aggregate demand is greater than aggregate supply, inventories
Keynes theory is associated with ______
What is meant by Equilibrium income?
A decrease in Cash Reserve Ratio will lead to ______
Which of the following statement is true?
What is the circumstance when aggregate output is determined solely by the level of aggregate demand called?
When aggregate demand is greater than aggregate supply, inventories:
Why is effective demand also known as expost demand?
With reference to Simple Keynesian model, give the meaning of ex-ante demand.
With the help of a diagram, determine the equilibrium level of output and income by using Aggregate demand and aggregate supply approach.
