Define full employment in an economy. Discuss the situation when aggregate demand is more than aggregate supply at full employment income level.
CBSE DELHI RE-PAPER SET 2 2018
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Full Employment is a situation where those who are able and willing to work are getting work at the prevailing wage rate.
When Aggregate Demand is greater than Aggregate Supply at full employment, such a situation is known as Excess Demand or Inflationary Gap. It is called inflationary becausethis leads to a rise in general price level of the economy.
When Aggregate Demand is greater than Aggregate Supply at full employment, such a situation is known as Excess Demand or Inflationary Gap. It is called inflationary becausethis leads to a rise in general price level of the economy.
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