In an economy, Aggregate Demand is greater than Aggregate Supply. Expl

1.	In an economy, Aggregate Demand is greater than Aggregate Supply. Explain the changes that will take place in the economy.
Answer» In an economy, when AD > AS it is known as Inflationary Gap. The effects of excess demand are continuous and persistent rise in prices. Producer will get abnormal profit. Consumers are losers and real wages fall. It leads to propensity to boom conditions in business cycle.

In an economy, Aggregate Demand is greater than Aggregate Supply. Explain the changes that will take place in the economy.

Answer»

In an economy, when AD > AS it is known as Inflationary Gap. The effects of excess demand are continuous and persistent rise in prices. Producer will get abnormal profit. Consumers are losers and real wages fall. It leads to propensity to boom conditions in business cycle.

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In an economy, Aggregate Demand is greater than Aggregate Supply. Explain the changes that will take place in the economy.

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