Saved Bookmarks
| 1. |
What happens if AD>AS prior to full employment level of employment? |
|
Answer» It is a state of disequilibrium in economics. When AD>AS , producers have to cater to demand out of their existing stock of goods , implying that the desired level of stocks will decrease. It implies greater production & therefore there is increase in AS .This process continues till equilibrium is struck between AD and AS. |
|