Question

8. Excess aggregate demand leads to:
a) More production
c) Rise in real income
b) Expansionary money policy
d) Contractionary money policy​

Answer 1

Excess demand refers to the situation when aggregate demand (AD) is more than the aggregate supply (AS) corresponding to full employment level of output in the economy. It is the excess of anticipated expenditure over the value of full employment output. ADVERTISEMENTS: Excess demand gives rise to an inflationary gap.

Answer 2

Answer:

Excess demand refers to the situation when aggregate demand (AD) is more than the aggregate supply (AS) corresponding to full employment level of output in the economy. It is the excess of anticipated expenditure over the value of full employment output. ADVERTISEMENTS: Excess demand gives rise to an inflationary gap.