Question

can deflationary gap exist at full employment level of income ?​

Answer 1

Answer:

Yes, deflationary gap can exist at equilibrium level of income. In the below figure equilibrium is attained at a equilibrium point E,, when deflationary gap is EB. Answer: Inflationary gap is the gap showing excess of current aggregate demand over 'aggregate supply at the level of full employment

Answer 2

Answer:

Yes, deflationary gap can exist at equilibrium level of income. In the below figure equilibrium is attained at a equilibrium point E,, when deflationary gap is EB. Answer: Inflationary gap is the gap showing excess of current aggregate demand over 'aggregate supply at the level of full employment'.