Explain the meaning of inflationary gap with the help of a diagram.
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Explanation:
EF indicates the inflationary gap in the diagram. Inflationary gap is the excess of aggregate demand over and above its level required to maintain full employment equilibrium in the economy. It implies two things- 1) Planned aggregate demand in the economy happens to exceed its full employment level.
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EF indicates the inflationary gap in the diagram. Inflationary gap is the excess of aggregate demand over and above its level required to maintain full employment equilibrium in the economy. It implies two things- 1) Planned aggregate demand in the economy happens to exceed its full employment level.
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