Question

Show inflationary gap using a well labelled diagram. Suggest any two fiscal measures to correct the situation of inflationary gap​

Answer 1

Answer:

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.

2) The level of aggregate demand surpasses the level of aggregate supply even when the available factors are fully utilized.

Answer 2

Answer:

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