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Does an excess of AD over AS always imply a situation of inflationary gap? Explain.

+1 vote

asked Sep 9, 2018 in Class 12 by kratos

Does an excess of AD over AS always imply a situation of inflationary gap? Explain.

isc
cbse
inflation
deficient demand
icse
class-12
currency
excess demand

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1 Answer

+2 votes

answered Apr 2, 2020 by kratos

Best answer

Yes, when AD is more than aggregate Supply people demand more & supply is inadequate to fulfil the demand , so price rises.

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