8. Excess aggregate demand leads to:a) More productionc) Rise in real – InterviewSolution

1.	8. Excess aggregate demand leads to:a) More productionc) Rise in real incomeb) Expansionary money policyd) Contractionary money policy
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.

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