What is inflationary gap explain the role of margin requirements in re – InterviewSolution

1.	What is inflationary gap explain the role of margin requirements in removing this gap?
Answer» and REPRESENT INFLATIONARY gap on a diagram. Explain the role of the varying reserves requirement in removing the gap. Inflationary gap occurs when AD>AS corresponding to full employment level. This inflationary gap, i.e. excess of Aggregate Demand CAUSES INFLATION in the economy and price LEVELS tend to rise.

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