What is ‘Above Full-Employment Equilibrium’
A macroeconomic term used to describe the real gross domestic product (GDP) is currently in excess of its long-run average, or some other historical measure. Accordingly, the amount that the current real GDP is greater then the historic average is called an inflationary gap, as this will create inflationary pressures in this particular economy.
Explaining ‘Above Full-Employment Equilibrium’
Above full-employment equilibrium simply means that a given economy is producing goods, as measured by its GDP, at a higher level then it usually does. Because this market is in equilibrium, there will not be any excess supply in the short run, but this overly active economy will create more demand for goods and services, which will push prices upwards and possibly, lead to a greater level of inflation.
Above Full Employment Equilibrium FAQ
What is over full employment equilibrium?
How do you calculate full employment equilibrium?
Is equilibrium GDP the same as full employment?
What is meant by full employment?
What is the full employment level of output?
Does equilibrium beyond full employment imply a higher level of output compared to full employment equilibrium?
What gaps exist when equilibrium does not occur at full employment?
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