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Depreciation

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Question

The amount by which actual aggregate demand exceeds aggregate supply corresponding to full employment is known as inflationary gap.

A

True

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B

False

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Solution

The correct option is A True
True. Inflationary gap is when actual aggregate demand exceeds aggregate supply when the economy is operating at full employment level. It is a type of output gap.

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Q. The gap by which actual aggregate demand exceeds the aggregate supply required to establish full employment equilibrium is known as ______.

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