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Question : 5
Total: 19
'Excess demand creates greater opportunities of employment in the economy' Defend or refute the given statement with valid explanation.
Solution:
I refute the given statement.
Reasons:
1. Excess demand (AD) > AS at full employment level) occurs after an economy achieves full employment level.
2. Excess Demand puts pressure on the available stock of goods which leads to increase in price level only (inflationary gap).
If all the resources are already fully employed, there is no scope of more opportunities of employment in the economy.
Reasons:
1. Excess demand (AD) > AS at full employment level) occurs after an economy achieves full employment level.
2. Excess Demand puts pressure on the available stock of goods which leads to increase in price level only (inflationary gap).
If all the resources are already fully employed, there is no scope of more opportunities of employment in the economy.
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