An inflationary gap develops when demand for commodities and services exceeds supply due to factors such as greater employment levels, growing trade activity, or increased spending.
The term “demand” is relying on people needs and wants to the amount of goods and services. Demand is an economic notion that deals with the connection between consumer demand for goods and services and their market prices.
An inflationary gap exists when they are the market of the higher in the demand of the goods and the services are the generating of the employment to the benefit of the government.
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