Aggregate demand greater than aggregate supply

Definition

When total demand for goods and services in an economy surpasses the total supply available, leading to scarcity. This can result in increased prices and production levels.

Related terms

Scarcity: A condition of limited resources compared to unlimited wants and needs.

Inflation: A sustained increase in the general price level of goods and services in an economy over time.

Expansionary fiscal policy: Government measures aimed at increasing aggregate demand by boosting government spending or reducing taxes.