It is a state of disequilibrium in economics. When AD>AS , producers have to cater to demand out of their existing stock of goods , implying that the desired level of stocks will decrease. It implies greater production & therefore there is increase in AS. This process continues till equilibrium is struck between AD and AS.
What happens if AD>AS prior to full employment level of employment?
Answers
Jayanta Das
It is a state of disequilibrium in economics. When AD>AS , producers have to cater to demand out of their existing stock of goods , implying that the desired level of stocks will decrease. It implies greater production & therefore there is increase in AS. This process continues till equilibrium is struck between AD and AS.