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Defines excess demand....

Defines excess demand.

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Exess demand refers to a situation when `AD gt AS` corresponding to the full employment level of output in the economy. Here, Actual `AD gt "Required" AD`.
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Knowledge Check

  • During excess demand, central bank __ the margin.

    A
    Decreases
    B
    increases
    C
    Removes
    D
    Does not change

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