F
forza_bologna
Member
Module 19 of CT7 defines the full-employment level of GDP as: "The level of GDP at which there is no deficiency of aggregate demand".
I am not confortable with this definition.
I would see the full-employement level of GDP defined as: the GDP obtainable by using all available employee's resources working a normal capacity.
I do not understand what is the link between agregate demand and employment level in the definition.
In case of an inflationary gap, there is a problem of excess of demand. In such a situation, obviously there is no deficiency of aggregate demand, but the corresponding level of GDP is not a full-employement level of GDP, either.
Can anybody help me with an explation? What is the manual wanting to say?
Many thanks,
I am not confortable with this definition.
I would see the full-employement level of GDP defined as: the GDP obtainable by using all available employee's resources working a normal capacity.
I do not understand what is the link between agregate demand and employment level in the definition.
In case of an inflationary gap, there is a problem of excess of demand. In such a situation, obviously there is no deficiency of aggregate demand, but the corresponding level of GDP is not a full-employement level of GDP, either.
Can anybody help me with an explation? What is the manual wanting to say?
Many thanks,