Above Full-Employment Equilibrium


DEFINITION of 'Above Full-Employment Equilibrium'

A macroeconomic term used to describe the real gross domestic product (GDP) is currently in excess of its long-run average, or some other historical measure. Accordingly, the amount that the current real GDP is greater then the historic average is called an inflationary gap, as this will create inflationary pressures in this particular economy.

BREAKING DOWN 'Above Full-Employment Equilibrium'

Above full-employment equilibrium simply means that a given economy is producing goods, as measured by its GDP, at a higher level then it usually does. Because this market is in equilibrium, there will not be any excess supply in the short run, but this overly active economy will create more demand for goods and services, which will push prices upwards and possibly, lead to a greater level of inflation.

  1. Gross Domestic Product - GDP

    The monetary value of all the finished goods and services produced ...
  2. Inflation

    The rate at which the general level of prices for goods and services ...
  3. Structural Unemployment

    A longer-lasting form of unemployment caused by fundamental shifts ...
  4. Real Gross Domestic Product (GDP)

    An inflation-adjusted measure that reflects the value of all ...
  5. Consumer Price Index - CPI

    A measure that examines the weighted average of prices of a basket ...
  6. Macroeconomics

    The field of economics that studies the behavior of the aggregate ...
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