Aggregate supply greater than aggregate demand

Definition

When the total supply of goods and services in an economy exceeds the total demand for them, resulting in a surplus. This can lead to decreased prices and production levels.

Related terms

Surplus: A situation where the quantity supplied exceeds the quantity demanded at a given price.

Deflation: A sustained decrease in the general price level of goods and services in an economy.

Contractionary fiscal policy: Government measures aimed at reducing aggregate demand to control inflation by decreasing government spending or increasing taxes.