2 lakh in an investment scheme assuring his funds would earn a minimum 11% interest and there would be no deduction of income tax upon withdrawal after three years. Another representative from the same bank visited the depositor after a period of one year from the initial investment and convinced him to prematurely close three FDs aggregating Rs.
To measure the slack in the economy, the deviation of aggregate demand from the economy’s potential supply – the so-called “output gap” – is often seen as a helpful guide for policymakers. On this logic, inflation rises, when aggregate demand exceeds potential output.