overheating

Overheating of an economy occurs when its productive capacity is unable to keep pace with growing aggregate demand. It is generally characterised by an above-average rate of economic growth, where growth is occurring at an unsustainable rate. Boom periods are often characterised by overheating in the economy. An economy is said to be overheated when producers are not able to supply all the goods that consumers demand. The main reason behind overheating is insufficient supply allocation because of excess spending by the people due to increase in consumer wealth.

View More On Wikipedia.org