surplus economy

A surplus economy occurs when the supply of goods and services exceeds demand, leading to excess inventory. This imbalance can result in businesses lowering prices to sell their surplus products, possibly causing deflation. It often reflects weaker consumer purchasing power, overproduction, or economic slowdown. To address this, governments or central banks might implement policies to stimulate demand, such as lowering interest rates or increasing public spending. In essence, a surplus economy indicates that the economy isn't generating enough consumer or investment activity to fully utilize available resources, highlighting a need for measures to boost demand and restore balance.