Overheating

Term describing an economy that is expanding so rapidly that economists fear a rise in Inflation. In an overheated economy, too much money is chasing too few goods, leading to price rises, and the productive capacity of a nation is usually nearing its limit. The remedies in the United States are usually a tightening of the money supply by the Federal Reserve and curbs in federal government spending. See also Monetary Policy; Optimum Capacity.

Term describing an economy that is expanding so rapidly that economists fear a rise in Inflation. In an overheated economy, too much money is chasing too few goods, leading to price rises, and the productive capacity of a nation is usually nearing its limit.