Overheated Economy Law and Legal Definition
Overheated economy is an economy in which the long period of good economic growth and activity makes high levels of inflation and interest rate, and inefficient supply allocations. Overheating of economy occurs when producers overproduce and create excess production capacity in an attempt to capitalize on the high levels of wealth. In an overheated economy the economic growth will occur in an unsustainable rate. Boom periods are often qualified by overheating in the economy.