What happens to unemployment levels when there is an inflationary gap characterized by increased aggregate demand?

When there is an inflationary gap, it means that the demand for goods and services in the economy is higher than what the economy can produce at full capacity. This increased demand often leads to businesses hiring more workers to meet the needs of consumers, which typically lowers unemployment levels. For example, if a new restaurant opens and attracts many customers, it may need to hire additional staff, reducing the number of people looking for jobs. However, while unemployment may decrease, this situation can also lead to rising prices, as too much money chases too few goods. So, in an inflationary gap, we see lower unemployment but potentially higher prices for everyday items.