If aggregate demand exceeds aggregate supply at full employment level, the gap which occurs is known as __________.

Inflationary gap

The correct answer is Option (4) → Inflationary gap

An inflationary gap occurs when aggregate demand (AD) exceeds the potential output (aggregate supply, AS) of an economy at full employment. This situation typically leads to upward pressure on prices (inflation) because demand exceeds the economy's capacity to produce goods and services.