State briefly the effect of excess demand on output, employment and price

(i) Effect on output In the situation of excess demand, output does not increase. The economy is already in the state of full capacity production.
(ii) Effect on employment Employment will not increase because there is no involuntary unemployment in the economy. The economy has already achieved full employment.
(iii) Effect on prices Excess demand only generates pressure on demand at the existing flow of goods and services in the economy. So, prices tend to rise.