Problems of Deficient Demand and Excess Demand
2 Board Economics previous year questions on Problems of Deficient Demand and Excess Demand — options free on every question; 1 include the answer & explanation free, the rest unlock with PYQ Pass.
In an economy, when _______ is insufficient to achieve the level of output corresponding to full employment, the difference is termed a deflationary gap.
(Choose the correct option to fill in the blank)
Ex-ante Aggregate Demand
(A) Ex-ante Aggregate Demand
Explanation:
A deflationary gap occurs when planned aggregate demand is less than the aggregate supply required for full employment equilibrium. Due to insufficient demand, unemployment and underutilisation of resources arise.
Read the following statements carefully:
Statement 1: During deflationary gap, the Central Bank of a country may increase the repo rate.
Statement 2: The government can reduce the deflationary gap by purchasing Government Securities (G-Sec) in the open market.
Options are free to see. Unlock the correct answer and full explanation with Pass.
Practice more Board Economics PYQs
Browse every Economics chapter, or explore the full Board question bank.
📈 All Economics chapters →