In an economy, when _______ is insufficient to achieve the level of output corresponding to full employment, the differe…
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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)
✓ Correct answer: a)
Ex-ante Aggregate Demand
Explanation
(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.
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