Sandeep Garg Macroeconomics Class 12- Chapter 9: Excess Demand and Deficient Demand

‘Sandeep Garg Class 12 Macroeconomics Solutions Chapter 9: Excess Demand and Deficient Demand’ is explained by expert economics teachers from the latest edition of Sandeep Garg Macroeconomics Class 12 textbook solutions. At BYJU’S, we provide Sandeep Garg Economics Class 12 Solutions to give a comprehensive insight about the subject to the students.

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Sandeep Garg Solutions Class 12 – Chapter 9 – Part B

Question 1

Name the situation under which the planned aggregate expenditure exceeds the equilibrium level of expenditure.

Answer:

Excess demand

Question 2

What does the inflationary gap measure?

Answer:

The inflationary gap measures the quantum of excess demand.

Question 3

Name the situation under which the aggregate demand is insufficient to eliminate involuntary unemployment.

Answer:

Deficient demand

Question 4

What is the impact of a decrease in the margin requirements?

Answer:

A decrease in the margin requirements encourages borrowings and raises the aggregate demand.

Explore link: Income Determination and Multiplier Solutions

Question 5

State two measures by which a central bank can attempt to reduce the inflationary gap.

Answer:

The two measures by which a central bank can attempt to reduce the inflationary gap are as follows:

• Increase in the bank rate
• Sale in the government securities

Question 6

What is the impact of the excess and deficient demands on the price level?

Answer:

The excess demand raises the general price level (inflation), whereas the deficient demand reduces it (deflation).

Also Read the concept of Demand

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