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Sandeep Garg Solutions Class 12 – Chapter 9 – Part B
Name the situation under which the planned aggregate expenditure exceeds the equilibrium level of expenditure.
What does the inflationary gap measure?
The inflationary gap measures the quantum of excess demand.
Name the situation under which the aggregate demand is insufficient to eliminate involuntary unemployment.
What is the impact of a decrease in the margin requirements?
A decrease in the margin requirements encourages borrowings and raises the aggregate demand.
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State two measures by which a central bank can attempt to reduce the inflationary gap.
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
What is the impact of the excess and deficient demands on the price level?
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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