Excess Demand And Deficient Demand-Important Questions

IMPORTANT QUESTIONS

CHAPTER 19: Excess Demand and Deficient Demand

1. Define inflationary gap.
2. When does the situation of deficient demand arise in an economy?
3. Explain the implications of inflationary gap?
4. Explain the situation of deficient demand in an economy with the help of a diagram.
5. Explain the role of bank rate in dealing with the problem of deficient demand?
6. Explain how government spending is useful in removing deficient demand?
7. Explain how controlling money supply is helpful in reducing excess demand?
8. Explain the role of “open market operations” in controlling the inflationary gap?
9. What is meant by margin requirement? How does central bank use this measure to control deflationary conditions in an economy?
10. Explain the concept of deficient demand in macroeconomics. Also explain the role of bank rate in correcting it.
11. What is excess demand? Explain the role of ‘Reverse Repo Rate’ in removing it.
12. Define fiscal policy?
13. What is the role of fiscal policy in:-
1. Excess demand
2. Deficient demand
14. Discuss the reasons that are responsible for excess demand?
15. Distinguish between demand and deficient demand?
16. Discuss the measures to correct excess demand?
17. Explain with diagram excess and deficient demand in three sector economy?
18. Discuss the situation when aggregate demand is more than aggregate supply at full employment level.
19. How does change in taxes help to control the situation of excess and deficient demand?