Deflationary gap is the shortfall in aggregate demand from the level required to maintain full employment equilibrium in the economy.
During deflationary gap or deficient demand margin requirement is reduced, which induces borrowing. This raises borrowings in the economy. As a result, the flow of credit rises and therefore aggregate demand rises.
marlinbito answered the question on May 12, 2018 at 13:17
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Explain the concept of inflationary gap. Also explain the role of “legal reserves” in reducing Inflationary gap.
(Solved)
Explain the concept of inflationary gap. Also explain the role of “legal reserves” in reducing Inflationary gap.
Date posted:
May 12, 2018
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Which transactions determine the ‘balance of trade’? When is balance of trade in surplus?
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Which transactions determine the ‘balance of trade’? When is balance of trade in surplus?
Date posted:
May 12, 2018
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Define foreign exchange rate. How is it determined under flexible exchange rate system?
(Solved)
Define foreign exchange rate. How is it determined under flexible exchange rate system?
Date posted:
May 12, 2018
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Write any three precautions to be taken while estimating national income by expenditure Method.
(Solved)
Write any three precautions to be taken while estimating national income by expenditure Method.
Date posted:
May 12, 2018
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Giving reasons, explain the treatment assigned to the following while estimating national Income: (i) Social security contributions by employees.(ii)Pension paid after retirement.
(Solved)
Giving reasons, explain the treatment assigned to the following while estimating national Income:
(i) Social security contributions by employees.
(ii)Pension paid after retirement.
Date posted:
May 12, 2018
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Answers (1)
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Explain how ‘non-monetary exchanges’ are a limitation in taking GDP as an index of welfare.
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Explain how ‘non-monetary exchanges’ are a limitation in taking GDP as an index of welfare.
Date posted:
May 12, 2018
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State the Say’s Law of markets.
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State the Say’s Law of markets.
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May 12, 2018
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State the two components of money supply
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State the two components of money supply
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May 12, 2018
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Define ‘Statutory Liquidity Ratio’.
(Solved)
Define ‘Statutory Liquidity Ratio’.
Date posted:
May 12, 2018
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Market for a good is in equilibrium. There is “increase” in supply of the good. Explain the chain of effects of this change
(Solved)
Market for a good is in equilibrium. There is “increase” in supply of the good. Explain the chain of effects of this change
Date posted:
May 12, 2018
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Explain the distinction between ‘’change in quantity supplied” and “change in supply”
(Solved)
Explain the distinction between ‘’change in quantity supplied” and “change in supply”
Date posted:
May 12, 2018
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Define marginal cost. Explain its relation with average cost
(Solved)
Define marginal cost. Explain its relation with average cost
Date posted:
May 12, 2018
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Explain how changes in prices of inputs influence the supply of a product.
(Solved)
Explain how changes in prices of inputs influence the supply of a product.
Date posted:
May 12, 2018
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What does the Law of Variable proportions show? State the behaviour of marginal product according to this law
(Solved)
What does the Law of Variable proportions show? State the behaviour of marginal product according to this law
Date posted:
May 12, 2018
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Due to the increase in population the demand for agricultural land has” increased”. But the supply of agricultural land is fixed. Explain two methods...
(Solved)
Due to the increase in population the demand for agricultural land has "increased". But the supply of agricultural land is fixed. Explain two methods by which the demand for land can be “decreased”
Date posted:
May 12, 2018
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Explain the implications of the feature ‘barriers to entry’ under monopoly
(Solved)
Explain the implications of the feature ‘barriers to entry’ under monopoly
Date posted:
May 12, 2018
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Explain the implications of the feature’ homogeneous products in a perfectly competitive market.
(Solved)
Explain the implications of the feature’ homogeneous products in a perfectly competitive market.
Date posted:
May 12, 2018
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Distinguish between explicit costs and implicit costs and give examples.
(Solved)
Distinguish between explicit costs and implicit costs and give examples.
Date posted:
May 12, 2018
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Explain the importance of personal hygiene
(Solved)
Explain the importance of personal hygiene.
Date posted:
May 12, 2018
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Use real time illustrations to discuss how various demographic dispositions impact on economic performance of a least developed country.
(Solved)
Use real time illustrations to discuss how various demographic dispositions impact on economic performance of a least developed country.
Date posted:
May 12, 2018
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Answers (1)