NCERT Solutions for Class 12 Macro Economics Excess Demand and Deficient Demand

NCERT Solutions for Class 12 Macro Economics Excess Demand and Deficient Demand

NCERT Solutions for Class 12 Macro Economics Excess Demand and Deficient Demand is designed and prepared by the best teachers across India. All the important topics are covered in the exercises and each answer comes with a detailed explanation to help students understand concepts better. These NCERT solutions play a crucial role in your preparation for all exams conducted by the CBSE, including the JEE.

NCERT TEXTBOOK QUESTIONS SOLVED

1. What is meant by excess demand in macroeconomics? [CBSE 2009]

Ans.When in an economy aggregate demand exceeds “aggregate supply at full employment level”, the demand is said to be an excess demand.

2. Define inflationary gap. [CBSE 2008]

Ans. When in an economy aggregate demand exceeds “aggregate supply at full employment level”, the demand is said to be an excess demand and the gap is called inflationary gap.

3. Give the meaning of deficient demand.

Ans. When in an economy aggregate demand falls short of aggregate supply at full employment level, the demand is said to be as deficient demand.

4. Define deflationary gap. [CBSE 2008] OR Give the meaning of deflationary gap. [CBSE 2010]

Ans. When in an economy aggregate demand falls short of aggregate supply at full employment level, the demand is said to be deficient demand and the gap is called deflationary gap.

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

Ans. Increase in cash reserve ratio.
Increase in marginal requirement.

6. What is the impact of increase in margin requirements?

Ans. Increase in margin requirements discourages borrowings and decreases the aggregate demand

7. Give the meaning of full employment.[CBSE 2008]

Ans. Full employment equilibrium refers to the situation where aggregate demand = aggregate supply and all those who are able to work and willing to work (at the existing wage rate) are getting work.

8. Give the meaning of involuntary unemployment.[CBSE 2008, 09, Sample Paper 2010]

Ans. Involuntary unemployment refers to a situation in which all able and willing persons to work at existing wage-rate do not find work. They are rendered unemployed against their wish. Hence, it is termed as involuntary unemployment.

9. Is it necessary that equality between AD and AS is established at the full employment level?

Ans. No, it is not necessary that full employment occurs when AD = AS. Equilibrium can be achieved at full employment level, under employment level or at over full employment level.

10. What is meant by full employment equilibrium?

Ans. Full employment equilibrium refers to a situation when equilibrium is attained i.e., aggregate demand is equal to aggregate supply at full employment level.

11. What is underemployment equilibrium?[CBSE 2008]

Ans. Underemployment equilibrium refers to a situation when equilibrium is attained i.e., aggregate demand is equal to aggregate supply below full employment level or when resources are not fully employed.

12. What is the meaning of over full employment equilibrium?

Ans. Over full employment level refers to a situation when equilibrium is attained, i.e., aggregate demand is equal to aggregate supply beyond the full employment level.

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