Page 2 - HA - Excess demand and Deficient Demand (1)

8. When actual Aggregate demand is more than the required 1
aggregate demand to maintain full employment in the
economy is called ________.
(inflationary gap / deflationary gap)

9. Policy related to the revenue and expenditure of the 1
Government is known as ______. (Monetary/fiscal)
10. ___________________ is exercised through discussions, 1
letters and speeches to banks.
(moral suasion /margin requirements/varying legal
reserve ratio)
11. The organisation, who formulates monetary policy in 1

India is________.
Short answer type question (3 – 4 marks each)
12. Distinguish between inflationary gap and deflationary gap. 4
13. Distinguish between full employment equilibrium and 4
under employment equilibrium. Using diagram.
Long answer type question (6 marks each)

14. Explain the role of the following in correcting excess 3+3
demand in the economy.
a. Reverse Repo rate.
b. Public Expenditure.
15. State how excess demand is different from deficient 6
demand.
16. Define deficient demand and state how open market 6
operation helps to control it?
17. Define excess demand and state how margin requirement 6

and repo rate help to control it?