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Explain the role of government policy …

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Explain the role of government policy in checking deflationary gap.

Posted by Honey Singh 5 years ago

CBSE > Class 12 > Economics

1 answers

Yogita Ingle 5 years ago

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.
Inflationary gap is also referred to as excess demand. When aggregate demand is greater than aggregate supply, at full employment level in the economy, it is referred to as inflationary gap or excess demand. This situation actually results in an increase of prices, that is inflation.

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CBSE > Class 12 > Economics