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प्रश्न
Answer in detail.
Explain the equilibrium between Aggregate Demand and Aggregate Supply.
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उत्तर
The equilibrium level of income is determined at that point, where Aggregate Demand (AD) is equal to Aggregate Supply (AS). Here, AD refers to the planned/desired level of expenditure in the economy during an accounting year. Similarly, AS refers to the planned/desired level of output in an economy during an accounting year.
In the diagram, the consumption curve is depicted by C and the investment curve is depicted by the horizontal straight line parallel to the output/income axis. Summing up the investment curve and consumption curve, we get the aggregate demand curve represented by AD = C + I. The aggregate supply curve is represented by the 45° line. Throughout this line, the planned expenditure is equal to the planned output. That is, AS = Y = expenditure. The implication of the 45° line is that, in case of any disequilibrium, AS will be adjusted in a way to equate AD in order to restore equilibrium back. In other words, in case of any inequality between AD and AS, equilibrium output will be determined by AD.
The point E is the equilibrium point, where the planned level of expenditure (AD) is equal to the planned level of output (AS). In other words, this suggests that there is no undesired inventory accumulation. The equilibrium level of output is OQ, which is also known as the 'effective demand'.
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संबंधित प्रश्न
State the determinants of aggregate demand.
What is aggregate supply?
Explain national income equilibrium through aggregate demand and aggregate supply. Use diagram. Also explain the changes that take place in an economy when the economy is not in equilibrium
Explain the concept of 'excess demand' in macroeconomics. Also explain the role of 'open market operation' in correcting it.
Explain the concept of ‘deficient demand’ in macroeconomics.
State components of aggregate demand.
Why does consumption curve not start from the origin?
State three measures to reduce inflationary gap.
Aggregate demand can be increased by ______
Explain the role of Repo Rate in reducing the Inflationary gap.
Explain the concept of deflationary gap.
Name any two components of 'aggregate demand'.
Explain the role of Cash Reserve Ratio in removing an inflationary gap
Explain the role of 'Margin Requirements' in removing this deficient demand gap.
What is a ‘consumption function’?
Explain the subjective factors which determine consumption function.
Discuss the situation when aggregate demand is more than aggregate supply at full employment income level.
What are the determinants of Aggregate demand?
Explain with reason, whether you agree or disagree with the following statement:
Aggregate supply is influenced only by availability of natural resources.
Fill in the blank with appropriate alternatives given below
That part of income, which is not spent on consumption, is called __________.
Define or Explain the following concept:
Aggregate Demand
Define or Explain the following concept:
Aggregate Supply
Give reason or explain.
Aggregate demand is a positive function of the level of employment and output.
Distinguish between:
Aggregate Demand and Aggregate Supply
Write Short note on:
Marginal Propensity to Consume
Answer the following question:
What are the determinants of Aggregate Supply (AS)?
State with reason whether you agree or disagree with the following statement.
Aggregate demand depends only on the consumption expenditure.
State with reason whether you agree or disagree with the following statement.
Aggregate supply is influenced by the state of technology only.
Answer in detail.
Explain the determinants of aggregate demand.
Answer in detail.
What is Aggregate Supply? Explain the determinants of Aggregate Supply.
Answer the following question.
Describe the adjustments that may take place in an economy when ex-ante Aggregate Demand is greater than ex-ante Aggregate Supply.
What is meant by the “Effective Demand Principle” in the Keynesian theory of employment? Discuss using a schedule or a diagram.
Choose the correct from given options
When aggregate demand is greater than aggregate supply, inventories
The main component of aggregate demand is ______
In a closed economy, aggregate demand is the sum of ______.
An increase in aggregate demand of equilibrium level of income and employment causes an increase in ______
The difference between the Aggregate Demand at above full employment and Aggregate Demand at full employment is known as ______
Aggregate supply is equal to ______.
What is meant by Equilibrium income?
How is it determined by using Saving and Investment approach?
Which of the following are the definitions of money supply in India?
When the value of the currency falls as compared to other currencies, it is ______
A decrease in Cash Reserve Ratio will lead to ______
It is seen that the private consumption expenditure, private investment expenditure, and ex-ante savings have reduced the ______ in the economy.
What is the circumstance when aggregate output is determined solely by the level of aggregate demand called?
The equilibrium level of income/output is established when ______
The slope of the supply curve is measured by ______.
“In an economy ex-ante Aggregate Demand is less than ex-ante Aggregate Supply.”
Explain its impact on the level of output, income and employment.
If aggregate demand exceeds aggregate supply in a situation of full employment, what will be its impact on the economy?
With the help of a diagram, determine the equilibrium level of output and income by using Aggregate demand and aggregate supply approach.
