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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.
Explain how government spending can be helpful in removing deficient demand.
Derive the two alternative conditions of expressing national income equilibrium. Show these equilibrium conditions on a single diagram.
What is meant by inflationary gap?
State three measures to reduce inflationary gap.
Define aggregate supply?
Explain the role of Repo Rate in reducing the Inflationary gap.
explain the role of Bank Rate in correcting deficient demand?
Explain the role of 'Margin Requirements' in removing this deficient demand gap.
Explain the determinants of aggregate supply.
Discuss the situation when aggregate demand is more than aggregate supply at full employment income level.
State whether the following statements are True or False with reason:
Income earned from foreign investment is considered for aggregate demand.
How will you derive the autonomous expenditure multiplier when the price of final goods and the rate of interest are given?
Fill in the blank with appropriate alternatives given below
That part of income, which is not spent on consumption, is called __________.
Match the following Group:
| Group A | Group B | ||
| 1) | Aggregate Supply | a) | Expected receipts |
| 2) | Autonomous Investment | b) | Lord J. M. Keynes |
| 3) | Consumption | c) | Government Investment |
| 4) | A.P.C. | d) | ΔC/ΔY |
| 5) | Investment | e) | C/Y |
| f) | Addition to stock of capital | ||
| g) | Destruction of utility | ||
State whether the following statement is true or false.
The equality between aggregate demand and aggregate supply determines the equilibrium level of employment.
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:
Average Propensity to Consume
Write Short note on:
Marginal Propensity to Consume
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.
Write explanatory answer.
What is 'aggregate supply'? Explain the determinants of aggregate supply.
Explain the concept of deficient demand with the help of aggregate demand and aggregate supply curves. Discuss one physical and one monetary measure to correct it.
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.
On which factor Keynesian Theory of Employment depends?
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 ______
Aggregate supply is equal to ______.
Identify the correctly matched pair from Column A to Column B:
| Column A | Column B |
| (1) Y = AD | (a) Level of output at full employment |
| (2) Forward Multiplier | (b) Withdrawal of investment decreases income |
| (3) Paradox of Thrift | (c) People save less or same as before |
| (4) Multiplier (k) < 1 | (d) 0 < MPC < 1 |
A decrease in Cash Reserve Ratio will lead to ______
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 ______
Why is effective demand also known as expost demand?
If aggregate demand exceeds aggregate supply in a situation of full employment, what will be its impact on the economy?
