Explain how controlling money supply is helpful in reducing Excess Demand.
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Supply of money remaining the same when there is an increase in demand for money, there will be
(c) The quantity of money demanded is inversely related to the interest rate.
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Distinguish between Individuals Demand and Market Demand. Name the factors affecting demand for a good by an individual.
Individuals demand refers to the quantity of a good, single consumer is willing to buy, at a price during a period of time while market demand refers to the quantity...
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What is "Excess Demand" for a good in a market? Explain its chain of effects on the market for that good. Use a schedule.
Px (in Rs.) Dx (in Units) Sx (in Units) 1 10 2 2 8 4 3 6 6 4 4 8 Excess Demand: Excess Demand for a good in a mart occurs when actual price of the good is lower than the equilibrium price. Suppose market price is...
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Supply of money refers to quantity of money:
(c) as on any point of time.
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Explain the role of taxation in reducing excess demand.
By raising taxes, government can reduce Personal Disposable Income of the people. This in turn will reduce private final consumption expenditure depending upon Marginal Propensity to Consume. This will reduce...
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Explain how can government spending be helpful in removing deficient demand.
Deficient Demand means excess of AS over AD at full employment. Since government expenditure is component of AD, increasing it will help in removing deficient demand in the economy.
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Explain various monetary policy instruments that the Central Bank uses to control the excess demand.
There are different policy instruments through which the monetary authority regulates the money supply, thereby, helpful in reducing excess demand in the economy. The following are the various monetary policy...
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What is 'Excess Demand'? Explain the role of 'Reverse Repo Rate' in removing it.
Excess demand refers to a situation when Aggregate Demand (AD) is in excess of Aggregate Supply (AS) corresponding to full employment in the economy. It causes Inflationary Gap in the...
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Distinguish between "Excess Demand" and "Deficient Demand".
Excess Demand-Excess demand refers to a situation when Aggregate Demand (AD) is in excess of Aggregate Supply (AS) corresponding to full employment in the economy. It causes Inflationary Gap in...
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What should be the 'focus point' for a manager while controlling, as controlling at each and every step is not possible?
Focus point for a manager while controlling should be the "Key Result Areas".
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