--%>

Concept of deflationary gap

Elucidate the concept of deflationary gap.

Answer: Deflationary gap is the deficit in aggregate demand from the level needed to maintain full employment equilibrium.

   Related Questions in Macroeconomics

  • Q : Limitation of credit availability What

    What occurs to economy, when credit availability is limited and credit is made costlier? Answer: Aggregate demands falls

  • Q : Crisis in Japan & US Question: What can

    Question: What can we learn from the Japanese experience? Is the US headed for a 'lost decade? Answer: There was a similari

  • Q : Collecting cost-Revenue data from

    Collect cost, revenue data or other relevant data from the airbus industry and describe how you would modify the data to make it relevant to decisions a manager should make.

  • Q : What is Equilibrium quantity

    Equilibrium quantity: It is the quantity supplied and the quantity demanded at equilibrium price.

  • Q : Income approach to evaluate national

    Explain in short the income approach to evaluate national income. Answer: Under income method to compute the National Income, the steps given below have been taken into account: A) First of all production units tha

  • Q : Principles of macroeconomics Explain

    Explain the concept of “economies of scale” and “increasing returns”.

  • Q : Cost-push inflation Describe cost-push

    Describe cost-push inflation and its major source.

  • Q : What is multiplier Multiplier : The

    Multiplier: The Multiplier is the ratio of change in income by the change in investment. Multiplier (k) = ΔY/ΔI

  • Q : Fiscal Monetary changes With the

    With the general equilibrium framework in place, the stage is now set for introducing fiscal and monetary changes and analysing their effects on the general equilibrium. We will first introduce a fiscal change in the form of increase in deficit-financed expenditure, a

  • Q : Components of aggregate demand What are

    What are the components of aggregate demand (AD)? Answer: The components of AD are as follows:AD = C + I + G + (X - M) By Simplifying AD = C + I, Here C refers to Household consumption demand and I refer