What are the measures to correct situation of excess demand/inflationary gap.
or
What is fiscal policy? How is it used to reduce excess demand? Discuss its three measures.
or 
Explain the role of government expenditure and taxation in reducing excess demand. 
or
What is monetary policy? How is it used to reduce excess demand? Discuss its measures. 
or
What is bank rate? Explain its role in reducing excess demand.
or
How do changes in bank rate affect money creation by commercial banks? Explain. 
or
What are open market operations? How do these affect availability of credit?
or
How do changing cash reserve ratio (CRR) affect availability of credit?
or
Explain role of 'varying reserve requirement' in removing inflationary gap.
or
Explain role of 'legal reserves' in correcting inflationary gap.