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Determination of Income and Employment
Question
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How can the problems of excess demand and deficient demand be combated?

Answer

Excess demand and deficient demand can be corrected through government fiscal policy (i.e., government expenditure, taxes) and Central Bank's monetary policy measures (like Bank rate, Open market operations, Cash reserve ratio, etc.).

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Some More Questions From Determination of Income and Employment Chapter

State briefly the Classical Theory and the Keynesian Theory of Income and Employment.

What do you understand by aggregate demand (AD)?

Explain the meaning of aggregate supply (AS).

Calculate consumption level for Y = र 1000 crores if consumption function is C = 300 + 0.5Y.

State relationship between income and consumption.

What is Breakeven point?

What are the types of Propensity to consume?