Arrange the following in correct sequence according to their occurance. (A) Reduction in cash reserve ratio by the Reserve Bank. (B) Involuntary…

Option 4: (D), (B), (A), (C) -> This represents the correct sequence of events in a recessionary scenario and monetary policy response. First, aggregate demand falls short of aggregate supply at full employment level (D), creating a deflationary gap. This deficiency in demand leads to involuntary unemployment (B) as firms reduce production. To address this situation, the Reserve Bank implements expansionary monetary policy by reducing the cash reserve ratio (A). This policy action then results in increased credit availability in the capital market (C), as banks have more funds to lend, potentially stimulating economic activity and addressing the initial demand deficiency. -> correct