Option 1: Deficient Demand -> When output equilibrium is less than the full employment level, it indicates that the aggregate demand in the economy is insufficient to support full employment. This situation is known as Deficient Demand or Deflationary Gap. It results in unemployment, underutilization of resources, and production below the economy's potential. To correct this, expansionary fiscal or monetary policies are typically implemented to boost aggregate demand and move the economy toward full employment equilibrium. -> correct
If output equilibrium is less than the full employment level, then this condition is known as:
CUET UG 2025 — Economics Macro
If output equilibrium is less than the full employment level, then this condition is known as:
Held on 13 May 2025 · Verified 13 Jul 2026.
Options
- A
Deficient Demand.
- B
Constant Demand.
- C
Marginal Demand.
- D
Aggregate Demand.
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