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Problems Of Deficient Demand And Excess Demand

ICSE · Class 12 · Economics

Complete topic list for Problems Of Deficient Demand And Excess Demand in ICSE Class 12 Economics. Key concepts, sub-topics, and what to focus on for board exams.

70 questions36 flashcards5 concepts

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4 Topics · ICSE Class 12 Economics

Topics in Problems Of Deficient Demand And Excess Demand

1

1. Core Meaning of Demand Imbalances

  • The equilibrium level of income under Keynesian framework need not be at full employment level.
  • If aggregate demand is less than full-employment aggregate supply, the economy reaches under-employment equilibrium.
  • This situation is called deficient demand.
2

2. Diagram-Based Understanding

  • In the excess demand diagram, full employment output = ON.
  • Required aggregate demand at full employment = BM.
  • Current aggregate demand = AM.
3

3. Causes and Consequences of Deficient Demand

  • Causes of deficient demand include credit contraction, cut in government expenditure, rise in taxes, and rise in propensity to save.
  • Unsold inventory piles up with producers beyond the desired level.
  • Producers plan to cut production in the next round.
4

4. Causes and Consequences of Excess Demand

  • Causes of excess demand include increase in private investment due to credit facilities, increase in money supply through deficit financing, rise in consumption demand due to higher MPC or lower MPS,
  • Excess demand creates many problems in the economy.
  • Output of goods and services remains constant in excess demand.

Key Concepts

Central concept: Demand disequilibrium at full employment

Deficient DemandExcess DemandDeflationary GapInflationary GapFiscal PolicyMonetary PolicyQuantitative MethodsQualitative Methods

Frequently Asked Questions

What are the important topics in Problems Of Deficient Demand And Excess Demand for ICSE Class 12 Economics?
Problems Of Deficient Demand And Excess Demand covers several key topics that are frequently asked in ICSE Class 12 board exams. Focus on the core concepts listed on this page and practise related questions to build confidence.
How to score full marks in Problems Of Deficient Demand And Excess Demand — ICSE Class 12 Economics?
Understand the core concepts first, then work through the 70 practice questions available for this chapter. Revise formulas and definitions regularly, and use flashcards for quick recall before the exam.

Sources & Official References

Content is aligned to the official syllabus. Refer to the board website for the latest curriculum.

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