✓ Board-verified
Economics · 2022 · 3 marks
CBSE 2022 · Region 2 · Set 1 · Q9
Define Inflationary Gap. State, how the government can control the situation of inflationary gap, using the taxation policy.
Define Inflationary Gap. State, how the government can control the situation of inflationary gap, using the taxation policy.
Marking-scheme solution
Inflationary gap refers to the situation when Aggregate Demand is greater than Aggregate Supply, corresponding to full employment level of output.
The government may raise the existing taxes rates/levy new taxes to reduce the disposable income in the hands of general public. This will help to manage inflationary situation in the economy.
All Determination of Income and Employment questions2022 question paperPractice Determination of Income and Employment →
More from Determination of Income and Employment
- At the break-even point level of incomes for the economy is ₹ 10,000 crores and if the people tends to save 20 per cent of their additional income,…2022
- Calculate the Equilibrium level of Income for an imaginary economy, if it is given that: Saving function, S = (–)500 + 0·2 Y where S = Savings, Y =…2022
- State and discuss any one component of Aggregate Demand in a two-sector economy.2022
- 'Investment multiplier and Marginal Propensity to Save are indirectly related to each other.' Explain with the help of numerical example.2022
- Assuming for a hypothetical economy, the following data is given: Income (Y) Consumption Investment (I) Aggregate Demand (AD) 0 20 20 40 100 100 20 –…2026
- “In an economy, ex-ante Aggregate Supply is more than ex-ante Aggregate Demand.” Explain its impact on the level of output, income and employment. OR…2024
- Identify which of the following equations is true. (Choose the correct alternative)2023
- Suppose in an economy, planned spendings are greater than planned outputs. Identify the correct option with respect to effects on the economy: (i)…2025
CBSE Class 12 Economics past-paper question from the 2022 board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.