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Economics · 2022 · 5 marks
CBSE 2022 · Region 4 · Set 1 · Q11
Explain the concept of deficient demand. How can government spending policy be helpful in correcting the situation of deficient demand?
Explain the concept of deficient demand. How can government spending policy be helpful in correcting the situation of deficient demand ?
Marking-scheme solution
Deficient demand refers to a situation when Aggregate Demand falls short of Aggregate Supply corresponding to full employment level of output in an economy.The government may plan to increase its spending, to correct deficient demand. This may lead to increase in disposable income (purchasing power) in the hands of the general public. Thus, Aggregate Demand will rise and deficient demand will be managed accordingly.
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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.