100 MCQS of Excess Demand and Deficient Demand Macroeconomics class 12

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Looking for important MCQs of Excess Demand and Deficient Demand chapter with answers of Macroeconomics class 12 of CBSE, ISC, and other State Boards.

We have compiled a huge list of Multiple Choice Questions of Excess Demand and Deficient Demand chapter of Macroeconomics

Multiple Choice Questions of Excess Demand and Deficient Demand chapter with answers of Macroeconomics class 12

Let’s Practice

__ is exercised through discussions, letters, and speeches to banks:

a) Moral suasion
b) Selective Credit Controls
c) Margin Requirements
d) Open Market Operations

Ans – a)

Which of the following is not the reason for excess demand?

a) Fall in the propensity to consume
b) Reduction in taxes
c) Decrease in investments
d) Deficit Financing

Ans – a), c)

Increase in cash reserve ratio will lead to:

a) Fall in Aggregate Demand
b) Rise in Aggregate Demand
c) No change in Aggregate Demand
d) Reduces credit creating power of Commercial banks

Ans – a), d)

The gap by which actual aggregate demand exceeds the aggregate demand required to establish full
employment equilibrium is known as _ .

a) Deficient Demand
b) Deflationary gap
c) Inflationary gap
d) Excess Demand

Ans – c)

“Change in Government Spending” is a part of:

a) Monetary Policy
b) Fiscal Policy
c) Either a) or b)
d) Neither a) nor b)

Ans – b)

__ refers to the situation when aggregate supply falls showt of aggregate demand
corresponding to full employment level of output in the economy.

a) Deficient Demand
b) Excess Demand
c) Inflationary Gap
d) Deflationary gap

Ans – b)

Excess demand leads to:

a) Increase in the level of employment
b) Decrease in the level of employemnt
c) No change in the level of employment
d) Increase in Price level

Ans – c), d)

Deficient Demand indicates:

a) Under employment equilibrium
b) Over full employment equilibrium
c) Full employment equilibrium
d) None of these

Ans – a)

Monetary Policy is the policy of _ to control money supply and credit creation in the
economy.

a) Central Government
b) Central Bank
c) Both a) and b)
d) None of these

Ans – b)

During excess demand, central bank __ the margin.

a) Decreases
b) Increases
c) Removes
d) Does not change

Ans – b)

If an economy is to control recession like most of the Euro Zone nations, which of the following
can be appropriate:

a) Reducing Repo Rate
b) Reducing CRR
c) Both a) and b)
d) None of a) and b)

Ans – c)

Aggregate demand can be increased by:

a) increasing bank rate
b) selling government securities by Reserve Bank of India
c) increasing cash reserve ratio
d) none of the above

Ans – d)

The monetary policy generally targets to ensure _ .

a) Price stability in the economy
b) Employment generation in the country
c) Stable foreign relations
d) Greater tax collections for the government

Ans – a)

Excess Demand can be controlled through:

a) Monetary Policy
b) Fiscal Policy
c) Both a) and b)
d) Neither a) nor b)

Ans – c)

An economy is at full employment and AD is greater than AS, what will be the impact on price level
in such an economy?

a) Rise
b) Fall
c) No change
d) Both rise and fall

Ans – a)

Which of the following can be used to correct inflationary gap under Monetary Policy?

a) Increase in Taxation
b) Reduce availability of credit
c) Cut in Government Expenditure
d) None of these

Ans – b)

Deficient Demand leads to:

a) Decrease in Planned Output
b) Fall in General Prices
c) Both a) and b)
d) Rise in Employment Level

Ans – c)

During deflation, it is advisable to:

a) Lower the bank rate and purchase of securities in the open market
b) Increase the bank rate and purchase of securities in the open market
c) Lower the bank rate and sale of securities in the open market
d) Increase the bank rate and sale of securities in the open market

Ans – a)

The effects of excess demand in an economy are:

a) Increase in Output, Employment, and Price Level
b) Decrease in Output, Employment, and Price Level
c) Increase in Price Level but no change in Output and Employment
d) Increase in Output but no change in Employment and Price Level

Ans – c)

To reduce credit availability in the economy, the central bank may _ .

a) Buy securities in the open market
b) Sell securities in the open market
c) Reduce Reserve ratio
d) Reduce repo rate

Ans – b)

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