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Economics

Measures to correct excess/deficient demand - Government spending

In Class 12 Economics, this topic from “Determination of Income and Employment” explains how government spending can correct excess demand and deficient demand. Students learn why reducing public expenditure can control inflationary pressure when aggregate demand is too high, while increasing expenditure can raise demand, output, income and employment during a demand shortage. The topic also connects government expenditure with fiscal policy, the multiplier effect and macroeconomic stability.

Medium · Level 1 · 6 questions

TOPIC PRACTICE

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6 questions

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  1. It adds spending to the income flow
  2. It always removes income
  3. It only changes a shop's name
  4. It changes the taste of one fruit
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  1. To decorate one shop
  2. To increase aggregate demand and employment
  3. To change one consumer’s taste
  4. To change the packaging of one good
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  1. It adds government demand to total spending and the income flow
  2. It always reduces total spending
  3. It consists only of tax collection
  4. It is only the cost incurred by one firm
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  1. The relation between personal taste and colour
  2. The rent of one shop
  3. Government can withdraw and add purchasing power to the income flow
  4. All prices always remain stable
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  1. Decorating one shop.
  2. Supporting aggregate demand and employment.
  3. Changing the colour of one good.
  4. Changing an individual's taste.
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  1. The effect of fiscal policy on demand
  2. The cost policy of one firm
  3. The equilibrium of one consumer
  4. The individual market for one good

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