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Consider the following statements.
1. The equilibrium level of output may be more or less than the full employment level of output
2. If it is less than the full employment of output, it is due to the fact that demand is not enough to employ all factors of production
3. This situation is called the situation of deficient demand
Which of these statements are correct?
- a)1 and 2 Only
- b)2 and 3 Only
- c)1 and 3 Only
- d)All of them
Correct answer is option 'D'. Can you explain this answer?
Most Upvoted Answer
Consider the following statements.1. The equilibrium level of output ...
Equilibrium Level of Output
The equilibrium level of output is the level of output where aggregate demand equals aggregate supply. It is the level of output where the economy is in balance, and there is no tendency for the economy to either expand or contract.
Full Employment Level of Output
The full employment level of output is the level of output where all the factors of production are fully employed. At this level of output, there is no involuntary unemployment in the economy.
Statement 1 - Correct
The equilibrium level of output may be more or less than the full employment level of output. This is because the equilibrium level of output depends on both the level of aggregate demand and the level of aggregate supply in the economy.
Statement 2 - Correct
If the equilibrium level of output is less than the full employment level of output, it is due to the fact that demand is not enough to employ all factors of production. In other words, there is deficient demand in the economy.
Statement 3 - Correct
This situation is called the situation of deficient demand. In this situation, there is not enough demand in the economy to employ all the factors of production at their full capacity. As a result, there is involuntary unemployment in the economy.
Conclusion
Hence, all the given statements are correct. The equilibrium level of output depends on both the level of aggregate demand and the level of aggregate supply in the economy. If the equilibrium level of output is less than the full employment level of output, it is due to the fact that there is deficient demand in the economy. This situation is called the situation of deficient demand, and it results in involuntary unemployment in the economy.
The equilibrium level of output is the level of output where aggregate demand equals aggregate supply. It is the level of output where the economy is in balance, and there is no tendency for the economy to either expand or contract.
Full Employment Level of Output
The full employment level of output is the level of output where all the factors of production are fully employed. At this level of output, there is no involuntary unemployment in the economy.
Statement 1 - Correct
The equilibrium level of output may be more or less than the full employment level of output. This is because the equilibrium level of output depends on both the level of aggregate demand and the level of aggregate supply in the economy.
Statement 2 - Correct
If the equilibrium level of output is less than the full employment level of output, it is due to the fact that demand is not enough to employ all factors of production. In other words, there is deficient demand in the economy.
Statement 3 - Correct
This situation is called the situation of deficient demand. In this situation, there is not enough demand in the economy to employ all the factors of production at their full capacity. As a result, there is involuntary unemployment in the economy.
Conclusion
Hence, all the given statements are correct. The equilibrium level of output depends on both the level of aggregate demand and the level of aggregate supply in the economy. If the equilibrium level of output is less than the full employment level of output, it is due to the fact that there is deficient demand in the economy. This situation is called the situation of deficient demand, and it results in involuntary unemployment in the economy.
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Consider the following statements.1. The equilibrium level of output ...
- Full employment level of income is that level of income where all the factors of production are fully employed in the production process. Recall that equilibrium attained at the point of equality of Y and AD by itself does not signify full employment of resources.
- Equilibrium only means that if left to itself the level of income in the economy will not change even when there is unemployment in the economy. The equilibrium level of output may be more or less than the full employment level of output.
- If it is less than the full employment of output, it is due to the fact that demand is not enough to employ all factors of production.
- This situation is called the situation of deficient demand. It leads to decline in prices in the long run. On the other hand, if the equilibrium level of output is more than the full employment level, it is due to the fact that the demand is more than the level of output produced at full employment level.
- This situation is called the situation of excess demand. It leads to rise in prices in the long run.
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Consider the following statements.1. The equilibrium level of output may be more or less than the full employment level of output2. If it is less than the full employment of output, it is due to the fact that demand is not enough to employ all factors of production3. This situation is called the situation of deficient demandWhich of these statements are correct?a) 1 and 2 Onlyb) 2 and 3 Onlyc) 1 and 3 Onlyd) All of themCorrect answer is option 'D'. Can you explain this answer?
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Consider the following statements.1. The equilibrium level of output may be more or less than the full employment level of output2. If it is less than the full employment of output, it is due to the fact that demand is not enough to employ all factors of production3. This situation is called the situation of deficient demandWhich of these statements are correct?a) 1 and 2 Onlyb) 2 and 3 Onlyc) 1 and 3 Onlyd) All of themCorrect answer is option 'D'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements.1. The equilibrium level of output may be more or less than the full employment level of output2. If it is less than the full employment of output, it is due to the fact that demand is not enough to employ all factors of production3. This situation is called the situation of deficient demandWhich of these statements are correct?a) 1 and 2 Onlyb) 2 and 3 Onlyc) 1 and 3 Onlyd) All of themCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements.1. The equilibrium level of output may be more or less than the full employment level of output2. If it is less than the full employment of output, it is due to the fact that demand is not enough to employ all factors of production3. This situation is called the situation of deficient demandWhich of these statements are correct?a) 1 and 2 Onlyb) 2 and 3 Onlyc) 1 and 3 Onlyd) All of themCorrect answer is option 'D'. Can you explain this answer?.
Consider the following statements.1. The equilibrium level of output may be more or less than the full employment level of output2. If it is less than the full employment of output, it is due to the fact that demand is not enough to employ all factors of production3. This situation is called the situation of deficient demandWhich of these statements are correct?a) 1 and 2 Onlyb) 2 and 3 Onlyc) 1 and 3 Onlyd) All of themCorrect answer is option 'D'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements.1. The equilibrium level of output may be more or less than the full employment level of output2. If it is less than the full employment of output, it is due to the fact that demand is not enough to employ all factors of production3. This situation is called the situation of deficient demandWhich of these statements are correct?a) 1 and 2 Onlyb) 2 and 3 Onlyc) 1 and 3 Onlyd) All of themCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements.1. The equilibrium level of output may be more or less than the full employment level of output2. If it is less than the full employment of output, it is due to the fact that demand is not enough to employ all factors of production3. This situation is called the situation of deficient demandWhich of these statements are correct?a) 1 and 2 Onlyb) 2 and 3 Onlyc) 1 and 3 Onlyd) All of themCorrect answer is option 'D'. Can you explain this answer?.
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