Commerce Exam  >  Commerce Notes  >  Crash Course of Macro Economics -Class 12  >  MCQs - Problem & Measure To Correct Excess and Deficient Demand

MCQs - Problem & Measure To Correct Excess and Deficient Demand | Crash Course of Macro Economics -Class 12 - Commerce PDF Download

Q.1 Which of the following is/are the qualitative tool of Central Bank ? 

(a) Moral suasion
(b) Margin requirement

(c) Bank rate

(d) Both (a) and (b)
Ans: D

Q.2 In a situation of ‘Inflationary Gap’ at the full employment level of income: 

(a) AD < AS
(b) AD > AS
(c) AD = AS

(d) None

Ans: B

Q.3 Which of the following measures of meeting deficit in a budget, leads to an increase in money supply in the economy. (Choose the correct alternative)

(a) Disinvestment
(b) Loan from World Bank

(c) Deflict Financing
(d) All of these
Ans: C

Q.4 “Change in government revenue” is part of

(a) Fiscal policy

(b) Monetary policy

(c) Either (a) or (b)
(d) Neither (a) nor (b)
Ans: A


Q.5 When the government prints and circulates more currency in the economic system,it must

(a) bring down the general price level.
(b) push up the general price level.

(c) increase the supply of goods in the economy.

(d) None of the above.

Ans: C

Q.6 To fight deflation, the government should

(a) increase income tax rate.
(b) cut back its own expenditure

(c) increase investment by giving monetary and fiscal incentives
(d) increase bank rate.
Ans: C


Q.7 He responsibility of fiscal policy lies with

(a) the government
(b) the central government

(c) the commercial bank
(d) the stock exchanges
Ans: B


Q.8 Identify the correct statement 

(a) Excess demand leads to decrease in output.

(b) Increase in CRR increases the lending capacity of the banks.

(c) Reduction in government spending leads to fall in income.

(d) Monetary policy is the policy of the government to control credit and money supply.
Ans: C

Q.9 _____ is exercised through discussions, letters and speeches to banks.

(a) Moral suasion
(b) Selective Credit Control
(c) Margin Requirements

(d) OMO
Ans: A

Q.10 Which of these of fiscal policy can be used to correct deficient  demand ? 

(a) Increase in government expenditure
(b) Cut in tax rates

(c) Cut in public borrowing
(d) All of these
Ans: D

Q.11 Wage-price spiral is a consequence of:

(a) inflationary gap

(b) deflationary gap
(c) stagflation

(d) both (a) and (c)
Ans: A

Q.12 Which of the these of monetary policy can be adopted to correct excess demand ?

(a) Increase in repo rate
(b) Increase in CRR

(c) Increase in margin requirement

(d) All of these
Ans: D

The document MCQs - Problem & Measure To Correct Excess and Deficient Demand | Crash Course of Macro Economics -Class 12 - Commerce is a part of the Commerce Course Crash Course of Macro Economics -Class 12.
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FAQs on MCQs - Problem & Measure To Correct Excess and Deficient Demand - Crash Course of Macro Economics -Class 12 - Commerce

1. What is excess demand in commerce and why is it a problem?
Ans. Excess demand in commerce refers to a situation where the demand for a product or service exceeds its supply. This can lead to shortages, price hikes, and dissatisfaction among customers. It is a problem because it can result in lost sales opportunities for businesses and disrupt the equilibrium in the market.
2. What is deficient demand in commerce and why is it a problem?
Ans. Deficient demand in commerce occurs when the demand for a product or service falls short of its supply. This can lead to excess inventory, decreased sales, and financial losses for businesses. It is a problem because it indicates a lack of consumer interest or purchasing power, which can affect the overall health of the economy.
3. What are the potential measures to correct excess demand in commerce?
Ans. To correct excess demand in commerce, businesses can consider implementing measures such as increasing production capacity, improving supply chain efficiency, implementing rationing or allocation systems, and adjusting prices to manage demand. They can also explore partnerships with suppliers to increase the availability of raw materials or components.
4. What are the potential measures to correct deficient demand in commerce?
Ans. To correct deficient demand in commerce, businesses can adopt strategies such as marketing and advertising campaigns to increase awareness and stimulate demand. They can also consider offering discounts, promotions, or introducing new product variations to attract customers. Additionally, businesses can explore new markets or target different customer segments to expand their customer base.
5. What are the consequences of not addressing excess or deficient demand in commerce?
Ans. Failing to address excess or deficient demand in commerce can have significant consequences. Excess demand can lead to dissatisfied customers, lost sales, and damage to a company's reputation. On the other hand, deficient demand can result in financial losses, excess inventory, and potential layoffs or downsizing. Both situations can negatively impact a business's profitability and long-term sustainability.
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