Measures to Correct Deficient and Excess Demand
Examine the various fiscal and monetary policy tools that the government and central bank can use to correct situations of deficient and excess demand and stabilise the economy.
About This Topic
Examine the various fiscal and monetary policy tools that the government and central bank can use to correct situations of deficient and excess demand and stabilise the economy.
Key Questions
- Explain how changes in government spending can be used to correct a deflationary gap.
- Compare the effectiveness of monetary policy versus fiscal policy in combating excess demand.
- Evaluate the role of the bank rate in influencing the level of aggregate demand in the economy.
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