How to control deficient demand? To arrest deflation, attempts are made to raise the volume of aggregate effective demand. As the aggregate demand expenditure falls short of the aggregate supply of output, the prime step of fighting deflation is to ..
Deficient demand! How does it produce depression in the economy? Deficient demand refers to the situation when aggregate demand for goods and services falls short of aggregate supply of output which is produced by fully employing the given resources of the economy.
Deficient demand produces adverse effects upon employment, output and the price level in the following manner. If aggregate demand is less than aggregate supply, entire amount of goods produced in an economy is not sold.
Deficient demand and excess demand can be distinguished from each other in the following manner. Deficient demand is a situation, which occurs due to excess of aggregate supply of output over the aggregate demand for output at the level of full employment.