Determination of Income and Employment-Aggregate Demand and Its Components (CBSE (Central Board of Secondary Education- Board Exam) Class-12 Economics): Questions 1 - 1 of 1

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Question number: 1

» Determination of Income and Employment » Aggregate Demand and Its Components

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Explain the meaning of underemployment equilibrium. State two policy measures that the government can take to make the economy reach full employment equilibrium.


An economy is in equilibrium when aggregate demand is equal to aggregate supply. If aggregate demand is only sufficient to support a level of aggregate supply at less than full employment, then the economy is in under full employment equilibrium.

The two policy measures that the government can take are:

(i) Increase government expenditure


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