Fiscal measures to correct deficient demand in an economy are discussed below: 

(1) Increase in government spending: Government spends money on public works that include infrastructural activities and administrative activities. To rectify deficient demand, the government should increase expenditure on public works such as the construction of highways, flyovers and buildings. Such expenditures increase employment opportunities and provide additional income to people. Increasing public expenditure will help to increase aggregate demand and correct the situation of deficient demand.

(ii) A decrease in taxes: Government collects revenue from people in the form of taxes. Higher taxes imply lower disposable income and lower ability to spend. Thus, to rectify the situation of deficient demand, the government can lower taxes, which help in increasing people’s disposable income. As a result, the ability to spend money goes up and the aggregate demand is likely to increase.