how does change in bank rate control the situation of excess and defic

1.	how does change in bank rate control the situation of excess and deficient demand?? please answer this question
Answer» Answer: Some of the MEASURES to rectify the situation of excess demand are:1 Fiscal policy, 2 Monetary Policy 3 Miscellaneous 1. Fiscal Policy Fiscal policy is the expenditure and revenue ( taxation) policy of the government to accomplish the desired objectives. In case of excess demand ( when current demand is more than AS at full EMPLOYMENT ), the objective of fiscal policy is to reduce aggregate demand. THE MAIN TOOLS OF FISCAL POLICY In situation LIKE that of excess demand, government should curtail its expenditure on public works , thereby reducing the money income of the people and their demand for goods and SERVICES. In this WAY, government should reduce the budget deficit which shows excess of expenditure over revenue

how does change in bank rate control the situation of excess and deficient demand?? please answer this question

Answer»

Answer:

Some of the MEASURES to rectify the situation of excess demand are:1

Fiscal policy, 2 Monetary Policy 3 Miscellaneous

1. Fiscal Policy

Fiscal policy is the expenditure and revenue ( taxation) policy of the government to accomplish the desired objectives.

In case of excess demand ( when current demand is more than AS at full EMPLOYMENT ), the objective of fiscal policy is to reduce aggregate demand.

THE MAIN TOOLS OF FISCAL POLICY

In situation LIKE that of excess demand,

government should curtail its expenditure on public works , thereby reducing the money income of the people and their demand for goods and SERVICES. In this WAY, government should reduce the budget deficit which shows excess of expenditure over revenue

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