Arrange the following in correct sequence according to their occurrence.
(A) Reduction in cash reserve ratio by the Reserve Bank.
(B) Involuntary unemployment situation in the economy.
(C) Increase in credit availability in the capital market.
(D) Aggregate demand falls short of aggregate supply, corresponding to full employment in the economy.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → (D), (B), (A), (C)
The events run from a fall in demand, to its effect on jobs, to the Reserve Bank’s response and its result:
(D) Aggregate demand falls short of aggregate supply, corresponding to full employment in the economy. — This is deficient demand, the start of the chain. Demand is not enough to employ all factors of production.
(B) Involuntary unemployment situation in the economy. — Firms produce less and employ fewer people. So people willing to work cannot find jobs.
(A) Reduction in cash reserve ratio by the Reserve Bank. — The Reserve Bank responds to this. A lower ratio means banks can keep less as reserves.
(C) Increase in credit availability in the capital market. — Banks can now lend more, so more credit becomes available. This helps to raise demand.
Note: None of the NCERT books (2026-27, 2025-26, 2023-24 or pre-rationalised) sets out this chain of events or uses the term involuntary unemployment. They explain deficient demand and the cash reserve ratio in separate places, and the order follows by reasoning from these two ideas.