Match List-I with List-II
|
List-I |
List-II |
|
(A) Inflationary gap |
(I) A cause of deficiency of AD |
|
(B) Decline in exports |
(II) A monetary measure to correct disequilibrium between AD and AS |
|
(C) Cash reserve ratio |
(III) Pursued by the government of the country |
|
(D) Fiscal policy |
(IV) There is no unemployment or underemployment in the country |
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → (A)-(IV), (B)-(I), (C)-(II), (D)-(III)
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A) Inflationary gap → (IV) There is no unemployment or underemployment in the country. An inflationary gap arises when Aggregate Demand (AD) exceeds Aggregate Supply (AS) at the full employment level — i.e., when there is no involuntary unemployment. It leads to upward pressure on prices.
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(B) Decline in exports → (I) A cause of deficiency of AD. Exports are a component of AD. If exports decline, AD falls, causing deficient demand.
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(C) Cash Reserve Ratio (CRR) → (II) A monetary measure to correct disequilibrium between AD and AS. CRR is a monetary policy tool used by the central bank to control money supply and adjust AD.
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(D) Fiscal policy → (III) Pursued by the government of the country. Fiscal policy involves government taxation and spending, and is implemented by the government, not the central bank.