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DETERMINATION OF INCOME AND EMPLOYMENT, (Full Employment, Problematic…

- - - - Ratio of total consumption to total income. Symbolically APC = C/Y
- - - - Consumption = C Investment = I Government spending = G Net export = X-M So A.D = C + I + G + (X-M)
- - - - Meaning
        
        It refers to a situation in which aggregate demand is in excess of aggregates supply corresponding to full employment level.
        
        Problems
        
        Storage of stocks 2. Rise in prices 3. Rise in inflation 4. Deficit currency in value.
      - Deficit Demands
        
        Meaning
        
        It refers to a situation where aggregate demand is deficit of aggregate supply.
        
        Problems
        
        Excess stock. 2. Involuntary unemployment. 3. Price falls. 4. lock out of industries
      - Measures
        
        Change in government saving. 2. Change in available of credit. 3. Change in quantitative investments like bank rate ,SLR. 4. Change in government policies.