Match each effect with excess demand or deficient demand.

Match each effect with excess demand or…

Question 14

MediumOriginal question

Match each effect with excess demand or deficient demand.

List I	List II
A. Prices rise with no rise in output	I. Deficient demand: excess stock
B. Unsold stocks pile up	II. Deficient demand: job losses
C. Firms' order books are full and stocks run down	III. Excess demand: inflation
D. Involuntary unemployment rises	IV. Excess demand: shortages

A-III, B-I, C-IV, D-IICorrect answerYour answerA-III, B-IV, C-II, D-ICorrect answerYour answerA-IV, B-III, C-I, D-IICorrect answerYour answerA-II, B-I, C-IV, D-IIICorrect answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer A

Correct answer: A

Too much spending shows up as rising prices and running-down stocks.
Too little spending shows up as piling stocks and lost jobs.

Concept: Effects of the two gaps
Typical timeTypical: 90 s
Your timeYours: —

The rule this testsExcess demand and the inflationary gap

Practise this chapter →

Ten questions from Excess & Deficient Demand, at your own pace.

Practise this chapter →

Ten questions from Excess & Deficient Demand, at your own pace.

Question 14

Explanation