Assertion (A): Deficient demand pushes prices up sharply.
Reason (R): Deficient demand means AD is less than output at full employment.

Both A and R are true, and R is the correct explanation of A.Correct answerYour answerBoth A and R are true, but R is not the correct explanation of A.Correct answerYour answerA is true, but R is false.Correct answerYour answerA is false, but R is true.Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer D

Correct answer: D

R is the definition of deficient demand, so it is true.
With too little demand, goods go unsold; prices do not rise sharply. A is false.

Concept: Deficient demand and prices
Typical timeTypical: 70 s
Your timeYours: —

The rule this testsDeficient demand and the deflationary gap

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Assertion (A): Deficient demand pushes prices up sharply.Reason (R): Deficient demand means AD is less than output at full employment.

Explanation

Assertion (A): Deficient demand pushes prices up sharply.
Reason (R): Deficient demand means AD is less than output at full employment.