Question : To correct the situation of the deflationary gap, the central bank:
Option 1: increases margin requirement

Option 2: decreases margin requirement

Option 3: increases cash reserve ratio

Option 4: both (a) and (c)

Question

Question : By increasing the tax burden on the households, the government intends to:
Option 1: correct the situation of deficient demand

Option 2: correct the situation of the inflationary gap

Option 3: correct the situation of excess demand

Option 4: both (a) and (c)

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Answer 1

Correct Answer: decreases margin requirement

Solution : The correct answer is (B) decreases margin requirement

To correct the situation of a deflationary gap, where there is insufficient aggregate demand in the economy, the central bank Decreasing the margin requirement refers to lowering the amount of collateral that borrowers need to provide when taking out loans. This action encourages borrowing and investment, increasing spending and aggregate demand.

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Question : To correct the situation of the deflationary gap, the central bank:Option 1: increases margin requirement Option 2: decreases margin requirement Option 3: increases cash reserve ratio Option 4: both (a) and (c)

Related Questions

Question : By increasing the tax burden on the households, the government intends to:Option 1: correct the situation of deficient demand Option 2: correct the situation of the inflationary gap Option 3: correct the situation of excess demand Option 4: both (a) and (c)

Question : The foreign trade effect suggests that an increase in the price level:Option 1: Increases imports and decreases exports Option 2: Decreases imports and increases exports Option 3: Increases both imports and exports Option 4: Decreases both imports and exports

Question : Legal reserve requirement involves- Option 1: Cash reserve ratio Option 2: Statutory liquidity ratio Option 3: Both A and B Option 4: Neither A and B.

Question : What is the full form of CRR?Option 1: Cash Reserve Ratio Option 2: Credit Reserve Ratio Option 3: Currency Reserve Ratio Option 4: None of the above

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Question : To correct the situation of the deflationary gap, the central bank:
Option 1: increases margin requirement

Option 2: decreases margin requirement

Option 3: increases cash reserve ratio

Option 4: both (a) and (c)

Question : By increasing the tax burden on the households, the government intends to:
Option 1: correct the situation of deficient demand

Option 2: correct the situation of the inflationary gap

Option 3: correct the situation of excess demand

Option 4: both (a) and (c)

Question : The foreign trade effect suggests that an increase in the price level:
Option 1: Increases imports and decreases exports

Option 2: Decreases imports and increases exports

Option 3: Increases both imports and exports

Option 4: Decreases both imports and exports

Question : Legal reserve requirement involves-

Option 1: Cash reserve ratio

Option 2: Statutory liquidity ratio

Option 3: Both A and B

Option 4: Neither A and B.

Question : What is the full form of CRR?
Option 1: Cash Reserve Ratio

Option 2: Credit Reserve Ratio

Option 3: Currency Reserve Ratio

Option 4: None of the above

Question : To reduce credit availability in the economy, the Central bank may___
Option 1: Buy securities in the open market

Option 2: Sell securities in the open market

Option 3: Reduce reserve ratio

Option 4: Reduce the repo rate