Deflationary gap refers to a situation when at full employment level of income AD falls short of AS. It is called deficient demand.
Margin requirements refers to the margin on the security provided by the borrower. When margin is lower, the borrowing capacity of the barrow is higher. When central bank lowers the margin the borrowing capacity of the borrowers increase. This raise AD.
Explain the role of margin requirements for correcting the deflationary gap.
Answers
Amarjeet Kumar
Deflationary gap refers to a situation when at full employment level of income AD falls short of AS. It is called deficient demand.
Margin requirements refers to the margin on the security provided by the borrower. When margin is lower, the borrowing capacity of the barrow is higher. When central bank lowers the margin the borrowing capacity of the borrowers increase. This raise AD.