Question

______ refers to that level of Aggregate Demand, which can be met by the corresponding supply in the economy.

Options

• Autonomous Consumption

• Effective Demand

• Excess Demand

• Deficient Demand

Answer 1

Effective Demand refers to that level of Aggregate Demand, which can be met by the corresponding supply in the economy.

Explanation:

Effective demand is that level of aggregate demand which can be met by corresponding aggregate supply in the economy. Autonomous consumption is the level of consumption at zero level of income in the economy. Excess demand means aggregate demand exceeds aggregate supply corresponding to full employment in the economy. Deficient demand means aggregate demand falls short of aggregate supply corresponding to full employment in the economy.