Question

Which of the following statements is not correct regarding Excess Demand?

Options

• Excess Demand raises the market value of output.

• Excess Demand means Aggregate Demand is more than Aggregate Supply.

• Excess Demand is caused due to reduction in the public expenditure.

• Excess Demand is the result of decline in exports.

Answer 1

Excess Demand is the result of decline in exports.

Explanation:

Excess demand occurs when demand for exports grows as a result of reduced domestic goods prices or a fall in the local currency exchange rate.