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explain distinction between excess demand and deficient demand using diagram

Dear Student

Deficient demand is the situation when Aggregate Demand is less than Aggregate Supply corresponding to full employment condition . 


Excess demand is the situation when aggregate demand is greater than aggregate supply corresponding to full employment .


EF = inflationary gap
= excess demand

Regards .


 

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when the demand is more than the supply it is called as excess demand and when the supply is more than the demand it is called excess supply or deficit demand.
 
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