Explain the concept of deflationary gap. Also explain the role of “margin requirements” in reducing it

      

Explain the concept of deflationary gap. Also explain the role of “margin requirements” in reducing it

  

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marlyne
Deflationary gap is the shortfall in aggregate demand from the level required to maintain full employment equilibrium in the economy.
During deflationary gap or deficient demand margin requirement is reduced, which induces borrowing. This raises borrowings in the economy. As a result, the flow of credit rises and therefore aggregate demand rises.
marlinbito answered the question on May 12, 2018 at 13:17


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