The concept of 'deflationary gap' in Keynesian economics specifically refers to:

CA Foundation · Business Economics · RTP · May 2026
The concept of 'deflationary gap' in Keynesian economics specifically refers to:
(A) A. The excess of actual output over potential GDP at full employment
(B) B. The shortfall in aggregate demand required to achieve full employment equilibrium
(C) C. The reduction in price levels due to contractionary monetary policy
(D) D. The difference between actual inflation and target inflation rates

Suggested Answer and Working Notes:

Correct Answer: Option (B)

B. The shortfall in aggregate demand required to achieve full employment equilibrium

Topics: Determination of National Income

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