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Question : 12
Total: 21
"The Government has raised the exemption limit for the payment of Income tax from ₹2 lakh to ₹2.5 lakh."
If the situation of deficient demand is prevailing in the economy, what will be the impact of this action taken by the government?
If the situation of deficient demand is prevailing in the economy, what will be the impact of this action taken by the government?
Solution:
A rise in the exemption limit from 2 lakh to 2.5 lakh will help in correcting the situation of deficient demand. It will increase the disposable income which will induce them to increase the expenditure and ultimately demand will increase. Thus, it is a good step of government to correct deficient demand.
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