Question

Write two reasons of deficient demand?

Hint:

Deficient demand can lead to economic slowdown as it signals underutilization of resources in the economy.

Answer 1

Step 1: Understanding Deficient Demand.
Deficient demand occurs when the demand for goods and services in the economy is less than the supply at the prevailing price level. Two reasons for deficient demand are: 

1. Low Income: When the income of individuals in the economy is low, they are unable to afford goods and services, which leads to deficient demand. 

2. High Prices: If the price levels are too high, consumers may not be able to purchase enough goods and services, leading to a lack of demand.

Step 2: Conclusion.
Thus, low income and high prices are the key reasons for deficient demand in an economy.