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Land utilisation

  LAND UTILIZATION  Land is a scarce resource, whose supply is fixed for all practical purposes. At the same time, the demand for land for various competing purposes is continuously increasing with the increase in human population and economic growth.Land use pattern at any given time is determined by several factors including size of human and livestock population, the demand pattern, the technology in use, the cultural traditions, the location and capability of land, institutional factors like ownership pattern and rights scale regulation. Major Types of Land Utilization in India : As in all other countries, land in India is put to various uses. The utilization of land depends upon physical factors like topography, soil and climate as well as upon human factors such as the density of population, duration of occupation of the area,land tenure and technical levels of the people.There are spatial and temporal difference in land utilization due to the continued interplay of phys...
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Deflationary gap

DEFICIT DEMAND or DEFLATIONARY GAP

DEFICIT demand refers to the situation when aggregate demand is short of aggregate supply corresponding to the full employment in the economy .
                   AD>AS 
This implies that 
- AD is short of its full employment level.
-AS converges with AD at level lower than full employment.

Owing to the deficit AD , equilibrium between AD and desired AS is struck at a level lower than full employment which creates a situation of underemployment in the economy.

Deflationary gap 
It is a situation when resources are not fully utilised and there is excess capacity in the economy. Deficit aggregate demand is often described as situation of deflationary gap .It is Shortfall in AD from the level required to maintain full employment equilibrium. There is involuntary unemployment in the economy in such a situation.
It is  measured as the difference between desired AD corresponding to the full employment and desired AS corresponding to under employment . It emerges because sectors are not fully employed and economy is operating  in situation of underemployment equilibrium.
It is described as the situation where the economy is caught in low level equilibrium trap.Level of income and employment is low because demand is low and demand is low because income and employment is low.

Causes of deflationary gap
a)Private consumption expenditure : Private consumption expenditure may reduce owing to reduction in propensity to consume or increase in propensity to save.

b)Investment expenditure: Any Reduction in investment implies reduction in aggregate demand. Investment expenditure may reduce in situation of poor business.

c) Government expenditure : During the situation of bloating inefficiency,instead of making fresh investments,the government may resist to disinvestment.

d)Exports: Decline in exports occur due to lack of demand in the rest of the world.

e)Imports :Rise in imports implies a cut in aggregate demand. This rises when international prices are lower than domestic prices .

f)Tax rates: Increase in tax rates leaves lesser disposable income with the people. It reduces their capacity to spend even when their propensity to spend remains the same. Lower disposable income means low level of AD.

Effect of Deflationary gap

a)When aggregate demand fails to facilitate fuller utilisation of factors and there is excess capacity with the producers they tend to build an unwanted inventory stock.
b)Idle inventory stock would force the producers to plan lesser production implying a cut in planned aggregate supply.
c)A cut in planned aggregate supply implies a situation in level of planned output.
d)Reduction in level of planned output causes situation of reduction in employment implying a reduction in level of income. Thus the economy got trap in low level equilibrium trap .

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