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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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Inflationary gap

EXCESS DEMAND or INFLATIONARY GAP

Excess demand refers to the situation when aggregate demand is in excess of aggregate supply corresponding to full employment in the economy.
                AD>AS
It implies that
a)Desired AD in the economy happens to exceed its full employment level .
b)The level of AD surpasses level of AS even when available factors are fully utilised.
c)The level of output cannot be rise because factors are already fully employed.

Excess demand raises the market value of output because quantum of output remaining constant,higher the demand leads to rise in prices level which implies the situation of inflationary gap .
 
Inflationary gap
Inflationary gap is the excess of AD over and above it's level required to maintain full employment equilibrium in the economy.Higher the excess demand,greater the inflationary gap.
It is measured as the difference between AD beyond full employment and AD at full employment.

Causes of inflationary gap 

a)Private consumption: Increase in private consumption expenditure may occur owing to increase in propensity to consume or decrease in propensity to save .

b) Investment expenditure :Increase in investment expenditure which may occurs owing to soaring business expectations.

c) Government expenditure: Increase in government expenditure owing to its expanding commitment for development as well as welfare projects in the economy.

d)Exports :Increase in exports owing to higher international prices compared with the domestic prices.

e)Imports :Decrease in imports ,owing to higher international prices compared with domestic prices .

f)Tax: A cut in tax rates leaving higher disposal income with the people.

Effects of inflationary gap

a)When AD increases beyond its full employment level ,the pressure of demand on existing supply state mounting up.
b)Mounting pressure causes a rise in prices which is the situation of inflation.
c)Excess demand generates pressure of demand on existing resources.This raises factor cost which further contributes to rise in general price level.
d)A situation may arise when wages start catching prices and vice versa which implies situation of wage price spiral.This generates bottlenecks of growth and economy may hit the path of stagnation.

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