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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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Monetary Measures to correct inflationary and deflationary gap

Monetary Measures to correct inflationary and deflationary gap

Monetary measures
Monetary policy is that policy of government which corrects the situation of excess and deficit demand by regulating interest rate and availability of credit in the economy.
The cost of credit is raised and availability of credit is reduces when excess demand is to be correct . It is called as Dear money policy.
The cost of credit is reduced and availability of credit is increased when deficit demand is to be corrected . It is called as cheap money policy.

Component of monetary policy and the way which can help to correct inflationary and deflationary gap

a)Bank rate : Bank rate is the rate at which the central bank lends money to the commercial banks .It is also called as repo rate.
In the situation of excess demand ,bank rate is increased .As this action follows ,the commercial bank raise market rate of interest which can reduces the demand for credit.Due to this consumption and investment expenditure are reduced which further s reduces AD .
In the situation of deficit demand ,bank rate is reduced . This raises demand for credit due to which consumption and investment expenditure increases which further increases AD .

b)Open market operations : It is policy that focuses on increasing and decreasing the stock of cash balances or liquidity with the people through sale and purchase of securities by central bank.
In the situation of excess demand ,cash balance needs to be reduced. For this,central bank tries to sell securities which sucks purchasing power from the market . Consequently AD is reduced .
In the situation of deficit demand ,cash balances needs to be increased. For this central bank purchase securities which injects purchasing power into the market. Consequently,AD is increased .

c)Cash reserve ratio : It refers to the ratio between cash reserves of commercial banks with central bank and it's total deposits.It is also called as legal reserve ratio.
In the situation of excess demand ,CRR is raised . This reduces the reserves of money with the commercial banks which further reduces their credit . This further cause reduction in credit availability in the market . accordingly , AD is reduced .
In the situation of deficit demand,CRR is decreased . This increases the reserves of money with commercial banks which further increases their credit. This cause increase in credit availablity in the market and accordingly,AD is increased.

d)Statutory liquidity ratio : This refers to the ratio between liquid assets and total deposits of the commercial banks. It is also called as legal reserve ratio.
In the state of excess demand ,SLR is raised with a view to contract liquidity. Creation capacity of commercial bank is reduced. Accordingly, availablity of credit reduces in capital markets and as a result,AD is reduced .
In the state of deficit demand ,SLR is reduces with a view to expand liquidity. Creation capacity of commercial bank is increased m Accordingly, availability og credit increases in capital markets and as a result ,AD tends to rise  .

e)Margin requirement : It refers to minimum down payment that borrowers are to make as a percentage of their total borrowing from the commercial banks .
In the situation of Excess demand, higher Magin requirement acts as a disincentives to borrow. Accordingly demand for credit is reduced.
In the situation of deficit demand,lower margin requirement act as incentive to borrow which raises more credit. Accordingly,demand for credit is increased.

f)Moral suasion : It refers to moral pressure on commercial banks by central bank .
In the situation of excess demand ,moral suasion should be selective in lending.
In the situation of deficit demand,moral suasion should be liberal in lending.

g)Credit rationing : It means loan according to prescribed limits of credit for different sectors of the economy.
In the situation of excess demand, credit rationing is used when availability of credit needs to be reduced .
In the situation of deficit demand ,credit rationing is not required as banks are advised to pursue cheap money policy .



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