Determination of Income and Employment Class 12 MCQ Quiz – Test Your Understanding!

Read the following statements carefully:

• Statement 1: The consumption function assumes that consumption changes at a constant rate as income changes.
• Statement 2: Autonomous consumption is the ratio of total consumption (C) to total income (Y).

In an economy, the break-even point and equilibrium point may lie at the same level of income, if ex-ante investments are _____.

What is the impact of an increase in reverse repo rate on the lending capacity of commercial banks?

Choose the equation that represents the equilibrium condition in a two-sector economy.

Given below are some basic activities that occur in an economy. Identify the activity that would not help to study the economy in its totality.

Cut in Repo rate by RBI is likely to……….. (increase/decrease) the demand for goods and services in the economy. (choose the correct alternative)

What is the term used to describe the level of output where Aggregate Demand is equal to Aggregate Supply?

The difference by which actual Aggregate Demand exceeds the Aggregate Demand, required to establish full employment equilibrium is known as……….………(inflationary gap/deflationary gap). (choose the correct alternative)

Read the following statements carefully:

• Statement 1: Aggregate demand is the sum total of consumption and investment expenditures.
• Statement 2: Total consumption consists of an autonomous component and an induced component.

Choose the correct option based on the above statements.

Read the following statement -Assertion (A) and Reason (R). Choose one of the correct alternatives given below:

• Assertion (A): The saving curve makes a negative intercept on the vertical axis at a zero level of income.
• Reason (R): The saving function refers to the functional relationship between saving and income.

The impacts of "Excess Demand‟ under the Keynesian theory of income and employment, in an economy are: (choose the correct alternative)

What is the effect of an increase in government expenditure on Aggregate Demand?

Graphically, the Aggregate Demand function can be obtained by vertically adding the _________ and _________ functions.

What is the value of the investment multiplier, when the Marginal Propensity to Consume (MPC) is 0.1?

The total consumption and investment curves are given below:

Identify which of the following represents “Autonomous Consumption”.