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

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)

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

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

The total consumption and investment curves are given below:

Identify which of the following represents “Autonomous Consumption”.

As the Marginal Propensity to Save (MPS) increases, the value of the investment multiplier ____________. (Choose the correct alternative)

Average Propensity to Consume can never be ………………………... (choose the correct alternative)

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

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?

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.

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.

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

There are two statements given below, marked as Statement (1) and Statement (2). Read the statements and choose the correct option.

• Statement (1) When aggregate supply is plotted as a 45°line graph, the economy is said to be at equilibrium.
• Statement (2) The total amount spent on aggregate demand is equal to the total expenditure in the country.

What happens when ex-ante Aggregate Demand is more than ex-ante Aggregate Supply?

If the increase in National Income is equal to an increase in consumption, identity the value of Marginal Propensity to Save :