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

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

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”.

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 effect of an increase in government expenditure on Aggregate Demand?

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.

If in an economy, the value of the investment multiplier is 4 and Autonomous Consumption is ₹ 30 Crore, the relevant consumption function would be:

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: 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).

The value of __________ can be greater than one.

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

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

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

• Assertion (A): Ex-post Investments represent planned Investments; whereas ex-ante Investments represent the actual level of investments.
• Reason (R): At the equilibrium level, Ex-ante Savings and Ex-ante Investments are always equal.

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.

Suppose for a given economy,
S= -60 + 0.1Y
I= ₹ 4,000 crore
(Where S = Saving Function, Y = National Income and I = Investment Expenditure)
The equilibrium level of Income would be ₹ ______ crore.
(Choose the correct alternative to fill up the blank)