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

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

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

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.

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.

Read the following statements carefully:

• Statement 1: The consumption curve is an upward-sloping straight-line curve due to the direct relationship between income and consumption and the assumption of constant Marginal Propensity to Consume.
• Statement 2: Aggregate Demand curve and Consumption curve are parallel to each other.

The value of __________ can be greater than one.

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.

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

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

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.

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)

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?

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.