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)

Decrease in Cash Reserve Ratio will lead to…...........… (choose the correct alternative)

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

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.

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 total consumption and investment curves are given below:

Identify which of the following represents “Autonomous Consumption”.

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

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

The value of __________ can be greater than one.

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

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

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

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.

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)

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