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

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.

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

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.

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

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.

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.

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

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

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)

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

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

The total consumption and investment curves are given below:

Identify which of the following represents “Autonomous Consumption”.

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

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