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

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

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.

The value of __________ can be greater than one.

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

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: 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.

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

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

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.

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).

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 total consumption and investment curves are given below:

Identify which of the following represents “Autonomous Consumption”.