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

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.

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

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)

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).

In an economy, the break-even point and equilibrium point may lie at the same level of income, if ex-ante investments are _____.

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

The total consumption and investment curves are given below:

Identify which of the following represents “Autonomous Consumption”.

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.

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

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

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

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)

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.

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