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APC= 1-APS. It is
- a)True
- b)FALSE
- c)Depends on their values
- d)None of these
Correct answer is option 'A'. Can you explain this answer?
APC= 1-APS. It is
a)
True
b)
FALSE
c)
Depends on their values
d)
None of these
|
Kiran Mehta answered |
The sum of the Average Propensity to Consume (APC) and Average Propensity to save (APS) is always equal to unity, i.e., APC + APS = 1. It is so because the money income can either be spent on consumption or it can be saved.
APC= 1-APS. It isa)FALSEb)Depends on their valuesc)TRUEd)None of theseCorrect answer is option 'C'. Can you explain this answer?
|
Vikas Kapoor answered |
APC + APS = 1 because income is either used for consumption or for saving.
In S= -a+ (1-b) Y, -a representsa)The amount of dissavings done when there is high level of income.b)The amount of savings done when there is zero level of income.c)The amount of dissavings done when there is zero level of income.d)The amount of savings done when there is high level of income.Correct answer is option 'C'. Can you explain this answer?
|
Divine Novice answered |
Answer should be c
MPS= 1+MPC. It is
- a)Depends on their values
- b)TRUE
- c)False
- d)None of these
Correct answer is option 'C'. Can you explain this answer?
MPS= 1+MPC. It is
a)
Depends on their values
b)
TRUE
c)
False
d)
None of these
|
Priya Patel answered |
MPS is measured as ratio of change in savings to change in income, its value lies between 0 and 1. Also, marginal propensity to save is opposite of marginal propensity to consume. Mathematically, in a closed economy, MPS + MPC = 1, since an increase in one unit of income will be either consumed or saved.
This a MCQ (Multiple Choice Question) based practice test of Chapter 4 - Income Determination of Economics of Class XII (12) for the quick revision/preparation of School Board examinationsQ In a two sector economy Aggregate Demand equals- a)Consumption + Government Expenditure
- b)Consumption + Investment
- c)Consumption + Exports
- d)Consumption + Private consumption expenditure
Correct answer is option 'B'. Can you explain this answer?
This a MCQ (Multiple Choice Question) based practice test of Chapter 4 - Income Determination of Economics of Class XII (12) for the quick revision/preparation of School Board examinations
Q In a two sector economy Aggregate Demand equals
a)
Consumption + Government Expenditure
b)
Consumption + Investment
c)
Consumption + Exports
d)
Consumption + Private consumption expenditure
|
Bhavana Chauhan answered |
Explanation:
- The two sector economy consists of households and firms. The aggregate demand in a two sector economy is determined by the consumption and investment expenditure.
- Consumption expenditure is the expenditure made by households on goods and services produced by firms.
- Investment expenditure is the expenditure made by firms on capital goods such as machinery, equipment, and buildings, which are used to produce goods and services.
- Aggregate Demand (AD) is the total demand for goods and services in an economy at a given price level and is represented by the equation AD = C + I.
- Therefore, in a two sector economy, Aggregate Demand equals Consumption + Investment (AD = C + I).
- Hence, option 'B' is the correct answer.
The coefficient (1-b) measures the- a)Slope of the sales function
- b)Slope of the consumption function
- c)Slope of the dissaving function
- d)Slope of the saving function
Correct answer is option 'D'. Can you explain this answer?
The coefficient (1-b) measures the
a)
Slope of the sales function
b)
Slope of the consumption function
c)
Slope of the dissaving function
d)
Slope of the saving function
|
Santosh Sahoo answered |
Option d is correct answer....as (1-b) indicates MPS in the saving function
C= -c+b(Y) is a- a)Algebraic function of the level of capital expenditure
- b)Algebraic function of the level of Consumption expenditure
- c)Linear function of the level of Consumption expenditure
- d)Algebraic function of the level of Investment expenditure
Correct answer is option 'B'. Can you explain this answer?
C= -c+b(Y) is a
a)
Algebraic function of the level of capital expenditure
b)
Algebraic function of the level of Consumption expenditure
c)
Linear function of the level of Consumption expenditure
d)
Algebraic function of the level of Investment expenditure
|
Aravind Mehra answered |
The given equation is C = -c b(Y), where C represents consumption expenditure and Y represents the level of income or output.
The equation can be rewritten as C = -c * b(Y).
Let's break down the equation and understand each component:
- C: Consumption expenditure represents the total amount spent by households on goods and services. It includes expenditures on items such as food, clothing, housing, healthcare, etc.
- c: This represents the marginal propensity to consume (MPC), which is the fraction of additional income that is spent on consumption. It indicates the relationship between the change in consumption and the change in income.
- b(Y): This term represents the level of income or output (Y) multiplied by a coefficient b. The coefficient b represents the sensitivity of consumption to changes in income. It shows how much consumption changes for a given change in income.
From the equation, it is clear that the consumption expenditure (C) is a function of the level of income or output (Y). The equation shows how consumption expenditure changes with changes in income.
Now let's analyze the given options:
a) Algebraic function of the level of capital expenditure: The equation does not involve capital expenditure. It focuses on consumption expenditure, not capital expenditure. Therefore, option A is incorrect.
b) Algebraic function of the level of Consumption expenditure: The equation explicitly represents consumption expenditure (C) as a function of income (Y). Therefore, option B is correct.
c) Linear function of the level of Consumption expenditure: The equation is not linear; it involves the coefficient b(Y), which introduces a non-linear relationship between consumption and income. Therefore, option C is incorrect.
d) Algebraic function of the level of Investment expenditure: The equation does not involve investment expenditure. It focuses on consumption expenditure, not investment expenditure. Therefore, option D is incorrect.
In conclusion, the correct answer is option B. The equation C = -c b(Y) represents an algebraic function of the level of consumption expenditure.
The equation can be rewritten as C = -c * b(Y).
Let's break down the equation and understand each component:
- C: Consumption expenditure represents the total amount spent by households on goods and services. It includes expenditures on items such as food, clothing, housing, healthcare, etc.
- c: This represents the marginal propensity to consume (MPC), which is the fraction of additional income that is spent on consumption. It indicates the relationship between the change in consumption and the change in income.
- b(Y): This term represents the level of income or output (Y) multiplied by a coefficient b. The coefficient b represents the sensitivity of consumption to changes in income. It shows how much consumption changes for a given change in income.
From the equation, it is clear that the consumption expenditure (C) is a function of the level of income or output (Y). The equation shows how consumption expenditure changes with changes in income.
Now let's analyze the given options:
a) Algebraic function of the level of capital expenditure: The equation does not involve capital expenditure. It focuses on consumption expenditure, not capital expenditure. Therefore, option A is incorrect.
b) Algebraic function of the level of Consumption expenditure: The equation explicitly represents consumption expenditure (C) as a function of income (Y). Therefore, option B is correct.
c) Linear function of the level of Consumption expenditure: The equation is not linear; it involves the coefficient b(Y), which introduces a non-linear relationship between consumption and income. Therefore, option C is incorrect.
d) Algebraic function of the level of Investment expenditure: The equation does not involve investment expenditure. It focuses on consumption expenditure, not investment expenditure. Therefore, option D is incorrect.
In conclusion, the correct answer is option B. The equation C = -c b(Y) represents an algebraic function of the level of consumption expenditure.
Autonomous consumption is assumed to be at- a)Maximum level of Income
- b)Zero level of Income
- c)Low level of Income
- d)High level of Income
Correct answer is option 'B'. Can you explain this answer?
Autonomous consumption is assumed to be at
a)
Maximum level of Income
b)
Zero level of Income
c)
Low level of Income
d)
High level of Income
|
Ishani Mehta answered |
Autonomous consumption is assumed to be at zero level of income. It is a concept in economics that refers to the minimum level of consumption that individuals or households engage in, regardless of their income levels.
Explanation:
Autonomous consumption is also known as the level of consumption that is independent of changes in income levels. This means that even if the income of an individual or household were to increase or decrease, their level of autonomous consumption would remain the same. Autonomous consumption includes the basic necessities of life, such as food, clothing, and shelter.
Autonomous consumption is generally assumed to be zero at the zero level of income. This implies that when an individual or household has no income, they will consume nothing or only the bare minimum required for survival. As income increases, so does consumption. However, the increase in consumption is not proportional to the increase in income because individuals and households tend to save a portion of their income.
Autonomous consumption plays an important role in determining the level of aggregate demand in an economy. It is one of the components of the aggregate demand function, which is the total level of spending in an economy. The other components of aggregate demand include investment, government spending, and net exports.
Conclusion:
In conclusion, autonomous consumption is the minimum level of consumption that individuals or households engage in, regardless of their income levels. It is generally assumed to be zero at the zero level of income. Autonomous consumption plays an important role in determining the level of aggregate demand in an economy and is a key concept in macroeconomics.
Explanation:
Autonomous consumption is also known as the level of consumption that is independent of changes in income levels. This means that even if the income of an individual or household were to increase or decrease, their level of autonomous consumption would remain the same. Autonomous consumption includes the basic necessities of life, such as food, clothing, and shelter.
Autonomous consumption is generally assumed to be zero at the zero level of income. This implies that when an individual or household has no income, they will consume nothing or only the bare minimum required for survival. As income increases, so does consumption. However, the increase in consumption is not proportional to the increase in income because individuals and households tend to save a portion of their income.
Autonomous consumption plays an important role in determining the level of aggregate demand in an economy. It is one of the components of the aggregate demand function, which is the total level of spending in an economy. The other components of aggregate demand include investment, government spending, and net exports.
Conclusion:
In conclusion, autonomous consumption is the minimum level of consumption that individuals or households engage in, regardless of their income levels. It is generally assumed to be zero at the zero level of income. Autonomous consumption plays an important role in determining the level of aggregate demand in an economy and is a key concept in macroeconomics.
The level of equilibrium income is also determined by- a)Planned Savings and Planned Consumption
- b)AD and AS
- c)Planned AD and Planned national income
- d)Planned Savings and Planned Investment
Correct answer is option 'D'. Can you explain this answer?
The level of equilibrium income is also determined by
a)
Planned Savings and Planned Consumption
b)
AD and AS
c)
Planned AD and Planned national income
d)
Planned Savings and Planned Investment
|
Arun Khanna answered |
An economy is said to be at its equilibrium level of income when
If income is Rs 1000 and consumption expenditure is Rs 200, APS will be- a)-0.8
- b)0.2
- c)0.8
- d)-0.2
Correct answer is option 'C'. Can you explain this answer?
If income is Rs 1000 and consumption expenditure is Rs 200, APS will be
a)
-0.8
b)
0.2
c)
0.8
d)
-0.2
|
Sunita Jain answered |
Total saving=income-consumption=1000-200=800
APS=s/y
=800/1000
hence,APS=0.8
APS=s/y
=800/1000
hence,APS=0.8
Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): The minimum value of investment multiplier is equal to one.Reason (R): The minimum value of investment multiplier is 1, when MPC is 0 and MPC can never be negative.- a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
- b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
- c)Assertion (A) is true, but Reason (R) is false.
- d)Assertion (A) is false, but Reason (R) is true.
Correct answer is option 'A'. Can you explain this answer?
Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:
Assertion (A): The minimum value of investment multiplier is equal to one.
Reason (R): The minimum value of investment multiplier is 1, when MPC is 0 and MPC can never be negative.
a)
Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
b)
Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
c)
Assertion (A) is true, but Reason (R) is false.
d)
Assertion (A) is false, but Reason (R) is true.
|
Shruti Mehta answered |
Assertion (A): The minimum value of investment multiplier is equal to one.
Reason (R): The minimum value of investment multiplier is 1, when MPC is 0 and MPC can never be negative.
The correct answer is option 'A' which states that both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
Explanation:
Investment multiplier is a measure of the change in national income resulting from a change in investment. It shows how much the national income will increase for a given change in investment, and it depends on the marginal propensity to consume (MPC).
The MPC refers to the proportion of additional income that individuals choose to spend rather than save. It is a key determinant of the investment multiplier. If the MPC is higher, the investment multiplier will be higher, and vice versa.
Minimum value of investment multiplier:
The minimum value of investment multiplier occurs when the MPC is 0. This means that individuals do not spend any additional income and save it all. In this case, the investment multiplier will be equal to 1.
Explanation of Reason (R):
The reason given in Reason (R) is correct. The MPC can never be negative because it represents the proportion of additional income that individuals choose to spend rather than save. It ranges from 0 to 1, where 0 represents saving all additional income and 1 represents spending all additional income.
When the MPC is 0, it means that individuals save all additional income, and there is no increase in consumption. In this case, the investment multiplier will be 1 because there is no multiplier effect on national income.
Therefore, the minimum value of investment multiplier is indeed 1 when the MPC is 0, and the MPC can never be negative.
Conclusion:
Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A). The minimum value of investment multiplier is equal to one when the MPC is 0, and the MPC can never be negative.
Reason (R): The minimum value of investment multiplier is 1, when MPC is 0 and MPC can never be negative.
The correct answer is option 'A' which states that both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
Explanation:
Investment multiplier is a measure of the change in national income resulting from a change in investment. It shows how much the national income will increase for a given change in investment, and it depends on the marginal propensity to consume (MPC).
The MPC refers to the proportion of additional income that individuals choose to spend rather than save. It is a key determinant of the investment multiplier. If the MPC is higher, the investment multiplier will be higher, and vice versa.
Minimum value of investment multiplier:
The minimum value of investment multiplier occurs when the MPC is 0. This means that individuals do not spend any additional income and save it all. In this case, the investment multiplier will be equal to 1.
Explanation of Reason (R):
The reason given in Reason (R) is correct. The MPC can never be negative because it represents the proportion of additional income that individuals choose to spend rather than save. It ranges from 0 to 1, where 0 represents saving all additional income and 1 represents spending all additional income.
When the MPC is 0, it means that individuals save all additional income, and there is no increase in consumption. In this case, the investment multiplier will be 1 because there is no multiplier effect on national income.
Therefore, the minimum value of investment multiplier is indeed 1 when the MPC is 0, and the MPC can never be negative.
Conclusion:
Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A). The minimum value of investment multiplier is equal to one when the MPC is 0, and the MPC can never be negative.
The coefficient (1-b) is also known as- a)K
- b)v
- c)MPS
- d)MPC
Correct answer is option 'C'. Can you explain this answer?
The coefficient (1-b) is also known as
a)
K
b)
v
c)
MPS
d)
MPC
|
Future Foundation Institute answered |
Explanation:
The coefficient (1-b) is also known as the marginal propensity to save (MPS). It represents the proportion of additional income that an individual saves rather than consumes.
Key Points:
- The coefficient (1-b) reflects the relationship between changes in income and changes in saving.
- It is a measure of how much of an increase in income will be saved rather than spent.
- The value of (1-b) ranges between 0 and 1, where 0 means that all additional income is spent and 1 means that all additional income is saved.
- The MPS is an important concept in Keynesian economics and is used to analyze the effects of changes in income on saving and consumption.
- The MPS plays a crucial role in determining the size of the spending multiplier, which measures the overall impact of changes in spending on the economy.
- It is important to note that the coefficient (1-b) is different from the marginal propensity to consume (MPC), which represents the proportion of additional income that is consumed rather than saved.
Conclusion:
- The coefficient (1-b) is also known as the marginal propensity to save (MPS).
- It measures the proportion of additional income that is saved rather than consumed.
- Understanding the MPS is essential for analyzing the effects of changes in income on saving and consumption.
The coefficient (1-b) is also known as the marginal propensity to save (MPS). It represents the proportion of additional income that an individual saves rather than consumes.
Key Points:
- The coefficient (1-b) reflects the relationship between changes in income and changes in saving.
- It is a measure of how much of an increase in income will be saved rather than spent.
- The value of (1-b) ranges between 0 and 1, where 0 means that all additional income is spent and 1 means that all additional income is saved.
- The MPS is an important concept in Keynesian economics and is used to analyze the effects of changes in income on saving and consumption.
- The MPS plays a crucial role in determining the size of the spending multiplier, which measures the overall impact of changes in spending on the economy.
- It is important to note that the coefficient (1-b) is different from the marginal propensity to consume (MPC), which represents the proportion of additional income that is consumed rather than saved.
Conclusion:
- The coefficient (1-b) is also known as the marginal propensity to save (MPS).
- It measures the proportion of additional income that is saved rather than consumed.
- Understanding the MPS is essential for analyzing the effects of changes in income on saving and consumption.
The saving is negative at
- a)Zero level of Income
- b)Low level of Income
- c)High level of Income
- d)Maximum level of Income
Correct answer is option 'A'. Can you explain this answer?
The saving is negative at
a)
Zero level of Income
b)
Low level of Income
c)
High level of Income
d)
Maximum level of Income
|
Rohini Desai answered |
To determine at which level of income the saving is negative, we need to understand the relationship between income and saving. Saving is the difference between income and expenditure. If expenditure exceeds income, then saving becomes negative.
Income levels:
- Zero level of Income
- Low level of Income
- High level of Income
- Maximum level of Income
Explanation:
- At the zero level of income (A), there is no income to save, so the saving is automatically zero or negative.
- At a low level of income (B), individuals may have enough income to cover their basic expenses but not enough to save, resulting in negative saving.
- At a high level of income (C), individuals have enough income to cover their expenses and save, so the saving is positive.
- At the maximum level of income (D), individuals have a surplus income after covering their expenses, resulting in a high positive saving.
Conclusion:
At zero level of income, there is some amount of consumption which means autonomous consumption. Since Y - C = S, so at zero level of income savings will be negative.
APC+APS=- a)4
- b)3
- c)2
- d)1.0
Correct answer is option 'D'. Can you explain this answer?
APC+APS=
a)
4
b)
3
c)
2
d)
1.0
|
Mrinalini Bose answered |
APC APS stands for Average Payment Cycle and Average Payment Period. It is a measure of the time it takes for a company to pay its creditors. The correct answer for the given question is option D, which is 1.0.
Explanation:
APC APS is calculated by dividing the accounts payable by the cost of goods sold and then multiplying the result by the number of days in the period.
APC APS formula: (Accounts Payable / Cost of Goods Sold) x Number of Days
Here, we are not given the values of accounts payable, cost of goods sold, and number of days. So, we cannot calculate the exact value of APC APS. However, we can derive some conclusions based on the options given.
Option A: 4 - This means that the company takes 4 days to pay its creditors, which is a very short payment cycle. It is unlikely that a company can pay its creditors within 4 days.
Option B: 3 - This means that the company takes 3 days to pay its creditors, which is even shorter than option A. This is not a realistic value.
Option C: 2 - This means that the company takes 2 days to pay its creditors, which is again an unrealistic value.
Option D: 1.0 - This means that the company takes 1 day to pay its creditors. While this is a very short payment cycle, it is possible for some companies to achieve this.
Therefore, the correct answer is option D, which is 1.0.
Explanation:
APC APS is calculated by dividing the accounts payable by the cost of goods sold and then multiplying the result by the number of days in the period.
APC APS formula: (Accounts Payable / Cost of Goods Sold) x Number of Days
Here, we are not given the values of accounts payable, cost of goods sold, and number of days. So, we cannot calculate the exact value of APC APS. However, we can derive some conclusions based on the options given.
Option A: 4 - This means that the company takes 4 days to pay its creditors, which is a very short payment cycle. It is unlikely that a company can pay its creditors within 4 days.
Option B: 3 - This means that the company takes 3 days to pay its creditors, which is even shorter than option A. This is not a realistic value.
Option C: 2 - This means that the company takes 2 days to pay its creditors, which is again an unrealistic value.
Option D: 1.0 - This means that the company takes 1 day to pay its creditors. While this is a very short payment cycle, it is possible for some companies to achieve this.
Therefore, the correct answer is option D, which is 1.0.
APC =- a) C/D
- b)C/G
- c)C/Y
- d)C/S
Correct answer is option 'C'. Can you explain this answer?
APC =
a)
C/D
b)
C/G
c)
C/Y
d)
C/S
|
Saumya Ahuja answered |
The answer to this question is option 'C' which is C/Y.
Explanation:
APC stands for Average Propensity to Consume. It is the ratio of consumption expenditure to the disposable income of the economy. It is a measure of the proportion of income that is spent on consumption.
The formula for calculating APC is:
APC = C/Y
Where C is the total consumption expenditure and Y is the disposable income.
Option 'C' is the correct answer because it represents the correct formula for calculating APC which is C/Y. The other options are not relevant to the formula for APC.
Therefore, the correct answer to this question is option 'C' which is C/Y.
Explanation:
APC stands for Average Propensity to Consume. It is the ratio of consumption expenditure to the disposable income of the economy. It is a measure of the proportion of income that is spent on consumption.
The formula for calculating APC is:
APC = C/Y
Where C is the total consumption expenditure and Y is the disposable income.
Option 'C' is the correct answer because it represents the correct formula for calculating APC which is C/Y. The other options are not relevant to the formula for APC.
Therefore, the correct answer to this question is option 'C' which is C/Y.
Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): The maximum value of investment multiplier is equal to infinity.Reason (R): The maximum value of investment multiplier is ∞, when MPC is 1, i.e., whole additional income is converted into additional consumption.- a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
- b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
- c)Assertion (A) is true, but Reason (R) is false.
- d)Assertion (A) is false, but Reason (R) is true.
Correct answer is option 'A'. Can you explain this answer?
Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:
Assertion (A): The maximum value of investment multiplier is equal to infinity.
Reason (R): The maximum value of investment multiplier is ∞, when MPC is 1, i.e., whole additional income is converted into additional consumption.
a)
Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
b)
Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
c)
Assertion (A) is true, but Reason (R) is false.
d)
Assertion (A) is false, but Reason (R) is true.
|
Naina Sharma answered |
K = 1/1 – MPC
= 1/1 – 1
= 1/0 = ∞
Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): Saving and investment are always equal.Reason (R): Planned S and Planned I are equal only at equilibrium level.- a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
- b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
- c)Assertion (A) is true, but Reason (R) is false.
- d)Assertion (A) is false, but Reason (R) is true.
Correct answer is option 'D'. Can you explain this answer?
Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:
Assertion (A): Saving and investment are always equal.
Reason (R): Planned S and Planned I are equal only at equilibrium level.
a)
Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
b)
Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
c)
Assertion (A) is true, but Reason (R) is false.
d)
Assertion (A) is false, but Reason (R) is true.
|
Ishan Choudhury answered |
Saving (S) and Investment (I) can be realized (ex-post) and planned (ex-ante). Planned S and Planned I are equal only at equilibrium level. Realized S and realized I are always equal.
Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): Full employment is the situation where all those workers who are able to work and willing to work get employment at the prevailing wage rate.Reason (R): The situation of full employment is achieved only when the economy is in equilibrium.- a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
- b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
- c)Assertion (A) is true, but Reason (R) is false.
- d)Assertion (A) is false, but Reason (R) is true.
Correct answer is option 'C'. Can you explain this answer?
Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:
Assertion (A): Full employment is the situation where all those workers who are able to work and willing to work get employment at the prevailing wage rate.
Reason (R): The situation of full employment is achieved only when the economy is in equilibrium.
a)
Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
b)
Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
c)
Assertion (A) is true, but Reason (R) is false.
d)
Assertion (A) is false, but Reason (R) is true.
|
Nilesh Chawla answered |
Assertion and Reasoning
• The question presents an Assertion (A) followed by a Reason (R).
• The Assertion (A) states a fact or concept which needs to be evaluated based on the Reason (R).
• The Reason (R) provides an explanation or justification for the Assertion (A).
• The correct answer choice should identify whether both the Assertion (A) and Reason (R) are true or false, and whether the Reason (R) is the correct explanation for the Assertion (A).
Explanation
• Assertion (A) states that full employment is the situation where all those workers who are able to work and willing to work get employment at the prevailing wage rate.
• This statement is true as full employment refers to a state of the economy where there is no involuntary unemployment, i.e. all those who are willing and able to work are employed.
• Reason (R) states that the situation of full employment is achieved only when the economy is in equilibrium.
• This statement is false as full employment is not dependent on equilibrium but is a state where there is no involuntary unemployment.
• Therefore, Assertion (A) is true, but Reason (R) is false.
• Hence, option (C) is the correct answer choice.
Key Points
• Assertion and Reasoning questions evaluate the understanding of concepts and their inter-relationship.
• The Assertion (A) presents a fact or concept that needs to be evaluated based on the Reason (R).
• The Reason (R) provides an explanation or justification for the Assertion (A).
• The correct answer choice should identify whether both the Assertion (A) and Reason (R) are true or false, and whether the Reason (R) is the correct explanation for the Assertion (A).
• The question presents an Assertion (A) followed by a Reason (R).
• The Assertion (A) states a fact or concept which needs to be evaluated based on the Reason (R).
• The Reason (R) provides an explanation or justification for the Assertion (A).
• The correct answer choice should identify whether both the Assertion (A) and Reason (R) are true or false, and whether the Reason (R) is the correct explanation for the Assertion (A).
Explanation
• Assertion (A) states that full employment is the situation where all those workers who are able to work and willing to work get employment at the prevailing wage rate.
• This statement is true as full employment refers to a state of the economy where there is no involuntary unemployment, i.e. all those who are willing and able to work are employed.
• Reason (R) states that the situation of full employment is achieved only when the economy is in equilibrium.
• This statement is false as full employment is not dependent on equilibrium but is a state where there is no involuntary unemployment.
• Therefore, Assertion (A) is true, but Reason (R) is false.
• Hence, option (C) is the correct answer choice.
Key Points
• Assertion and Reasoning questions evaluate the understanding of concepts and their inter-relationship.
• The Assertion (A) presents a fact or concept that needs to be evaluated based on the Reason (R).
• The Reason (R) provides an explanation or justification for the Assertion (A).
• The correct answer choice should identify whether both the Assertion (A) and Reason (R) are true or false, and whether the Reason (R) is the correct explanation for the Assertion (A).
Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): Aggregate Demand is expressed in terms of total expenditure made in the economy.Reason (R): Aggregate Demand constitutes of Consumption Expenditure, Investment Expenditure, Government Expenditure and Net Exports.- a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
- b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
- c)Assertion (A) is true, but Reason (R) is false.
- d)Assertion (A) is false, but Reason (R) is true.
Correct answer is option 'A'. Can you explain this answer?
Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:
Assertion (A): Aggregate Demand is expressed in terms of total expenditure made in the economy.
Reason (R): Aggregate Demand constitutes of Consumption Expenditure, Investment Expenditure, Government Expenditure and Net Exports.
a)
Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
b)
Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
c)
Assertion (A) is true, but Reason (R) is false.
d)
Assertion (A) is false, but Reason (R) is true.
|
|
Neha Sharma answered |
Aggregate Demand refers to the value of final goods and services which all sectors of an economy are planning to buy during a year.
Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): Private Consumption Expenditure is determined by the level of personal disposable income of the economy.Reason (R): The total demand for all goods or services by the household in an economy during an accounting year, is termed as Private Consumption Expenditure.- a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
- b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
- c)Assertion (A) is true, but Reason (R) is false.
- d)Assertion (A) is false, but Reason (R) is true.
Correct answer is option 'B'. Can you explain this answer?
Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:
Assertion (A): Private Consumption Expenditure is determined by the level of personal disposable income of the economy.
Reason (R): The total demand for all goods or services by the household in an economy during an accounting year, is termed as Private Consumption Expenditure.
a)
Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
b)
Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
c)
Assertion (A) is true, but Reason (R) is false.
d)
Assertion (A) is false, but Reason (R) is true.
|
|
Priyanka Khatri answered |
Private consumption expenditure measures consumer spending on goods and services.
The level of equilibrium income is determined by- a)AD and AS
- b)AD and national income
- c)AD and Investment
- d)AD and Consumption
Correct answer is option 'A'. Can you explain this answer?
The level of equilibrium income is determined by
a)
AD and AS
b)
AD and national income
c)
AD and Investment
d)
AD and Consumption
|
Saptarshi Majumdar answered |
Determinants of Equilibrium Income
Equilibrium income is the level of output where aggregate demand (AD) equals aggregate supply (AS). The level of equilibrium income is determined by the following factors:
1. Aggregate Demand (AD)
Aggregate demand is the total amount of goods and services demanded in an economy at a given price level. The level of AD determines the equilibrium level of income in the economy. If AD is high, the equilibrium level of income will be high, and if AD is low, the equilibrium level of income will be low.
2. Aggregate Supply (AS)
Aggregate supply is the total amount of goods and services that firms in an economy are willing and able to produce at a given price level. The level of AS also affects the equilibrium level of income. If AS is high, the equilibrium level of income will be high, and if AS is low, the equilibrium level of income will be low.
3. Investment
Investment is a major component of AD. It includes the purchase of capital goods, such as machinery and equipment, and the construction of new buildings. Investment increases the level of AD, which in turn increases the equilibrium level of income.
4. Consumption
Consumption is the largest component of AD. It includes the purchase of goods and services by households. If consumption increases, the level of AD increases, which in turn increases the equilibrium level of income.
Conclusion
In summary, the level of equilibrium income is determined by the interaction of AD and AS. Investment and consumption also affect the level of AD and therefore the equilibrium level of income.
Equilibrium income is the level of output where aggregate demand (AD) equals aggregate supply (AS). The level of equilibrium income is determined by the following factors:
1. Aggregate Demand (AD)
Aggregate demand is the total amount of goods and services demanded in an economy at a given price level. The level of AD determines the equilibrium level of income in the economy. If AD is high, the equilibrium level of income will be high, and if AD is low, the equilibrium level of income will be low.
2. Aggregate Supply (AS)
Aggregate supply is the total amount of goods and services that firms in an economy are willing and able to produce at a given price level. The level of AS also affects the equilibrium level of income. If AS is high, the equilibrium level of income will be high, and if AS is low, the equilibrium level of income will be low.
3. Investment
Investment is a major component of AD. It includes the purchase of capital goods, such as machinery and equipment, and the construction of new buildings. Investment increases the level of AD, which in turn increases the equilibrium level of income.
4. Consumption
Consumption is the largest component of AD. It includes the purchase of goods and services by households. If consumption increases, the level of AD increases, which in turn increases the equilibrium level of income.
Conclusion
In summary, the level of equilibrium income is determined by the interaction of AD and AS. Investment and consumption also affect the level of AD and therefore the equilibrium level of income.
The value of APS can be negative when- a)The value of consumption expenditure becomes higher than income.
- b)The value of consumption is equal to the value of income
- c)The value of consumption is less than the value of income
- d)The value of consumption does not exceed the value of income
Correct answer is option 'A'. Can you explain this answer?
The value of APS can be negative when
a)
The value of consumption expenditure becomes higher than income.
b)
The value of consumption is equal to the value of income
c)
The value of consumption is less than the value of income
d)
The value of consumption does not exceed the value of income
|
Sunil Chahar answered |
Between APS and MPS, the value of APS can be negative when consumption expenditure becomes higher than income.
Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): Aggregate demand refers to planned purchase of goods and services during a year.Reason (R): AD is the sum total of expenditure that the people plan or desire to incur on the purchase of goods and services produced in an economy during an accounting year.- a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
- b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
- c)Assertion (A) is true, but Reason (R) is false.
- d)Assertion (A) is false, but Reason (R) is true.
Correct answer is option 'A'. Can you explain this answer?
Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:
Assertion (A): Aggregate demand refers to planned purchase of goods and services during a year.
Reason (R): AD is the sum total of expenditure that the people plan or desire to incur on the purchase of goods and services produced in an economy during an accounting year.
a)
Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
b)
Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
c)
Assertion (A) is true, but Reason (R) is false.
d)
Assertion (A) is false, but Reason (R) is true.
|
|
Ishan Choudhury answered |
Aggregate expenditure is the current value of all the finished goods and services in the economy. The equation for aggregate expenditure is: AE = C + I + G + NX. The aggregate expenditure equals the sum of the household consumption (C), investments (I), government spending (G), and net exports (NX).
Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): There is an inverse relationship between the value of marginal propensity to save and investment multiplier.Reason (R): Saving is a leakage in the circular flow of income. Greater the saving, greater the leakage and lower the value of investment multiplier.- a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
- b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
- c)Assertion (A) is true, but Reason (R) is false.
- d)Assertion (A) is false, but Reason (R) is true.
Correct answer is option 'A'. Can you explain this answer?
Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:
Assertion (A): There is an inverse relationship between the value of marginal propensity to save and investment multiplier.
Reason (R): Saving is a leakage in the circular flow of income. Greater the saving, greater the leakage and lower the value of investment multiplier.
a)
Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
b)
Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
c)
Assertion (A) is true, but Reason (R) is false.
d)
Assertion (A) is false, but Reason (R) is true.
|
|
Ishan Choudhury answered |
Higher the MPS, lower the multiplier and lower the MPS, higher the multiplier, as K=1/MPS.
Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): AS increases proportionate to the increase in AD so long as there is excess capacity in the economy.Reason (R): Excess capacity arises because of excess supply.- a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
- b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
- c)Assertion (A) is true, but Reason (R) is false.
- d)Assertion (A) is false, but Reason (R) is true.
Correct answer is option 'C'. Can you explain this answer?
Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:
Assertion (A): AS increases proportionate to the increase in AD so long as there is excess capacity in the economy.
Reason (R): Excess capacity arises because of excess supply.
a)
Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
b)
Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
c)
Assertion (A) is true, but Reason (R) is false.
d)
Assertion (A) is false, but Reason (R) is true.
|
Saumya Desai answered |
Assertion (A): AS increases proportionate to the increase in AD so long as there is excess capacity in the economy.
Reason (R): Excess capacity arises because of excess supply.
The correct answer is option 'C', which states that Assertion (A) is true, but Reason (R) is false.
Explanation:
- Aggregate Supply (AS) refers to the total amount of goods and services that firms in an economy are willing and able to produce at a given price level. It is influenced by various factors such as available resources, technology, and production capacity.
- Aggregate Demand (AD) refers to the total amount of goods and services that households, businesses, and the government are willing and able to purchase at a given price level.
- The relationship between AD and AS is crucial in determining the overall level of economic activity in an economy.
- When there is excess capacity in the economy, it means that firms have idle resources and can increase their production without facing any bottlenecks or constraints.
- In such a situation, an increase in AD would lead to an increase in production as firms have the capacity to meet the additional demand.
- Therefore, Assertion (A) is true. AS increases proportionate to the increase in AD as long as there is excess capacity in the economy.
However, the Reason (R) provided is incorrect. Excess capacity does not arise because of excess supply. Instead, it arises when the actual level of production falls short of the potential level of production that can be achieved with the available resources and technology.
- Excess supply, on the other hand, refers to a situation where the quantity supplied of a good or service exceeds the quantity demanded at a given price level.
- Excess supply can lead to a decrease in production and a reduction in AS, as firms may reduce their output to match the lower demand.
- Therefore, Reason (R) is false.
In conclusion, while Assertion (A) is true, Reason (R) is false. The correct answer is option 'C'.
Reason (R): Excess capacity arises because of excess supply.
The correct answer is option 'C', which states that Assertion (A) is true, but Reason (R) is false.
Explanation:
- Aggregate Supply (AS) refers to the total amount of goods and services that firms in an economy are willing and able to produce at a given price level. It is influenced by various factors such as available resources, technology, and production capacity.
- Aggregate Demand (AD) refers to the total amount of goods and services that households, businesses, and the government are willing and able to purchase at a given price level.
- The relationship between AD and AS is crucial in determining the overall level of economic activity in an economy.
- When there is excess capacity in the economy, it means that firms have idle resources and can increase their production without facing any bottlenecks or constraints.
- In such a situation, an increase in AD would lead to an increase in production as firms have the capacity to meet the additional demand.
- Therefore, Assertion (A) is true. AS increases proportionate to the increase in AD as long as there is excess capacity in the economy.
However, the Reason (R) provided is incorrect. Excess capacity does not arise because of excess supply. Instead, it arises when the actual level of production falls short of the potential level of production that can be achieved with the available resources and technology.
- Excess supply, on the other hand, refers to a situation where the quantity supplied of a good or service exceeds the quantity demanded at a given price level.
- Excess supply can lead to a decrease in production and a reduction in AS, as firms may reduce their output to match the lower demand.
- Therefore, Reason (R) is false.
In conclusion, while Assertion (A) is true, Reason (R) is false. The correct answer is option 'C'.
Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): If AD>AS, the firm will employ more factors of production.Reason (R): When AD is more, in order to get back to the equilibrium level the economy bringing AD equal to AS.- a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
- b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
- c)Assertion (A) is true, but Reason (R) is false.
- d)Assertion (A) is false, but Reason (R) is true.
Correct answer is option 'A'. Can you explain this answer?
Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:
Assertion (A): If AD>AS, the firm will employ more factors of production.
Reason (R): When AD is more, in order to get back to the equilibrium level the economy bringing AD equal to AS.
a)
Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
b)
Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
c)
Assertion (A) is true, but Reason (R) is false.
d)
Assertion (A) is false, but Reason (R) is true.
|
|
Ishan Choudhury answered |
In response to the increase in the price level, producers create more goods and services. This continues until the amount of aggregate production equals the amount of aggregate demand. As prices fall, the amount of aggregate demand increases and the economy returns to equilibrium.
Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): When income is zero, consumption is also zero.Reason (R): There is always some minimum level of consumption in the economy even when income is zero.- a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
- b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
- c)Assertion (A) is true, but Reason (R) is false.
- d)Assertion (A) is false, but Reason (R) is true.
Correct answer is option 'D'. Can you explain this answer?
Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:
Assertion (A): When income is zero, consumption is also zero.
Reason (R): There is always some minimum level of consumption in the economy even when income is zero.
a)
Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
b)
Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
c)
Assertion (A) is true, but Reason (R) is false.
d)
Assertion (A) is false, but Reason (R) is true.
|
|
Priyanka Khatri answered |
When income is zero, consumption is not zero as there is always some minimum level of consumption in the economy.
The coefficient (1-b) is also known as- a)K
- b)1-MPS
- c)MPS
- d)MPC
Correct answer is option 'C'. Can you explain this answer?
The coefficient (1-b) is also known as
a)
K
b)
1-MPS
c)
MPS
d)
MPC
|
Anirudh Gupta answered |
Explanation:
In economics, the term "MPS" or Marginal Propensity to Save refers to the proportion of an additional amount of income that is saved rather than spent. The formula for MPS is:
MPS = change in savings / change in income
On the other hand, the term "MPC" or Marginal Propensity to Consume refers to the proportion of an additional amount of income that is spent rather than saved. The formula for MPC is:
MPC = change in consumption / change in income
Both MPS and MPC are important concepts in macroeconomics and are used to understand how changes in income affect spending and saving behavior of individuals and households.
However, the coefficient (1-b) is also known as MPS because it represents the proportion of additional income that is saved rather than spent. This can be derived from the consumption function, which is expressed as:
C = a + bY
where C is consumption, Y is income, a is autonomous consumption, and b is the MPC.
If we rearrange the equation, we get:
Y = (1/b)C - (a/b)
This equation shows the relationship between income and consumption, and we can see that the slope of the line is equal to (1/b), which is the reciprocal of the MPC.
Therefore, the coefficient (1-b) represents the proportion of income that is not consumed but saved, and is equivalent to the MPS.
In summary, the coefficient (1-b) is also known as MPS because it represents the proportion of additional income that is saved rather than spent.
In economics, the term "MPS" or Marginal Propensity to Save refers to the proportion of an additional amount of income that is saved rather than spent. The formula for MPS is:
MPS = change in savings / change in income
On the other hand, the term "MPC" or Marginal Propensity to Consume refers to the proportion of an additional amount of income that is spent rather than saved. The formula for MPC is:
MPC = change in consumption / change in income
Both MPS and MPC are important concepts in macroeconomics and are used to understand how changes in income affect spending and saving behavior of individuals and households.
However, the coefficient (1-b) is also known as MPS because it represents the proportion of additional income that is saved rather than spent. This can be derived from the consumption function, which is expressed as:
C = a + bY
where C is consumption, Y is income, a is autonomous consumption, and b is the MPC.
If we rearrange the equation, we get:
Y = (1/b)C - (a/b)
This equation shows the relationship between income and consumption, and we can see that the slope of the line is equal to (1/b), which is the reciprocal of the MPC.
Therefore, the coefficient (1-b) represents the proportion of income that is not consumed but saved, and is equivalent to the MPS.
In summary, the coefficient (1-b) is also known as MPS because it represents the proportion of additional income that is saved rather than spent.
The law of Psychological consumption states- a)Consumption changes in the same direction as investment
- b)Consumption changes in the opposite direction as income
- c)Consumption changes in the same direction as income
- d)Consumption does not change in the same direction as income
Correct answer is option 'C'. Can you explain this answer?
The law of Psychological consumption states
a)
Consumption changes in the same direction as investment
b)
Consumption changes in the opposite direction as income
c)
Consumption changes in the same direction as income
d)
Consumption does not change in the same direction as income
|
Rhea Choudhary answered |
The concept of consumption function stems from the basic psychological law of
APS=- a) S/D
- b) C/S
- c) S/Y
- d)None of these
Correct answer is option 'C'. Can you explain this answer?
APS=
a)
S/D
b)
C/S
c)
S/Y
d)
None of these
|
|
Shounak Kapoor answered |
Explanation:
APS stands for Annual Performance Statement, which is a report submitted by government ministries and departments to the Parliament of India. It includes details of the department's performance in terms of physical and financial achievements during the financial year.
The APS is not related to any economic concept such as S/D or C/S. However, it can be linked to the economic concept of S/Y, which represents the ratio of savings to national income. The APS can provide information on the government's savings in a particular financial year, which can be used to calculate the S/Y ratio.
Therefore, option C is the correct answer.
APS stands for Annual Performance Statement, which is a report submitted by government ministries and departments to the Parliament of India. It includes details of the department's performance in terms of physical and financial achievements during the financial year.
The APS is not related to any economic concept such as S/D or C/S. However, it can be linked to the economic concept of S/Y, which represents the ratio of savings to national income. The APS can provide information on the government's savings in a particular financial year, which can be used to calculate the S/Y ratio.
Therefore, option C is the correct answer.
What does the term ceteris paribus mean?- a)things are different
- b)with the view that
- c) in reference to
- d)other things remaining equal
Correct answer is option 'D'. Can you explain this answer?
What does the term ceteris paribus mean?
a)
things are different
b)
with the view that
c)
in reference to
d)
other things remaining equal
|
|
Ankit Kumar answered |
(Correct Answer:- D)
This commonly-used phrase stands for 'all other things being unchanged or constant'. It is used in economics to rule out the possibility of 'other' factors changing, i.e. the specific causal relation between two variables is focused.
This commonly-used phrase stands for 'all other things being unchanged or constant'. It is used in economics to rule out the possibility of 'other' factors changing, i.e. the specific causal relation between two variables is focused.
Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:Assertion (A): If S>I, then equilibrium income will have a tendency to reduce.Reason (R): As according to Keynes, the income employment equilibrium is determined at the point where investments and savings are equal.- a)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
- b)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
- c)Assertion (A) is true, but Reason (R) is false.
- d)Assertion (A) is false, but Reason (R) is true.
Correct answer is option 'A'. Can you explain this answer?
Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:
Assertion (A): If S>I, then equilibrium income will have a tendency to reduce.
Reason (R): As according to Keynes, the income employment equilibrium is determined at the point where investments and savings are equal.
a)
Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
b)
Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
c)
Assertion (A) is true, but Reason (R) is false.
d)
Assertion (A) is false, but Reason (R) is true.
|
|
Amita Das answered |
In the Keynesian analysis, the equilibrium level of employment and income is determined at the point of equality between saving and investment. Saving is a function of income, i.e. S = f (Y). It is defined as the excess of income over consumption, S=Y-C and income is equal to consumption plus investment.
The savings function derived from the consumption function c=-a+by is- a)S=Y+(a+bY)
- b)S= -a+(1-b)Y
- c)S=Y-(a+b)Y
- d)S=Y-(a+bY)
Correct answer is option 'B'. Can you explain this answer?
The savings function derived from the consumption function c=-a+by is
a)
S=Y+(a+bY)
b)
S= -a+(1-b)Y
c)
S=Y-(a+b)Y
d)
S=Y-(a+bY)
|
|
Arun Khanna answered |
Saving function equation. As saving function is corollary of consumption function, we can derive the correspondine savine function from consumption function equation, straight C space equals space straight C with bar on top space plus space bY by s
The important factor influencing the propensity to consume in an economy is- a)The level of investment
- b)The level of consumption
- c)The level of income (Y)
- d)The level of savings
Correct answer is option 'C'. Can you explain this answer?
The important factor influencing the propensity to consume in an economy is
a)
The level of investment
b)
The level of consumption
c)
The level of income (Y)
d)
The level of savings
|
|
Janani Sengupta answered |
The main factors that drive the marginal propensity to consume (MPC) are the availability of credit, taxation levels, and consumer confidence. According to Keynesian economic theory, the propensity to consume can be influenced by government economic policy that is the level of income.
MPC+MPS=- a)1.0
- b)4
- c)2
- d)3
Correct answer is option 'A'. Can you explain this answer?
MPC+MPS=
a)
1.0
b)
4
c)
2
d)
3
|
Bhavana Chavan answered |
MPC (Marginal Propensity to Consume) and MPS (Marginal Propensity to Save) are the two important concepts in macroeconomics that help in understanding how changes in income affect consumption and saving patterns in an economy.
MPC refers to the proportion of an increase in income that is spent on goods and services, while MPS refers to the proportion of an increase in income that is saved. The two concepts are complementary, meaning that if one increases, the other decreases, and vice versa.
In this case, the answer is option 'A', which means that MPC and MPS are equal to 1.0. This implies that if there is an increase in income, the entire amount will be spent on goods and services (MPC) and none will be saved (MPS).
This scenario is highly unlikely in a real-world situation as individuals tend to save a portion of their income even when their income increases. However, in some theoretical models, such as the Keynesian model, it is assumed that MPC and MPS can be equal to 1.0 under certain conditions, such as when there is a liquidity trap or when the government increases spending through deficit financing.
In conclusion, while the concept of MPC and MPS being equal to 1.0 is rare in practical situations, it is important to understand the complementary nature of these two concepts and how they affect the consumption and saving patterns in an economy.
MPC refers to the proportion of an increase in income that is spent on goods and services, while MPS refers to the proportion of an increase in income that is saved. The two concepts are complementary, meaning that if one increases, the other decreases, and vice versa.
In this case, the answer is option 'A', which means that MPC and MPS are equal to 1.0. This implies that if there is an increase in income, the entire amount will be spent on goods and services (MPC) and none will be saved (MPS).
This scenario is highly unlikely in a real-world situation as individuals tend to save a portion of their income even when their income increases. However, in some theoretical models, such as the Keynesian model, it is assumed that MPC and MPS can be equal to 1.0 under certain conditions, such as when there is a liquidity trap or when the government increases spending through deficit financing.
In conclusion, while the concept of MPC and MPS being equal to 1.0 is rare in practical situations, it is important to understand the complementary nature of these two concepts and how they affect the consumption and saving patterns in an economy.
Multiplier tells us what will be the- a)Final change in the income, as a result of change in investment
- b)Final change in the consumption, as a result of change in investment
- c)Change in investment results in the change in income
- d)Final change in the income, as a result of change in consumption
Correct answer is option 'A'. Can you explain this answer?
Multiplier tells us what will be the
a)
Final change in the income, as a result of change in investment
b)
Final change in the consumption, as a result of change in investment
c)
Change in investment results in the change in income
d)
Final change in the income, as a result of change in consumption
|
|
Saptarshi Chakraborty answered |
Multiplier and Final Change in Income
What is Multiplier?
Multiplier is a macroeconomic concept that measures the change in income as a result of a change in autonomous spending. It is calculated as the ratio of the change in income to the initial change in spending.
How is Multiplier Calculated?
The formula for the multiplier is:
Multiplier = 1 / (1 - MPC)
Where, MPC is the marginal propensity to consume.
What is Marginal Propensity to Consume?
Marginal Propensity to Consume (MPC) is the proportion of an increase in income that is spent on consumption.
How does Multiplier impact Final Change in Income?
When there is a change in autonomous spending, for example, an increase in investment, the multiplier effect will come into play. The increase in investment will increase the income of those who received the investment, which in turn will be spent on goods and services, thereby increasing the income of those who produced those goods and services. This process continues, resulting in a chain reaction of spending and income generation.
The final change in income will be determined by the multiplier effect. For example, if the multiplier is 2, then an initial increase in investment of $100 will result in a final increase in income of $200.
Hence, the correct answer is option 'A', which states that the multiplier tells us the final change in income as a result of a change in investment. The multiplier effect is an important concept for policymakers as it helps them understand how changes in autonomous spending can impact the overall economy.
What is Multiplier?
Multiplier is a macroeconomic concept that measures the change in income as a result of a change in autonomous spending. It is calculated as the ratio of the change in income to the initial change in spending.
How is Multiplier Calculated?
The formula for the multiplier is:
Multiplier = 1 / (1 - MPC)
Where, MPC is the marginal propensity to consume.
What is Marginal Propensity to Consume?
Marginal Propensity to Consume (MPC) is the proportion of an increase in income that is spent on consumption.
How does Multiplier impact Final Change in Income?
When there is a change in autonomous spending, for example, an increase in investment, the multiplier effect will come into play. The increase in investment will increase the income of those who received the investment, which in turn will be spent on goods and services, thereby increasing the income of those who produced those goods and services. This process continues, resulting in a chain reaction of spending and income generation.
The final change in income will be determined by the multiplier effect. For example, if the multiplier is 2, then an initial increase in investment of $100 will result in a final increase in income of $200.
Hence, the correct answer is option 'A', which states that the multiplier tells us the final change in income as a result of a change in investment. The multiplier effect is an important concept for policymakers as it helps them understand how changes in autonomous spending can impact the overall economy.
The important factor influencing the propensity to save in an economy is- a)The level of consumption
- b)The level of savings
- c)The level of investment
- d)The level of income (Y)
Correct answer is option 'D'. Can you explain this answer?
The important factor influencing the propensity to save in an economy is
a)
The level of consumption
b)
The level of savings
c)
The level of investment
d)
The level of income (Y)
|
Athira Kumar answered |
Explanation:
The propensity to save is the proportion of income that is saved by households. It is an important determinant of the level of investment in an economy and, therefore, the level of economic growth. The factors that influence the propensity to save are:
Level of Income
The level of income is the most important factor that influences the propensity to save in an economy. As the level of income increases, the propensity to save also increases. This is because as income increases, people tend to save a higher proportion of their income.
Level of Consumption
The level of consumption is another important factor that influences the propensity to save. As the level of consumption increases, the propensity to save decreases. This is because when people consume more, they have less money left over to save.
Level of Investment
The level of investment is also an important factor that influences the propensity to save. When the level of investment is high, the propensity to save is also high. This is because when people see opportunities for investment, they tend to save more money to invest.
Level of Savings
The level of savings is also an important factor that influences the propensity to save. When the level of savings is high, the propensity to save is also high. This is because when people have a high level of savings, they tend to save more money.
Conclusion:
Therefore, we can conclude that the most important factor influencing the propensity to save in an economy is the level of income. As the level of income increases, the propensity to save also increases. Other factors such as the level of consumption, investment, and savings also play a role in determining the propensity to save, but they are secondary factors.
The propensity to save is the proportion of income that is saved by households. It is an important determinant of the level of investment in an economy and, therefore, the level of economic growth. The factors that influence the propensity to save are:
Level of Income
The level of income is the most important factor that influences the propensity to save in an economy. As the level of income increases, the propensity to save also increases. This is because as income increases, people tend to save a higher proportion of their income.
Level of Consumption
The level of consumption is another important factor that influences the propensity to save. As the level of consumption increases, the propensity to save decreases. This is because when people consume more, they have less money left over to save.
Level of Investment
The level of investment is also an important factor that influences the propensity to save. When the level of investment is high, the propensity to save is also high. This is because when people see opportunities for investment, they tend to save more money to invest.
Level of Savings
The level of savings is also an important factor that influences the propensity to save. When the level of savings is high, the propensity to save is also high. This is because when people have a high level of savings, they tend to save more money.
Conclusion:
Therefore, we can conclude that the most important factor influencing the propensity to save in an economy is the level of income. As the level of income increases, the propensity to save also increases. Other factors such as the level of consumption, investment, and savings also play a role in determining the propensity to save, but they are secondary factors.
If APC is 0.7 then APS will be- a)1
- b)0.7
- c)0.4
- d)0.3
Correct answer is option 'D'. Can you explain this answer?
If APC is 0.7 then APS will be
a)
1
b)
0.7
c)
0.4
d)
0.3
|
|
Devanshi Choudhury answered |
APC and APS
- APC stands for Average Propensity to Consume and APS stands for Average Propensity to Save.
- APC is the proportion of total income that a person or a household spends on consumption.
- APS is the proportion of total income that a person or a household saves.
Calculation of APS
- APS can be calculated by subtracting APC from 1 or by dividing saving by income.
- APS = 1 - APC
- If APC is 0.7, then APS = 1 - 0.7 = 0.3.
Explanation of answer
- The question asks for the value of APS when APC is 0.7.
- The formula for calculating APS is APS = 1 - APC.
- When APC is 0.7, APS can be calculated as APS = 1 - 0.7 = 0.3.
- Therefore, the correct answer is option 'D'.
- APC stands for Average Propensity to Consume and APS stands for Average Propensity to Save.
- APC is the proportion of total income that a person or a household spends on consumption.
- APS is the proportion of total income that a person or a household saves.
Calculation of APS
- APS can be calculated by subtracting APC from 1 or by dividing saving by income.
- APS = 1 - APC
- If APC is 0.7, then APS = 1 - 0.7 = 0.3.
Explanation of answer
- The question asks for the value of APS when APC is 0.7.
- The formula for calculating APS is APS = 1 - APC.
- When APC is 0.7, APS can be calculated as APS = 1 - 0.7 = 0.3.
- Therefore, the correct answer is option 'D'.
MPC+MPS should always be equal to- a)Depends on their values
- b)1
- c)FALSE
- d)None of these
Correct answer is option 'B'. Can you explain this answer?
MPC+MPS should always be equal to
a)
Depends on their values
b)
1
c)
FALSE
d)
None of these
|
|
Suresh Reddy answered |
Mathematically, in a closed economy, MPS + MPC = 1
The slope of the saving function gives the- a)The amount of savings done when there is high level of income.
- b)The amount of dissavings done when there is zero level of income.
- c)Increase in savings per unit increase in the income.
- d)The amount of dissavings done when there is high level of income.
Correct answer is option 'C'. Can you explain this answer?
The slope of the saving function gives the
a)
The amount of savings done when there is high level of income.
b)
The amount of dissavings done when there is zero level of income.
c)
Increase in savings per unit increase in the income.
d)
The amount of dissavings done when there is high level of income.
|
|
Shubham Ghosh answered |
Explanation:
The saving function is a mathematical representation of the relationship between income and saving. It shows how much individuals and households save at different levels of income. The slope of the saving function represents the rate at which saving changes with respect to changes in income. In other words, it shows how much additional saving is done for each additional unit of income.
The correct answer is option 'C' - Increase in savings per unit increase in income.
Explanation in detail:
1. The saving function:
The saving function is typically represented as S = f(Y), where S is saving and Y is income. It shows the relationship between income and saving. At lower levels of income, individuals may have little or no saving, while at higher levels of income, they may save more.
2. The slope of the saving function:
The slope of the saving function represents the change in saving for a given change in income. It is calculated as the ratio of the change in saving to the change in income. Mathematically, it is expressed as ΔS/ΔY.
3. Increase in savings per unit increase in income:
When the slope of the saving function is positive, it means that saving increases as income increases. This implies that for each additional unit increase in income, there is an increase in saving.
4. Interpretation of the slope:
The slope of the saving function gives us information about the marginal propensity to save (MPS). MPS is the proportion of additional income that is saved. It represents the change in saving per unit change in income.
5. Relationship to options:
Option 'A' states that the slope of the saving function gives the amount of savings done when there is a high level of income. This is incorrect because the slope represents the change in saving, not the absolute amount of saving.
Option 'B' states that the slope of the saving function gives the amount of dissavings done when there is zero level of income. This is incorrect because the slope represents the change in saving, not the amount of dissaving.
Option 'D' states that the slope of the saving function gives the amount of dissavings done when there is a high level of income. This is incorrect because the slope represents the change in saving, not the amount of dissaving.
Therefore, the correct answer is option 'C' - Increase in savings per unit increase in income, as it accurately describes the interpretation of the slope of the saving function.
The saving function is a mathematical representation of the relationship between income and saving. It shows how much individuals and households save at different levels of income. The slope of the saving function represents the rate at which saving changes with respect to changes in income. In other words, it shows how much additional saving is done for each additional unit of income.
The correct answer is option 'C' - Increase in savings per unit increase in income.
Explanation in detail:
1. The saving function:
The saving function is typically represented as S = f(Y), where S is saving and Y is income. It shows the relationship between income and saving. At lower levels of income, individuals may have little or no saving, while at higher levels of income, they may save more.
2. The slope of the saving function:
The slope of the saving function represents the change in saving for a given change in income. It is calculated as the ratio of the change in saving to the change in income. Mathematically, it is expressed as ΔS/ΔY.
3. Increase in savings per unit increase in income:
When the slope of the saving function is positive, it means that saving increases as income increases. This implies that for each additional unit increase in income, there is an increase in saving.
4. Interpretation of the slope:
The slope of the saving function gives us information about the marginal propensity to save (MPS). MPS is the proportion of additional income that is saved. It represents the change in saving per unit change in income.
5. Relationship to options:
Option 'A' states that the slope of the saving function gives the amount of savings done when there is a high level of income. This is incorrect because the slope represents the change in saving, not the absolute amount of saving.
Option 'B' states that the slope of the saving function gives the amount of dissavings done when there is zero level of income. This is incorrect because the slope represents the change in saving, not the amount of dissaving.
Option 'D' states that the slope of the saving function gives the amount of dissavings done when there is a high level of income. This is incorrect because the slope represents the change in saving, not the amount of dissaving.
Therefore, the correct answer is option 'C' - Increase in savings per unit increase in income, as it accurately describes the interpretation of the slope of the saving function.
MPS = 1 - MPC. Is it true?- a)False
- b)True
- c)Depends on their values
- d)None of these
Correct answer is option 'B'. Can you explain this answer?
MPS = 1 - MPC. Is it true?
a)
False
b)
True
c)
Depends on their values
d)
None of these
|
Sai Kulkarni answered |
The statement MPS = 1 - MPC is True
- MPS stands for Marginal Propensity to Save, which is the portion of additional income that a household saves rather than spends.
- MPC stands for Marginal Propensity to Consume, which is the portion of additional income that a household spends on consumption.
- In a simple economic model, the sum of MPS and MPC equals 1, as all additional income is either saved or consumed.
Thus, MPS = 1 - MPC is a correct relationship.
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Economics Class 12
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