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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.
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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.
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.
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
|
|
Jatin Nair answered |
Explanation:
To calculate the Average Propensity to Save (APS), we need to first understand the concept of APS and then use the given information to calculate it.
Concept of Average Propensity to Save (APS):
Average Propensity to Save (APS) is the proportion of income that an individual or a household saves out of their total income. It is calculated by dividing the saving (S) by the total income (Y).
Formula for Average Propensity to Save (APS):
APS = S / Y
Where:
APS = Average Propensity to Save
S = Saving
Y = Total Income
Given Information:
Income (Y) = Rs 1000
Consumption Expenditure (C) = Rs 200
Calculating Saving (S):
Saving (S) can be calculated by subtracting the consumption expenditure (C) from the total income (Y).
S = Y - C
S = 1000 - 200
S = 800
Calculating Average Propensity to Save (APS):
Using the formula for APS, we can now calculate it by dividing the saving (S) by the total income (Y).
APS = S / Y
APS = 800 / 1000
APS = 0.8
Therefore, the Average Propensity to Save (APS) is 0.8.
Conclusion:
The correct answer is option 'c' - 0.8.
To calculate the Average Propensity to Save (APS), we need to first understand the concept of APS and then use the given information to calculate it.
Concept of Average Propensity to Save (APS):
Average Propensity to Save (APS) is the proportion of income that an individual or a household saves out of their total income. It is calculated by dividing the saving (S) by the total income (Y).
Formula for Average Propensity to Save (APS):
APS = S / Y
Where:
APS = Average Propensity to Save
S = Saving
Y = Total Income
Given Information:
Income (Y) = Rs 1000
Consumption Expenditure (C) = Rs 200
Calculating Saving (S):
Saving (S) can be calculated by subtracting the consumption expenditure (C) from the total income (Y).
S = Y - C
S = 1000 - 200
S = 800
Calculating Average Propensity to Save (APS):
Using the formula for APS, we can now calculate it by dividing the saving (S) by the total income (Y).
APS = S / Y
APS = 800 / 1000
APS = 0.8
Therefore, the Average Propensity to Save (APS) is 0.8.
Conclusion:
The correct answer is option 'c' - 0.8.
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.
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
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.
|
Sai Chakraborty answered |
Assertion: When income is zero, consumption is also zero.
Reason: There is always some minimum level of consumption in the economy even when income is zero.
Explanation:
The given assertion states that when income is zero, consumption is also zero. The reason given is that there is always some minimum level of consumption in the economy even when income is zero. Let's analyze both statements individually.
Analysis of Assertion:
When income is zero, it means that an individual has no earning or financial resources. In such a case, it is highly unlikely that the individual would be able to consume anything. Consumption requires some level of financial resources to purchase goods and services. Therefore, it is reasonable to say that when income is zero, consumption is also zero.
Analysis of Reason:
The reason provided states that there is always some minimum level of consumption in the economy even when income is zero. This means that even in the absence of income, individuals would still consume goods and services to meet their basic needs. However, this reason is not correct. When income is zero, it implies that individuals have no financial resources to engage in consumption. While there may be essential goods and services required for survival, it is highly unlikely that individuals would be able to access or afford them without any income.
Conclusion:
Based on the analysis of both the assertion and the reason, it can be concluded that the assertion is false and the reason is true. The reason provided does not correctly explain the assertion. When income is zero, consumption is also zero as individuals do not have the financial means to engage in consumption. Therefore, the correct answer is option D - Assertion (A) is false, but Reason (R) is true.
Reason: There is always some minimum level of consumption in the economy even when income is zero.
Explanation:
The given assertion states that when income is zero, consumption is also zero. The reason given is that there is always some minimum level of consumption in the economy even when income is zero. Let's analyze both statements individually.
Analysis of Assertion:
When income is zero, it means that an individual has no earning or financial resources. In such a case, it is highly unlikely that the individual would be able to consume anything. Consumption requires some level of financial resources to purchase goods and services. Therefore, it is reasonable to say that when income is zero, consumption is also zero.
Analysis of Reason:
The reason provided states that there is always some minimum level of consumption in the economy even when income is zero. This means that even in the absence of income, individuals would still consume goods and services to meet their basic needs. However, this reason is not correct. When income is zero, it implies that individuals have no financial resources to engage in consumption. While there may be essential goods and services required for survival, it is highly unlikely that individuals would be able to access or afford them without any income.
Conclusion:
Based on the analysis of both the assertion and the reason, it can be concluded that the assertion is false and the reason is true. The reason provided does not correctly explain the assertion. When income is zero, consumption is also zero as individuals do not have the financial means to engage in consumption. Therefore, the correct answer is option D - Assertion (A) is false, but Reason (R) is true.
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.
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.
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.
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.
MPS = 1- MPC. It is
- a)0
- b)TRUE
- c)Depends on their values
- d)None of these
Correct answer is option 'B'. Can you explain this answer?
MPS = 1- MPC. It is
a)
0
b)
TRUE
c)
Depends on their values
d)
None of these
|
|
Kavita Joshi answered |
Since 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.
so option B is correct
Read the report given below and answer the questions that follow:In an economy the Aggregate Demand is determined by consumption, Government Expenditure and Net Exports in the economy. This is affected by the Savings and Investment in the economy. The Multiplier, that is investment multiplier, which is influenced by the ratio of total consumption and total income, regulates the flow of money in the economy influencing the Aggregate Demand and Supply. Any change in any of the factors leads to a big change in the economy’s equilibrium as a whole. It is to be kept in mind that the economy needs to be in equilibrium condition. When savings is less than the investments the aggregate demand is more than the aggregate supply, and vice versa.Savings and Investment affect the ________.- a)Aggregate demand and supply
- b)Government policies
- c)Government budget
- d)None of the above
Correct answer is option 'A'. Can you explain this answer?
Read the report given below and answer the questions that follow:
In an economy the Aggregate Demand is determined by consumption, Government Expenditure and Net Exports in the economy. This is affected by the Savings and Investment in the economy. The Multiplier, that is investment multiplier, which is influenced by the ratio of total consumption and total income, regulates the flow of money in the economy influencing the Aggregate Demand and Supply. Any change in any of the factors leads to a big change in the economy’s equilibrium as a whole. It is to be kept in mind that the economy needs to be in equilibrium condition. When savings is less than the investments the aggregate demand is more than the aggregate supply, and vice versa.
Savings and Investment affect the ________.
a)
Aggregate demand and supply
b)
Government policies
c)
Government budget
d)
None of the above
|
|
Neha Sharma answered |
- In the long term, an increase in investment should also increase productive capacity and increase aggregate supply. Therefore, investment can enable a more sustainable increase in AD. The increase in capacity enables a sustained rise in AD without causing inflation.
- As household wealth increases, aggregate demand usually increases as well. Conversely, a decline in wealth usually leads to lower aggregate demand. Increases in personal savings will also lead to less demand for goods, which tends to occur during recessions.
Read the following report and answer the questions that follow:Due to the Covid-19 situation, there has been a fall in the savings of the people, and they are spending the savings. This has led to the consumption to be done by the reduction of the savings. In order to control the situation, the government has announced various stimulus packages to revive the economy and providing employment through road and railway building projects. Still the desired savings or ex-ante savings that is required for the functioning of the economy has reduced. It is seen that the private consumption expenditure, private investment expenditure and ex-ante savings has reduced the aggregate demand in the economy.It is seen that the private consumption expenditure, private investment expenditure and ex-ante savings has reduced the ________________ in the economy.- a)Aggregate demand
- b)Aggregate supply
- c)Investment
- d)None of the above
Correct answer is option 'A'. Can you explain this answer?
Read the following report and answer the questions that follow:
Due to the Covid-19 situation, there has been a fall in the savings of the people, and they are spending the savings. This has led to the consumption to be done by the reduction of the savings. In order to control the situation, the government has announced various stimulus packages to revive the economy and providing employment through road and railway building projects. Still the desired savings or ex-ante savings that is required for the functioning of the economy has reduced. It is seen that the private consumption expenditure, private investment expenditure and ex-ante savings has reduced the aggregate demand in the economy.
It is seen that the private consumption expenditure, private investment expenditure and ex-ante savings has reduced the ________________ in the economy.
a)
Aggregate demand
b)
Aggregate supply
c)
Investment
d)
None of the above
|
|
Vikas Kapoor answered |
Aggregate demand represents the total demand for goods and services at any given price level in a given period. Aggregate demand consists of all consumer goods, capital goods (factories and equipment), exports, imports, and government spending programs.
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 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.
Read the report given below and answer the questions that follow:When, at a particular price level, aggregate demand for final goods equals aggregate supply of final goods, the final goods or product market reaches its equilibrium. Aggregate demand for final goods consists of ex-ante consumption, ex-ante investment, government spending, etc. The rate of increase in ex-ante consumption due to a unit increment in income is called marginal propensity to consume. For simplicity we assume a constant final goods price and constant rate of interest over short run to determine the level of aggregate demand for final goods in the economy. We also assume that the aggregate supply is perfectly elastic at this price. Under such circumstances, aggregate output is determined solely by the level of aggregate demand. This is known as effective demand principle. An increase (decrease) in autonomous spending causes aggregate output of final goods to increase (decrease) by a larger amount through the multiplier process.What is the circumstance when aggregate output is determined solely by the level of aggregate demand called?- a)Investment Multiplier
- b)Effective Demand
- c)Propensity to Consume
- d)Propensity to Save
Correct answer is option 'B'. Can you explain this answer?
Read the report given below and answer the questions that follow:
When, at a particular price level, aggregate demand for final goods equals aggregate supply of final goods, the final goods or product market reaches its equilibrium. Aggregate demand for final goods consists of ex-ante consumption, ex-ante investment, government spending, etc. The rate of increase in ex-ante consumption due to a unit increment in income is called marginal propensity to consume. For simplicity we assume a constant final goods price and constant rate of interest over short run to determine the level of aggregate demand for final goods in the economy. We also assume that the aggregate supply is perfectly elastic at this price. Under such circumstances, aggregate output is determined solely by the level of aggregate demand. This is known as effective demand principle. An increase (decrease) in autonomous spending causes aggregate output of final goods to increase (decrease) by a larger amount through the multiplier process.
What is the circumstance when aggregate output is determined solely by the level of aggregate demand called?
a)
Investment Multiplier
b)
Effective Demand
c)
Propensity to Consume
d)
Propensity to Save
|
|
Amita Das answered |
Under such circumstances, equilibrium output will be solely determined by the aggregate amount of demand at this price in the economy. We call it effective demand principle.
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): 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.
Read the report given below and answer the questions that follow:In an economy the Aggregate Demand is determined by consumption, Government Expenditure and Net Exports in the economy. This is affected by the Savings and Investment in the economy. The Multiplier, that is investment multiplier, which is influenced by the ratio of total consumption and total income, regulates the flow of money in the economy influencing the Aggregate Demand and Supply. Any change in any of the factors leads to a big change in the economy’s equilibrium as a whole. It is to be kept in mind that the economy needs to be in equilibrium condition. When savings is less than the investments the aggregate demand is more than the aggregate supply, and vice versa.Aggregate Demand is not determined by which of the following:- a)Consumption Expenditure
- b)Investment Expenditure
- c)Net Exports
- d)Government Policies
Correct answer is option 'D'. Can you explain this answer?
Read the report given below and answer the questions that follow:
In an economy the Aggregate Demand is determined by consumption, Government Expenditure and Net Exports in the economy. This is affected by the Savings and Investment in the economy. The Multiplier, that is investment multiplier, which is influenced by the ratio of total consumption and total income, regulates the flow of money in the economy influencing the Aggregate Demand and Supply. Any change in any of the factors leads to a big change in the economy’s equilibrium as a whole. It is to be kept in mind that the economy needs to be in equilibrium condition. When savings is less than the investments the aggregate demand is more than the aggregate supply, and vice versa.
Aggregate Demand is not determined by which of the following:
a)
Consumption Expenditure
b)
Investment Expenditure
c)
Net Exports
d)
Government Policies
|
|
Amita Das answered |
AD=C+I+G+X-M
Where,
C=Household Consumption Expenditure
I=Private Investment Expenditure
G=Government Expenditure
X-M=Net Exports
Read the following report and answer the questions that follow:Due to the Covid-19 situation, there has been a fall in the savings of the people, and they are spending the savings. This has led to the consumption to be done by the reduction of the savings. In order to control the situation, the government has announced various stimulus packages to revive the economy and providing employment through road and railway building projects. Still the desired savings or ex-ante savings that is required for the functioning of the economy has reduced. It is seen that the private consumption expenditure, private investment expenditure and ex-ante savings has reduced the aggregate demand in the economy.Due to the Covid-19 situation what has happened:- a)Ex-ante saving has increased.
- b)Ex-post saving has increased.
- c)Ex-ante saving has reduced.
- d)Ex-post savings has reduced.
Correct answer is option 'C'. Can you explain this answer?
Read the following report and answer the questions that follow:
Due to the Covid-19 situation, there has been a fall in the savings of the people, and they are spending the savings. This has led to the consumption to be done by the reduction of the savings. In order to control the situation, the government has announced various stimulus packages to revive the economy and providing employment through road and railway building projects. Still the desired savings or ex-ante savings that is required for the functioning of the economy has reduced. It is seen that the private consumption expenditure, private investment expenditure and ex-ante savings has reduced the aggregate demand in the economy.
Due to the Covid-19 situation what has happened:
a)
Ex-ante saving has increased.
b)
Ex-post saving has increased.
c)
Ex-ante saving has reduced.
d)
Ex-post savings has reduced.
|
|
Ishan Choudhury answered |
Due to the Covid-19 situation, people used their savings for consumption. Thus, there has been a fall in the savings of the people.
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.
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.
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): 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 = ∞
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
|
Arnav Chawla answered |
Introduction:
The concept of saving refers to the portion of income that is not consumed but instead set aside for future use. It is the difference between disposable income and consumption expenditure. Saving can be positive or negative depending on the level of income. In this case, the question asks about the scenario where saving is negative at a specific level of income.
Explanation:
In order to understand why saving is negative at a zero level of income, let's consider the following points:
1. Saving and Income:
- Saving is typically expected to be positive as income increases. This is because individuals have more disposable income to allocate towards saving when their earnings are higher.
- Conversely, when income is low or nonexistent, saving tends to be either minimal or negative.
2. Zero Level of Income:
- A zero level of income refers to a situation where an individual or household does not earn any income.
- This can occur during periods of unemployment, retirement, or when someone is dependent on others for financial support.
3. Negative Saving:
- When income is zero, individuals are unable to allocate any funds towards saving.
- However, they may still have expenses to cover, such as rent, utilities, or other bills.
- In this situation, individuals may resort to borrowing or utilizing existing savings to meet their financial obligations.
- As a result, saving becomes negative as individuals are using up their savings or going into debt to maintain their expenses.
Conclusion:
In summary, the saving is negative at a zero level of income because individuals are unable to allocate any funds towards saving and are instead relying on existing savings or borrowing to cover their expenses.
The concept of saving refers to the portion of income that is not consumed but instead set aside for future use. It is the difference between disposable income and consumption expenditure. Saving can be positive or negative depending on the level of income. In this case, the question asks about the scenario where saving is negative at a specific level of income.
Explanation:
In order to understand why saving is negative at a zero level of income, let's consider the following points:
1. Saving and Income:
- Saving is typically expected to be positive as income increases. This is because individuals have more disposable income to allocate towards saving when their earnings are higher.
- Conversely, when income is low or nonexistent, saving tends to be either minimal or negative.
2. Zero Level of Income:
- A zero level of income refers to a situation where an individual or household does not earn any income.
- This can occur during periods of unemployment, retirement, or when someone is dependent on others for financial support.
3. Negative Saving:
- When income is zero, individuals are unable to allocate any funds towards saving.
- However, they may still have expenses to cover, such as rent, utilities, or other bills.
- In this situation, individuals may resort to borrowing or utilizing existing savings to meet their financial obligations.
- As a result, saving becomes negative as individuals are using up their savings or going into debt to maintain their expenses.
Conclusion:
In summary, the saving is negative at a zero level of income because individuals are unable to allocate any funds towards saving and are instead relying on existing savings or borrowing to cover their expenses.
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): 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).
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
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.
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 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
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): 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.
|
Saikat Sharma answered |
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.
The correct answer is option B: Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
Explanation:
Private Consumption Expenditure refers to the total expenditure made by households on goods and services for their personal consumption. It includes expenses on items such as food, clothing, housing, healthcare, education, transportation, etc. Assertion (A) states that Private Consumption Expenditure is determined by the level of personal disposable income of the economy.
Understanding Assertion (A):
Personal disposable income is the income available to households after deducting taxes and other mandatory payments. It represents the purchasing power of individuals or households. The level of personal disposable income influences the ability of households to spend on consumption. When personal disposable income increases, households have more money available for spending, which leads to an increase in private consumption expenditure. Conversely, when personal disposable income decreases, households have less money to spend, resulting in a decrease in private consumption expenditure.
Understanding Reason (R):
Private Consumption Expenditure refers to the total demand for goods and services by households in an economy during an accounting year. It represents the consumption behavior of households and their willingness to spend on various goods and services. The reason states that private consumption expenditure is the total demand for all goods or services by households during an accounting year.
Explanation of the Correct Answer:
Both Assertion (A) and Reason (R) are true. Private Consumption Expenditure is indeed determined by the level of personal disposable income of the economy. However, Reason (R) is not the correct explanation of Assertion (A) because it only defines private consumption expenditure without explaining the relationship between personal disposable income and private consumption expenditure.
In conclusion, personal disposable income plays a significant role in determining the level of private consumption expenditure. When personal disposable income increases, private consumption expenditure tends to increase, and vice versa. However, the reason provided does not explain the cause-and-effect relationship between personal disposable income and private consumption expenditure, making it an incorrect explanation for Assertion (A).
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.
The correct answer is option B: Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
Explanation:
Private Consumption Expenditure refers to the total expenditure made by households on goods and services for their personal consumption. It includes expenses on items such as food, clothing, housing, healthcare, education, transportation, etc. Assertion (A) states that Private Consumption Expenditure is determined by the level of personal disposable income of the economy.
Understanding Assertion (A):
Personal disposable income is the income available to households after deducting taxes and other mandatory payments. It represents the purchasing power of individuals or households. The level of personal disposable income influences the ability of households to spend on consumption. When personal disposable income increases, households have more money available for spending, which leads to an increase in private consumption expenditure. Conversely, when personal disposable income decreases, households have less money to spend, resulting in a decrease in private consumption expenditure.
Understanding Reason (R):
Private Consumption Expenditure refers to the total demand for goods and services by households in an economy during an accounting year. It represents the consumption behavior of households and their willingness to spend on various goods and services. The reason states that private consumption expenditure is the total demand for all goods or services by households during an accounting year.
Explanation of the Correct Answer:
Both Assertion (A) and Reason (R) are true. Private Consumption Expenditure is indeed determined by the level of personal disposable income of the economy. However, Reason (R) is not the correct explanation of Assertion (A) because it only defines private consumption expenditure without explaining the relationship between personal disposable income and private consumption expenditure.
In conclusion, personal disposable income plays a significant role in determining the level of private consumption expenditure. When personal disposable income increases, private consumption expenditure tends to increase, and vice versa. However, the reason provided does not explain the cause-and-effect relationship between personal disposable income and private consumption expenditure, making it an incorrect explanation for Assertion (A).
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.
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.
|
|
Priyanka Khatri answered |
Excess capacity arises because of deficiency of demand.
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'.
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.
Read the report given below and answer the questions that follow:When, at a particular price level, aggregate demand for final goods equals aggregate supply of final goods, the final goods or product market reaches its equilibrium. Aggregate demand for final goods consists of ex-ante consumption, ex-ante investment, government spending, etc. The rate of increase in ex-ante consumption due to a unit increment in income is called marginal propensity to consume. For simplicity we assume a constant final goods price and constant rate of interest over short run to determine the level of aggregate demand for final goods in the economy. We also assume that the aggregate supply is perfectly elastic at this price. Under such circumstances, aggregate output is determined solely by the level of aggregate demand. This is known as effective demand principle. An increase (decrease) in autonomous spending causes aggregate output of final goods to increase (decrease) by a larger amount through the multiplier process.The equilibrium level is when,- a)AD = AS
- b)AD > AS
- c)AD < />
- d)AD < />
Correct answer is option 'A'. Can you explain this answer?
Read the report given below and answer the questions that follow:
When, at a particular price level, aggregate demand for final goods equals aggregate supply of final goods, the final goods or product market reaches its equilibrium. Aggregate demand for final goods consists of ex-ante consumption, ex-ante investment, government spending, etc. The rate of increase in ex-ante consumption due to a unit increment in income is called marginal propensity to consume. For simplicity we assume a constant final goods price and constant rate of interest over short run to determine the level of aggregate demand for final goods in the economy. We also assume that the aggregate supply is perfectly elastic at this price. Under such circumstances, aggregate output is determined solely by the level of aggregate demand. This is known as effective demand principle. An increase (decrease) in autonomous spending causes aggregate output of final goods to increase (decrease) by a larger amount through the multiplier process.
The equilibrium level is when,
a)
AD = AS
b)
AD > AS
c)
AD < />
d)
AD < />
|
|
Ishan Choudhury answered |
The equilibrium is when AD=AS.
So that, all the producers wish to produce during the year is exactly equal to what the buyers wish to spend on the purchase of goods and services during the year.
Read the following report and answer the questions that follow:Due to the Covid-19 situation, there has been a fall in the savings of the people, and they are spending the savings. This has led to the consumption to be done by the reduction of the savings. In order to control the situation, the government has announced various stimulus packages to revive the economy and providing employment through road and railway building projects. Still the desired savings or ex-ante savings that is required for the functioning of the economy has reduced. It is seen that the private consumption expenditure, private investment expenditure and ex-ante savings has reduced the aggregate demand in the economy.Which options did the government use to increase the savings and consumption in the economy:(1) Giving stimulus packages(2) Reducing investment in infrastructure(3) Open Market Operations(4) Providing employmentChoose the correct option:- a)1 and 2
- b)1, 2 and 3
- c)1 and 4
- d)1, 2 and 4
Correct answer is option 'C'. Can you explain this answer?
Read the following report and answer the questions that follow:
Due to the Covid-19 situation, there has been a fall in the savings of the people, and they are spending the savings. This has led to the consumption to be done by the reduction of the savings. In order to control the situation, the government has announced various stimulus packages to revive the economy and providing employment through road and railway building projects. Still the desired savings or ex-ante savings that is required for the functioning of the economy has reduced. It is seen that the private consumption expenditure, private investment expenditure and ex-ante savings has reduced the aggregate demand in the economy.
Which options did the government use to increase the savings and consumption in the economy:
(1) Giving stimulus packages
(2) Reducing investment in infrastructure
(3) Open Market Operations
(4) Providing employment
Choose the correct option:
a)
1 and 2
b)
1, 2 and 3
c)
1 and 4
d)
1, 2 and 4
|
|
Neha Sharma answered |
Government has announced various stimulus packages to revive the economy and to invest in infrastructure such as building roads and railways to provide employment.
Read the report given below and answer the questions that follow:When, at a particular price level, aggregate demand for final goods equals aggregate supply of final goods, the final goods or product market reaches its equilibrium. Aggregate demand for final goods consists of ex-ante consumption, ex-ante investment, government spending, etc. The rate of increase in ex-ante consumption due to a unit increment in income is called marginal propensity to consume. For simplicity we assume a constant final goods price and constant rate of interest over short run to determine the level of aggregate demand for final goods in the economy. We also assume that the aggregate supply is perfectly elastic at this price. Under such circumstances, aggregate output is determined solely by the level of aggregate demand. This is known as effective demand principle. An increase (decrease) in autonomous spending causes aggregate output of final goods to increase (decrease) by a larger amount through the multiplier process.At the price level mentioned in the case, Aggregate Supply is ____________.- a)Perfectly Elastic
- b)Perfectly Inelastic
- c)Unitary Elastic
- d)Elastic
Correct answer is option 'A'. Can you explain this answer?
Read the report given below and answer the questions that follow:
When, at a particular price level, aggregate demand for final goods equals aggregate supply of final goods, the final goods or product market reaches its equilibrium. Aggregate demand for final goods consists of ex-ante consumption, ex-ante investment, government spending, etc. The rate of increase in ex-ante consumption due to a unit increment in income is called marginal propensity to consume. For simplicity we assume a constant final goods price and constant rate of interest over short run to determine the level of aggregate demand for final goods in the economy. We also assume that the aggregate supply is perfectly elastic at this price. Under such circumstances, aggregate output is determined solely by the level of aggregate demand. This is known as effective demand principle. An increase (decrease) in autonomous spending causes aggregate output of final goods to increase (decrease) by a larger amount through the multiplier process.
At the price level mentioned in the case, Aggregate Supply is ____________.
a)
Perfectly Elastic
b)
Perfectly Inelastic
c)
Unitary Elastic
d)
Elastic
|
|
Priyanka Khatri answered |
In Keynesian approach, aggregate supply is perfectly elastic with respect to price level till full employment level of output. It means firms are willing to produce any amount of output at the prevailing price level till full employment level of output is reached.
Read the report given below and answer the questions that follow:In an economy the Aggregate Demand is determined by consumption, Government Expenditure and Net Exports in the economy. This is affected by the Savings and Investment in the economy. The Multiplier, that is investment multiplier, which is influenced by the ratio of total consumption and total income, regulates the flow of money in the economy influencing the Aggregate Demand and Supply. Any change in any of the factors leads to a big change in the economy’s equilibrium as a whole. It is to be kept in mind that the economy needs to be in equilibrium condition. When savings is less than the investments the aggregate demand is more than the aggregate supply, and vice versa.What happens when the Investment is lesser than Savings?- a)Aggregate Demand is more than the Aggregate Supply.
- b)Aggregate Demand is less than the Aggregate Supply
- c)Aggregate Demand is equal to the Aggregate Supply.
- d)Aggregate Demand is independent of Aggregate Supply.
Correct answer is option 'B'. Can you explain this answer?
Read the report given below and answer the questions that follow:
In an economy the Aggregate Demand is determined by consumption, Government Expenditure and Net Exports in the economy. This is affected by the Savings and Investment in the economy. The Multiplier, that is investment multiplier, which is influenced by the ratio of total consumption and total income, regulates the flow of money in the economy influencing the Aggregate Demand and Supply. Any change in any of the factors leads to a big change in the economy’s equilibrium as a whole. It is to be kept in mind that the economy needs to be in equilibrium condition. When savings is less than the investments the aggregate demand is more than the aggregate supply, and vice versa.
What happens when the Investment is lesser than Savings?
a)
Aggregate Demand is more than the Aggregate Supply.
b)
Aggregate Demand is less than the Aggregate Supply
c)
Aggregate Demand is equal to the Aggregate Supply.
d)
Aggregate Demand is independent of Aggregate Supply.
|
|
Vikas Kapoor answered |
When the investment is less than savings, the expenditure in the economy is less than what producers had expected, resulting in undesired building-up of unsold stock. Consequently, AD falls short of AS.
Read the report given below and answer the questions that follow:When, at a particular price level, aggregate demand for final goods equals aggregate supply of final goods, the final goods or product market reaches its equilibrium. Aggregate demand for final goods consists of ex-ante consumption, ex-ante investment, government spending, etc. The rate of increase in ex-ante consumption due to a unit increment in income is called marginal propensity to consume. For simplicity we assume a constant final goods price and constant rate of interest over short run to determine the level of aggregate demand for final goods in the economy. We also assume that the aggregate supply is perfectly elastic at this price. Under such circumstances, aggregate output is determined solely by the level of aggregate demand. This is known as effective demand principle. An increase (decrease) in autonomous spending causes aggregate output of final goods to increase (decrease) by a larger amount through the multiplier process.The rate of increase in __________________ due to a unit increment in income is called marginal propensity to consume.- a)Ex-post consumption
- b)Ex-ante consumption
- c)Both (A) and (B)
- d)None of the above
Correct answer is option 'B'. Can you explain this answer?
Read the report given below and answer the questions that follow:
When, at a particular price level, aggregate demand for final goods equals aggregate supply of final goods, the final goods or product market reaches its equilibrium. Aggregate demand for final goods consists of ex-ante consumption, ex-ante investment, government spending, etc. The rate of increase in ex-ante consumption due to a unit increment in income is called marginal propensity to consume. For simplicity we assume a constant final goods price and constant rate of interest over short run to determine the level of aggregate demand for final goods in the economy. We also assume that the aggregate supply is perfectly elastic at this price. Under such circumstances, aggregate output is determined solely by the level of aggregate demand. This is known as effective demand principle. An increase (decrease) in autonomous spending causes aggregate output of final goods to increase (decrease) by a larger amount through the multiplier process.
The rate of increase in __________________ due to a unit increment in income is called marginal propensity to consume.
a)
Ex-post consumption
b)
Ex-ante consumption
c)
Both (A) and (B)
d)
None of the above
|
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Neha Sharma answered |
MPC is the ratio between change in consumption and change in income.
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.
Read the following report and answer the questions that follow:Due to the Covid-19 situation, there has been a fall in the savings of the people, and they are spending the savings. This has led to the consumption to be done by the reduction of the savings. In order to control the situation, the government has announced various stimulus packages to revive the economy and providing employment through road and railway building projects. Still the desired savings or ex-ante savings that is required for the functioning of the economy has reduced. It is seen that the private consumption expenditure, private investment expenditure and ex-ante savings has reduced the aggregate demand in the economy.The fall in the savings is due to:- a)Decrease in income.
- b)Increase in consumption.
- c)Increase in government expenditure.
- d)Using savings for consumption.
Correct answer is option 'D'. Can you explain this answer?
Read the following report and answer the questions that follow:
Due to the Covid-19 situation, there has been a fall in the savings of the people, and they are spending the savings. This has led to the consumption to be done by the reduction of the savings. In order to control the situation, the government has announced various stimulus packages to revive the economy and providing employment through road and railway building projects. Still the desired savings or ex-ante savings that is required for the functioning of the economy has reduced. It is seen that the private consumption expenditure, private investment expenditure and ex-ante savings has reduced the aggregate demand in the economy.
The fall in the savings is due to:
a)
Decrease in income.
b)
Increase in consumption.
c)
Increase in government expenditure.
d)
Using savings for consumption.
|
|
Neha Sharma answered |
Due to the Covid-19 situation, income of the people has decreased. Thus, people used their savings for their consumption.
Chapter doubts & questions for Determination of Income and Employment - Economics Class 12 2024 is part of Commerce exam preparation. The chapters have been prepared according to the Commerce exam syllabus. The Chapter doubts & questions, notes, tests & MCQs are made for Commerce 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests here.
Chapter doubts & questions of Determination of Income and Employment - Economics Class 12 in English & Hindi are available as part of Commerce exam.
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