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.
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.
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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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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