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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
Correct answer is option 'B'. Can you explain this answer?
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Most Upvoted Answer
This a MCQ (Multiple Choice Question) based practice test of Chapter 4...
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.

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This a MCQ (Multiple Choice Question) based practice test of Chapter 4...
Correct answer is b because two sector means the the household and the firm so household spend on consumption and firm spent on investment and we also know AD = c+l
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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 equalsa)Consumption + Government Expenditureb)Consumption + Investmentc)Consumption + Exportsd)Consumption + Private consumption expenditureCorrect answer is option 'B'. Can you explain this answer?
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