Worksheet: Determination of Income and Employment- 2 | Economics Class 12 - Commerce PDF Download

Multiple Choice Questions

Q2: In the circular flow of income, which of the following represents withdrawals from the income flow?
(a) Government spending
(b) Investment by firms
(c) Imports
(d) Exports

Q3: Which of the following is a tool used by the government to control inflation?
(a) Increase in government spending
(b) Decrease in interest rates
(c) Increase in taxes
(d) Decrease in money supply

Q4: What does the term 'Gross Domestic Product (GDP)' represent?
(a) Total value of all goods and services produced within a country in a specific period
(b) Total value of all goods and services produced and consumed within a country in a specific period
(c) Total value of all goods and services produced within a country and exported to other countries
(d) Total value of all goods and services imported by a country

Q5: Which of the following is a component of aggregate demand?
(a) Government expenditure
(b) Imports
(c) Savings
(d) Taxes

True and False Questions 

Q2: Frictional unemployment occurs when individuals are unemployed due to mismatch between their skills and available job opportunities.

Q3: The Phillips curve illustrates the relationship between inflation and unemployment, showing an inverse relationship between the two.

Q4: Investment is considered an injection into the circular flow of income.

Q5: The multiplier effect refers to the initial change in spending leading to a larger change in national income.

Match the Following

Very Short Answer Questions 

Q2: Explain the concept of Aggregate Demand.

Q3: What is meant by the Propensity to Consume?

Q4: Differentiate between Autonomous Consumption and Induced Consumption.

Q5: Define the Marginal Propensity to Consume (MPC).

Short Answer Questions

Q2: Describe the concept of Multiplier with an example. How does it help in understanding the relationship between an initial change in investment and the final change in income?

Q3: Discuss the factors that determine the Marginal Propensity to Consume. How does MPC influence the overall consumption in an economy?

Q4: Explain the relationship between Average Propensity to Consume (APC) and Marginal Propensity to Consume (MPC).

Q5: Illustrate the concept of Aggregate Supply. What factors influence the Aggregate Supply in an economy?