Worksheet: Determination of Income and Employment - 3 | Economics for Grade 12 PDF Download

Fill in the Blanks

Q1: Consumption represents the demand for goods and services used for ________.

Q2: Autonomous Consumption is independent of ________.

Q3: Marginal Propensity to Consume (MPC) ranges between ________.

Q4: Investment refers to the increase in the stock of ________.

Q5: Income is the money earned by individuals from ________ or production activities.

Q6: Aggregate demand is the sum of ________ and investment expenditure on goods.

Q7: Market equilibrium occurs when ________ is equal to aggregate supply.

Q8: The investment multiplier is the ratio of the change in ________ to the initial change in planned investment expenditure.

Q9: Government expenditure adds to aggregate demand, while taxes imposed by the government reduce ________.

Q10: If a change in investment of Rs 2000 results in a change in national income of Rs 8000, then the investment multiplier is ________.

Assertion and Reason Based

Q1: Assertion: Consumption changes at a constant rate in response to changes in income.
Reason: This is because individuals always spend a fixed portion of their income.
(a) Both Assertion and Reason are True, and Reason is the correct explanation of Assertion.
(b) Both Assertion and Reason are True, but Reason is NOT the correct explanation of Assertion.
(c) Assertion is True, but Reason is False.
(d) Assertion is False, but Reason is True.

Q2: Assertion: Investment goods are considered intermediate goods in the production process.
Reason: Investment goods, such as machines, are used directly by consumers.
(a) Both Assertion and Reason are True, and Reason is the correct explanation of Assertion.
(b) Both Assertion and Reason are True, but Reason is NOT the correct explanation of Assertion.
(c) Assertion is True, but Reason is False.
(d) Assertion is False, but Reason is True.

Q3: Assertion: Aggregate demand is only influenced by consumption expenditure and investment expenditure.
Reason: Government economic activities do not affect aggregate demand.
(a) Both Assertion and Reason are True, and Reason is the correct explanation of Assertion.
(b) Both Assertion and Reason are True, but Reason is NOT the correct explanation of Assertion.
(c) Assertion is True, but Reason is False.
(d) Assertion is False, but Reason is True.

Q4: Assertion: Market equilibrium is a situation where supply exceeds demand.
Reason: In market equilibrium, producers cannot sell all the goods they produce.
(a) Both Assertion and Reason are True, and Reason is the correct explanation of Assertion.
(b) Both Assertion and Reason are True, but Reason is NOT the correct explanation of Assertion.
(c) Assertion is True, but Reason is False.
(d) Assertion is False, but Reason is True.

Q5: Assertion: The investment multiplier measures the change in government spending's impact on national income.
Reason: Investment multiplier is calculated based on changes in government expenditure.
(a) Both Assertion and Reason are True, and Reason is the correct explanation of Assertion.
(b) Both Assertion and Reason are True, but Reason is NOT the correct explanation of Assertion.
(c) Assertion is True, but Reason is False.
(d) Assertion is False, but Reason is True.

Very Short Answer Type Questions

Q1: What is induced consumption?

Q2: Define Marginal Propensity to Consume (MPC).

Q3: What is the role of household income in consumption?

Q4: Explain Autonomous Consumption.

Q5: What influences producers' investment decisions?

Q6: What does market equilibrium signify?

Q7: How is national income calculated?

Q8: What are investment goods?

Q9: What does the investment multiplier measure?

Q10: What affects households' disposable income?

Short Answer Type Questions

Q1: Explain the concept of Aggregate Demand and its components.

Q2: Describe the role of government in determining income.

Q3: Elaborate on the concept of the Investment Multiplier.

Q4: Discuss the factors influencing investment decisions by producers.

Q5: Explain how Market Equilibrium is achieved in an economy.

Q6: Describe the relationship between Consumption and Income.

Q7: Discuss the impact of government taxation on households' disposable income.

Q8: Explain the concept of Autonomous and Induced Consumption.

Long Answer Type Questions

Q1: Explain the role of Consumption in an economy and the factors influencing it.

Q2: Discuss the impact of Government Expenditure and Taxes on Aggregate Demand and income.

Q3: Elaborate on the concept of the Investment Multiplier.

Q4: Explain the concept of Autonomous and Induced Consumption.