Determination of Income and Employment Class- 12 MCQs

 

Determination of Income and Employment Class- 12 MCQs 

Question 1. What is the shape of the Keynesian Aggregate Supply before the level of full employment is attained?
(A) Perfectly inelastic
(B) Perfectly elastic
(C) Unitary elastic
(D) More elastic

Answer: (B) Perfectly elastic

Question 2. According to classical economists, real wage rate is ______ to the Marginal Productivity of Labour.
(A) Equal
(B) More
(C) Less
(D) None of these

Answer: (A) Equal

Question 3. What is the cause of Keynesian perfectly elastic Aggregate Supply curve?
(A) Wage price rigidity
(B) Constant Marginal Product of Labour
(C) Both of these
(D) None of these

Answer: (C) Both of these

Question 4. According to classical economists, there always exists ______ equilibrium in the economy.
(A) Full employment
(B) Underemployment
(C) Over full employment
(D) None of these

Answer: (A) Full employment

Question 5.
What will be APC when APS = 0?
(A) One
(B) Zero
(C) Two
(D) Infinite

Answer: (A) One

Question 6.
If the income is ₹ 400 crores and consumption is ₹ 250 crores, what will be the APC?
(A) 0.67
(B) 0.63
(C) 0.60
(D) 0.58

Answer: (B) 0.63

Question 7.
What is a fiscal measure of correcting deficient demand?
(A) Increase in public expenditure and decrease in taxes
(B) Decrease in public debt
(C) Deficit financing
(D) All of these

Answer: (D) All of these

Question 8.
Which is the measure of correcting excess demand?
(A) Deficit financing
(B) Reduction in taxes
(C) Increase in public expenditure
(D) Increase in public debt

Answer: (D) Increase in public debt

Question 9.
Suppose in a hypothetical economy, the income rises from ₹ 5,000 crores to ₹ 6,000 crores. As a result, the consumption expenditure rises from ₹ 4,000 crores to ₹ 4,600 crores. Marginal propensity to consume in such a case would be ______
(A) 0.8
(B) 0.4
(C) 0.2
(D) 0.6

Answer: (D) 0.6

Question 10. On the basis of government law, the compulsory payment made by the public is known as _________
(A) Expenditure
(B) Investment
(C) Tax
(D) Subsidy

Answer: (C) Tax

Question 11. Which among is the direct tax?
(A) Income tax
(B) Gift and Corporation tax
(C) Wealth tax
(D) All of these

Answer: (D) All of these

Question 12. The value of multiplier is:
(A) 1MPC
(B) 1MPS
(C) 11−MPS
(D) 1MPC−1

 

Answer: (B) 1MPS

Question 13. If MPC = 1, the value of the multiplier is:
(A) 0
(B) 1
(C) Between 0 and 1
(D) Infinity

Answer: (D) Infinity

Question 14. Aggregate demand can be increased by:
(A) increasing bank rate
(B) selling govt, securities by RBI
(C) increasing cash reserve ratio
(D) none of these

Answer: (D) None of these

Question 15. If the marginal propensity to consume is greater than the marginal propensity to save, the value of the multiplier will be
(A) greater than 2
(B) less than 2
(C) equal to 2
(D) equal to 5

Answer: (A) greater than 2

Question 16. Supply creates its own Demand. Who gave this law?
(a) J.B.Say
(b) J.S.Mill
(c) Keynes
(d) Ricardo

Answer: (a) J.B.Say

Question 17. Who is the author of the book ‘General Theory of Employment, Interest, and Money’?
(a) A.C. Pigou
(b) Malthus
(c) J.M. Keynes
(d) Marshall

Answer: (c) J.M. Keynes

Question 18. Which of the following is true for the Classical Theory of Employment?
(a) State of full employment in the economy
(b) No possibility of over-or under-production in the economy
(c) Both (a) and (b)
(d) None of the above

Answer: (c) Both (a) and (b)

Question 19. On which factor Keynesian Theory of Employment depends?
(a) Effective Demand
(b) Supply
(c) Production Efficiency
(d) None of the above

Answer: (a) Effective Demand

Question 20. Which is the determining factor for investment?
(a) Marginal Efficiency of Capital
(b) Interest Rate
(c) Both (a) and (b)
(d) None of these

Answer: (c) Both (a) and (b)

Question 21. According to Keynes, investment implies:
(a) Financial Investment
(b) Real Investment
(c) Both (a) and (b)
(d) None of the above

Answer: (b) Real Investment

Question 22. With the increase in investment, MEC:
(a) Rises
(b) Falls
(c) Remains Constant
(d) None of these

Answer: (b) Falls

Question 23. Which of the following is a Read Investment?
(a) Purchasing of a Share
(b) Purchasing of Old Factory
(c) Construction of Buildings
(d) Opening Deposit Account in the Bank

Answer: (c) Construction of Buildings

Question 24. APC + APS = ?
(a) ?
(b) 2
(c) 1
(d) 0

Answer: (c) 1

Question 25. MPC = MPS = ?
(a) ?
(b) 2
(c) 1
(d) 0

Answer: (c) 1

Question 26. Which or is true?
(a) MPC + MPS = 0
(b) MPC + MPS < 1
(c) MPC + MPS = 1
(d) MPC + MPS > 1

Answer: (c) MPC + MPS = 1

Question 27. The main component of aggregate demand is:
(a) Individual consumption
(b) Public consumption
(c) Investment
(d) All the above

Answer: (d) All the above

Question 28.
Who is the writer of the book, “Trained Economic Politique”?
(a) Pigour
(b) J.B. Say
(c) Keynes
(d) Ricardo

Answer: (a) Pigour

Question 29.
IF MPC = 0.5, then Multiplier (k) will be:
(a) 1/4
(b) = 0
(c) 1
(d) 2

Answer: (d) 2

Question 30.
On which concept does classical viewpoint depend?
(a) Say’s Law of Market
(b) perfect Flexibility of Wage Rate
(c) Perfect Flexibility of Interest Rate
(d) All of these

Answer: (d) All of these

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