Determination of Income and Employment Class 12 MCQ Economics are covered in this Article. Determination of Income and Employment MCQ Test contains 32 questions. Answers to MCQs on Determination of Income and Employment Class 12 Economics are available after clicking on the answer.
| Category | CBSE Economics Class 12 MCQs |
| Subject | Economics |
| Chapter | Determination of Income and Employment Class 12 MCQ |
Determination of Income and Employment Class 12 MCQ
1. ______ is called planned investment. ( Fill in the blank with correct alternative)
a) Ex-ante investment
b) Ex-post investment
c) Both (a) and (b)
d) None of the above
Answer
Answer: a)Ex-ante investment
2. ______ is an ex-ante measure. ( Fill in the blank with correct alternative)
a) Actual investment
b) Planned consumption
c) Actual output in the economy
d) All of the above
Answer
Answer: b) Planned consumption
3. The simplest consumption function assumes_____.( Fill in the blank with correct alternative)
a)Consumption changes at a constant rate as income changes
b)Consumption changes faster with more income
c)Consumption doesn’t chage with income
d)Consumption changes with more supply
Answer
Answer: a)Consumption changes at a constant rate as income changes
4. _______ is the change in the consumption per unit change in income.
( Fill in the blank with correct alternative)
a) Average propensity to consume
b) Marginal propensity to save
c) Marginal propensity to consume
d) Average propensity to save
Answer
Answer: c)Marginal propensity to consume
5. _______ is the consumption per unit of income. ( Fill in the blank with correct alternative)
a) Marginal propensity to save
b) Average propensity to save
c) Average propensity to consume
d) Marginal propensity to consume
Answer
Answer: c)Average propensity to consume
6. ______ is the saving per unit of income. ( Fill in the blank with correct alternative)
a) Average propensity to consume
b) Average propensity to save
c) Marginal propensity to consume
d) Marginal propensity to save
Answer
Answer: b)Average propensity to save
7. _________ refers to a situation where aggregate demand is equals to aggregate supply and resources are not fully employed in an economy.( Fill in the blank with correct alternative)
a) Full employment equilibrium
b) Over full employment equilibrium
c) Under full employment equilibrium
d) None of the above
Answer
Answer: c) Under full employment equilibrium
8. _______ is defined as addition to the stock of physical capital (Fill in the blank with correct alternative)
a) Investment
b) Consumptions
c) Savings
d) All of the above
Answer
Answer: a) Investment
9. ________ refers to the amount by which actual aggregate demand is more than the aggregate demand required to establish full employment in economy. ( Fill in the blank with correct alternative)
a)Deflation
b)Inflationary gap
c)Deflationary gap
d)Inflation
Answer
Answer: b)Inflationary gap
10. Piling up of stocks in the warehouses is known as _____.( Fill in the blank with correct alternative)
a)Accumulation of inventories
b)Intended accumulation of inventories
c)Unintended accumulation of inventories
d)None of the above
Answer
Answer: c)Unintended accumulation of inventories
Determination of Income and Employment Class 12 MCQ
11. ______ refers to the rate at which RBI lends to commercial banks against security.( Fill in the blank with correct alternative)
a)Repo rate
b)Open market operation
c)Reverse repo rate
d)Marginal requirement
Answer
Answer: a)Repo rate
12. In a given situation when AD > AS in an economy then _______ . (Choose the correct alternative).
a)General price level in the economy will decrease
b)Inventory stock will increase beyond desired level
c)Situation of excess demand arises
d)Producers will increase planned output
Answer
Answer: c)Situation of excess demand arises
13. If MPC is 0.5 , then investment multiplier will be ( Choose the correct alternative)
a)¼
b)0
c)1
d)2
Answer
Answer: d)2
14. What will be the value of APS when APC is 0 ( Choose the correct alternative)
a)0
b)1
c)2
d)∞
Answer
Answer: b)1
15. Which of the following statements about APC is incorrect:
a)APC can be greater and smaller than 1
b)APC can be equal to 1
c)APC can be zero
d)APC falls with increase in income
Answer
Answer: c)APC can be zero
16. Which of the following statement about investment multiplier is incorrect:
a)Maximum value of investment multiplier is ∞
b)Minimum value of investment multiplier is 0
c)K= ∆Y/∆I
d)There is a Direct relationship between investment multiplier and MPC
Answer
Answer: b)Minimum value of investment multiplier is 0
17. Open market operations include ( choose the correct alternative)
a)Selling of securities
b)Buying and selling of securities
c)Buying and selling of government securities and bonds
d)None of the above
Answer
Answer: c)Buying and selling of government securities and bonds
18. APC is equal to ( choose the correct alternative)
a)Y/C
b)∆C/∆Y
c)C/Y
d)∆Y/∆C
Answer
Answer: c)C/Y
19. If AS=C+S and AD=C+I , then equilibrium will be established at:
(Choose the correct alternative)
a)S=I
b)S>I
c)S<I
d)All of the above
Answer
Answer: a)S=I
20. Choose the correctly matched pair from the following
| Column A | Column B |
| A. Demand curve |
|
| B. Supply curve | 2 Planned I = Planned S |
| C. Saving- income approach | 3. 45° positively sloped |
| D. Equilibrium level of Income | 4. Alternative approach of AD – AS |
a)A-4
b)B-1
c)C-3
d)D-2
Answer
Answer: d)D-2
Determination of Income and Employment Class 12 MCQ
21. Choose the correctly matched pair from the following
| Column A | Column B |
| A. Fall in Aggregate demand | 1. Causes inflation |
| B. Deflationary gap | 2. Over employment equilibrium |
| C. Increase in aggregate demand | 3.Causes deflation |
| D. Inflationary gap | 4. Under full employment equilibrium |
a)A-4
b)B-1
c)C-3
d)D-2
Answer
Answer: a)A-4
22. Read the following statement given below and choose the correct alternative
Statement 1- If the people of the economy save more, income will increase.
Statement 2- If the people of the economy save less, Income will decrease
a)Both are correct
b)Both are incorrect
c)Statement 1 is correct and statement 2 is incorrect
d)Statement 1 is incorrect and statement 2 is correct
Answer
Answer: b)Both are incorrect
23. Read the following statement given below and choose the correct alternative
Statement 1- The equilibrium output in the economy determines the level of employment in the economy
Statement 2- Full employment level of income is the level where all the resources are partially employed
a)Both are correct
b)Both are incorrect
c)Statement 1 is correct and statement 2 is incorrect
d)Statement 1 is incorrect and statement 2 is correct
Answer
Answer: c)Statement 1 is correct and statement 2 is incorrect
24. Read the following statement given below and choose the correct alternative
Statement 1- Paradox of thirft states that savings are a part of everyday life
Statement 2- Household expenditure and savings are the components of aggregate demand
a)Both are correct
b)Both are incorrect
c)Statement 1 is correct and statement 2 is incorrect
d)Statement 1 is incorrect and statement 2 is correct
Answer
Answer: d)Statement 1 is incorrect and statement 2 is correct
25. Read the following statement given below and choose the correct alternative
Assertion (A)- The demand curve is a positively sloped straight line
Reason ( R)- Aggregate demand is Sum of investment and consumption
a)Both assertion and reason are true. Reason is the correct explanation of assertion
b)Both assertion and reason are true. Reason is not the correct explanation of assertion
c)Assertion is true but reason is not
d)Reason is true but Assertion is not
Answer
Answer: b)Both assertion and reason are true. Reason is not the correct explanation of assertion
26. Read the following statement given below and choose the correct alternative
Assertion (A)- Deficient demand is the State in which actual aggregate demand is less than the aggregate demand/supply required for equilibrium
Reason (R )- There is a fall in consumption expenditure, If propensity to consume Decreases.
a)Both assertion and reason are true. Reason is the correct explanation of assertion
b)Both assertion and reason are true. Reason is not the correct explanation of assertion
c)Assertion is true but reason is not
d)Reason is true but assertion is not
Answer
Answer: a)Both assertion and reason are true. Reason is the correct explanation of assertion
Determination of Income and Employment Class 12 MCQ
27. Read the following statement given below and choose the correct alternative
Assertion (A)- Deficit financing is the process of issuing new currency by RBI to grant loan to government
Reason (R)- Deficit financing causes deflation in the economy
a)Both assertion and reason are true. Reason is the correct explanation of assertion
b)Both assertion and reason are true. Reason is not the correct explanation of assertion
c)Assertion is true but reason is not
d)Reason is true but assertion is not
Answer
Answer: c)Assertion is true but reason is not
28. “Consumption curve is a straight line”,due to
a)Zero income level
b)Constant marginal propensity to consume
c)Inverse in consumption
d)All of the above
Answer
Answer: b)Constant marginal propensity to consume
29. “The aggregate demand in an economy is rising”. What can be the possible reasons for this?
a)Rise in exports
b)Fall in imports
c)Rise in investment expenditure
d)All of the above
Answer
Answer: d)All of the above
30.”The aggregate demand in an economy is falling”. What can be the possible reasons for this?
a)Fall in government expenditure
b)Fall in imports
c)Fall in consumption expenditure
d)All of the above
Answer
Answer: a)Fall in government expenditure
31. “Firms are planning to invest more than what households are planning to save”.What can be the possible reasons for this?
a)Investment < Savings
b)Investment > Savings
c)Investment = Savings
d)None of the above
Answer
Answer: b)Investment > Savings
32. “Households and firms are planning to purchase less than what producers are planning to supply”. What are the possible reasons for this?
a)Aggregate demand=Aggregate supply
b)Aggregate demand>Aggressive supply
c)Aggregate demand<Aggregate supply
d)None of the above
Answer
Answer: c)Aggregate demand<Aggregate supply
CBSE Economics Class 12 MCQ with Answers – Term 2
Part A: Introductory Macroeconomics
- Circular Flow of Income Class 12 MCQ with Answers
- Some Basic Concepts of Macroeconomics Class 12 MCQ
- National Income and Related Aggregates Class 12 MCQs
- National Income and Related Aggregates Class 12 Numericals
- Determination of Income and Employment Class 12 MCQs
Part B: Indian Economic Development
- Current challenges facing Indian Economy – 12 Marks
- Development Experience of India – A Comparison with Neighbours – 6 Marks