Determination of Income and Employment — Class 12 Economics PYQs

Suppose, the saving curve of an economy makes an intercept at a negative value of ₹ 50 crores. In the economy, 20% of an increase in income is saved.
In the light of above context, identify the value of investment multiplier (K).
Options :
(A) 2
(B) 5
(C) 10
(D) ∞ (infinite)

Suppose, the value of Average Propensity to Consume (APC) is 0.8 and National Income is ₹ 4,000 crores, the value of saving would be ₹ _______ crores.
(Choose the correct option to fill up the blank)
Options :
(A) 100
(B) 200
(C) 500
(D) 800

(a) In an economy ; C = 200 + 0.75 Y (where C is consumption expenditure and Y is National Income). Investment expenditure is ₹ 4,000 Crore.
Calculate the following :
(i) Equilibrium level of income.
(ii) Total consumption expenditure at equilibrium income level.
OR
(b) Explain the adjustment mechanism in case ex-ante savings are greater than ex-ante investments.

In the Keynesian Economics, ______ starts from the origin and is always drawn at an angle of 45°.
(Choose the correct option to fill up the blank)
(A) Consumption curve
(B) Aggregate demand curve
(C) Reference line
(D) Investment curve

Suppose for an economy, autonomous consumption stands as ₹ 100 crore and total consumption is ₹ 130 crores. The value of induced consumption would be ₹ ______ crore.
(Choose the correct option to fill up the blank)
(A) 30
(B) 80
(C) 100
(D) 130

Read the following statements : Assertion (A) and Reason (R). Choose one of the correct options given below :
Assertion (A) : If the value of Marginal Propensity to Save is 0.5, Marginal Propensity to Consume will be equal to Marginal Propensity to Save.
Reason (R) : Sum of Marginal Propensity to Consume and Marginal Propensity to Save always equals to unity.
Options :
(A) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
(B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
(C) Assertion (A) is true, but Reason (R) is false.
(D) Assertion (A) is false, but Reason (R) is true.

To arrive at the value of equilibrium level of income, there must exists an equality between ex-ante ______ and ex-ante .
(Choose the correct option to fill up the blank)
(i) Aggregate Demand, Aggregate Supply
(ii) Aggregate Demand, Savings
(iii) Aggregate Demand, Investment
(iv) Savings, Investment
Options :
(A) (i) and (ii)
(B) (i) and (iv)
(C) (ii) and (iii)
(D) (iii) and (iv)

Suppose for an economy, government proposes investment projects for construction of expressways with an incremental investment of ₹ 1200 crore. Assuming, 80% of increase in income is spent on consumption.
Estimate the following on the basis of above information :
(a) Change in income (ΔY).
(b) Change in consumption (ΔC).

Suppose for an economy, government proposes investment projects for construction of expressways with an incremental investment of ₹ 2,400 crore. Assuming, 80% of increase in income is spent on consumption.
Estimate the following on the basis of above information :
(a) Change in income (ΔY).
(b) Change in consumption (ΔC).

Suppose for an economy, government proposes investment projects for construction of expressways with an additional investment of ₹ 2000 crore. Assuming, 80% of increase in income is spent on consumption.
Estimate the following on the basis of above information :
(a) Change in income (ΔY).
(b) Change in consumption (ΔC).