Income Determination CBSE Questions & Answers

Income Determination

This is Economics Class 12 Income Determination CBSE Questions & Answers. There are 15 questions in this test with each question having around four answer choices.

Questions & Answers

1
In a two sector economy Aggregate Demand equals
  • A
    Consumption + Private consumption expenditure
  • B
    Consumption + Government Expenditure
  • C
    Consumption + Exports
  • D
    Consumption + Investment
    Correct
2
APC =
  • A
    \(\frac{C}{D}\)
  • B
    \(\frac{C}{S}\)
  • C
    \(\frac{C}{Y}\)
    Correct
  • D
    \(\frac{C}{G}\)
3
APS=
  • A
    None of these
  • B
    \(\frac{S}{Y}\)
    Correct
  • C
    \(\frac{C}{S}\)
  • D
    \(\frac{S}{D}\)
4
APC+APS=
  • A
    3
  • B
    1.0
    Correct
  • C
    4
  • D
    2
5
APC+APS should always be equal to 1
  • A
    None of these
  • B
    Depends on their values
  • C
    FALSE
  • D
    1
    Correct
6
Consumption changes in the same direction as income. It is
  • A
    Can’t say
  • B
    1
    Correct
  • C
    Insufficient information
  • D
    FALSE
7
The law of Psychological consumption states
  • A
    Consumption changes in the opposite direction as income
  • B
    Consumption changes in the same direction as income
    Correct
  • C
    Consumption does not change in the same direction as income
  • D
    Consumption changes in the same direction as investment
8
MPC+MPS=
  • A
    2
  • B
    3
  • C
    1.0
    Correct
  • D
    4
9
MPS= 1+MPC. It is
  • A
    TRUE
  • B
    None of these
  • C
    0
    Correct
  • D
    Depends on their values
10
What is meant by investment
  • A
    Addition to the stock of raw materials only
  • B
    Addition to the stock of capital goods
    Correct
  • C
    Addition to the income
  • D
    Addition to the stock of unsold goods only
11
C= -c+b(Y) is a
  • A
    Algebraic function of the level of Investment expenditure
  • B
    Algebraic function of the level of capital expenditure
  • C
    Algebraic function of the level of Consumption expenditure
    Correct
  • D
    Linear function of the level of Consumption expenditure
12
The investment demand function is
  • A
    The relationship between investment demand and the consumption expenditure
  • B
    The relationship between investment demand and the disposable income
  • C
    The relationship between investment demand and the National income
  • D
    The relationship between investment demand and the rate of interest
    Correct
13
The level of equilibrium income is determined by
  • A
    AD and Investment
  • B
    AD and Consumption
  • C
    AD and AS
    Correct
  • D
    AD and national income
14
The level of equilibrium income is also determined by
  • A
    AD and AS
  • B
    Planned Savings and Planned Investment
    Correct
  • C
    Planned AD and Planned national income
  • D
    Planned Savings and Planned Consumption
15
Multiplier tells us what will be the
  • A
    Final change in the consumption, as a result of change in investment
  • B
    Final change in the income, as a result of change in investment
    Correct
  • C
    Change in investment results in the change in income
  • D
    Final change in the income, as a result of change in consumption