Macro

Income & Employment

Easy

When at a particular price level, aggregate demand for final goods equals aggregate supply of final goods, the final goods or product in market reaches its equilibrium. Aggregate demand for final goods consist of ex-ante consumption, ex-ante investment, government spending etc. The rate of increase in ex-ante consumption due to a unit increase in income is called marginal propensity to consume.

The sum total of MPC and MPS is always equal to:

Zero

Infinity

One

Two

✅ Correct Option: 3

Any increase in income is either consumed or saved, so $\Delta C + \Delta S = \Delta Y$ . Dividing throughout by $\Delta Y$ : $MPC + MPS = 1$ . Hence the sum of MPC and MPS is always equal to one.

Question 46

Equilibrium in product market achieved when.

Question 47

Final goods are those goods.

Question 48

Aggregate demand for final goods doesn't include.

Question 49

MPC stands for.

The sum total of MPC and MPS is always equal to:

Solution

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CUET Economics Past Year Questions (Topic-Wise)