CUET Economics 2025 13 May Shift 1 PYQs

When autonomous investment increases in a two-sector model, then.

1. The aggregate demand curve shifts upwards.
2. Output/GDP increases by the same magnitude as the change in investment.
3. Autonomous expenditure increases by the same magnitude as the change in investment.
4. The consumption curve shifts upwards.

Determination of income and employment of a two-sector model is done by:

(A) Ex-ante aggregate demand for final goods.

(B) Ex-post aggregate demand for final goods.

(C) Fixed price of final goods.

(D) Constant rate of interest.

Choose the correct answer from the options given below:

Aggregate output is determined solely by the level of aggregate demand. This is known as effective demand principle. Which of the following is not the assumptions behind this principle?