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:

Option 1 -> Includes (B) which is incorrect as equilibrium is determined by ex-ante (planned) demand, not ex-post (actual) demand.

Option 2 -> Correctly identifies that two-sector model determination uses ex-ante aggregate demand, fixed prices, and constant interest rate - these are the standard assumptions.

Option 3 -> Includes (B) which is incorrect as ex-post demand represents accounting identity, not the basis for equilibrium determination.

Option 4 -> Excludes (A) which is essential - ex-ante (planned) aggregate demand is the fundamental basis for income and employment determination in the two-sector model.

Hence, Option 2: (A), (C) and (D) only -> In the two-sector Keynesian model, income and employment equilibrium is determined where ex-ante (planned) aggregate demand equals aggregate supply. The model assumes fixed prices (Keynesian assumption of price rigidity in short run) and constant rate of interest (exogenously given). Ex-post demand is an accounting identity (Y ≡ C + I) that always holds, but equilibrium is determined by planned demand (Y = C + I where both are intended). -> correct