Macro

Income & Employment

Medium

Match List-I with List-II

List-I List-II
(A) Inflationary gap (I) A cause of deficiency of AD
(B) Decline in exports (II) A monetary measure to correct disequilibrium between AD and AS
(C) Cash reserve ratio (III) Pursued by the government of the country
(D) Fiscal policy (IV) There is no unemployment or underemployment in the country

Choose the correct answer from the options given below:

List-I	List-II
(A) Inflationary gap	(I) A cause of deficiency of AD
(B) Decline in exports	(II) A monetary measure to correct disequilibrium between AD and AS
(C) Cash reserve ratio	(III) Pursued by the government of the country
(D) Fiscal policy	(IV) There is no unemployment or underemployment in the country

(A) - (I), (B) - (II), (C) - (III), (D) - (IV)

(A) - (IV), (B) - (I), (C) - (II), (D) - (III)

(A) - (I), (B) - (III), (C) - (IV), (D) - (II)

(A) - (III), (B) - (IV), (C) - (I), (D) - (II)

✅ Correct Option: 2

Option 2: (A) - (IV), (B) - (I), (C) - (II), (D) - (III) -> Let's match each term correctly:

(A) Inflationary gap occurs when aggregate demand exceeds aggregate supply at full employment level. At this point, the economy operates at full capacity with no unemployment or underemployment, matching with (IV).

(B) Decline in exports reduces the net exports component (X-M) of aggregate demand (AD = C + I + G + X - M). This leads to a deficiency in aggregate demand, matching with (I).

(C) Cash reserve ratio (CRR) is a monetary policy instrument used by central banks to control money supply and credit creation in the economy. It helps correct disequilibrium between AD and AS, matching with (II).

(D) Fiscal policy involves government decisions on taxation and public expenditure. It is formulated and pursued by the government of the country, matching with (III).

Therefore, the correct matching is A-IV, B-I, C-II, D-III. -> correct

2023: 28 May Shift 2

Given AD = C + I + CY, change in autonomous consumption will lead to :

(A) Change in equilibrium level of income

(B) Change in aggregate demand

(D) Change in aggregate demand and no change in equilibrium level of income

(E) Change in marginal propensity to consume

Choose the correct answer from the options given below :

2022: 15 July Shift 2

Suppose a TV manufacturing unit wants to raise its inventories from 1000 units to 2000 units during the year. Expecting sale of 5000 units during the year, the firm produces 5000+1000= 6000 TV sets. Actual sale for the firm are 5000 TV sets during the year.

This is an example of:

2024: 16 May

If the supply of final goods is assumed to be infinitely elastic at constant price over a short period of time, aggregate output is determined solely by the value of aggregate demand. This statement is called _________ Principle.

2026: 20 May Shift 1

In an economy, C= 100 + 0.7Y and investment is 500 crores. Find the equilibrium level of income.

2023: 30 May Shift 1

Deficit Demand Occurs when :

(A) Equilibrium level of output is less than full employment level

(B) When AD < AS (Aggregate Demand less than Aggregate Supply)

(D) Demand is not enough to employ all factors of production

(E) Prices will decline in the long run

Choose the correct answer from the options given below :

2023: 28 May Shift 2

The aggregate demand line shifts parallel upwards. The reason behind this is :

Solution

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