Macro

Income & Employment

Medium

Among the following identify the condition where firms face unplanned de-cumulation of inventories.

Unexpected rise in sales.

Unexpected fall in sales.

Change in inventories.

Gross value addition.

✅ Correct Option: 1

Option 1 -> When sales unexpectedly increase, firms sell more goods than planned, causing inventory to decrease unintentionally.

Option 2 -> When sales unexpectedly fall, firms sell less than planned, leading to unplanned accumulation (not de-cumulation) of inventories.

Option 3 -> This is a general term and doesn't specify unplanned changes or the direction of change.

Option 4 -> This refers to value added during production and is not directly related to inventory de-cumulation.

Hence, Unexpected rise in sales -> When demand exceeds expectations and sales rise unexpectedly, firms sell more inventory than they had planned for. This results in their stock levels falling below the desired level, which is called unplanned de-cumulation (reduction) of inventories. The firm experiences an unintended drawdown of its inventory stock because actual sales exceeded planned sales. This situation typically signals the need for increased production in subsequent periods to restore inventory levels. -> correct

2026: 11 May Shift 2

Match the LIST-I with LIST-II

LIST-I	LIST-II
A. Excess Demand	I. Factors of production; willing to work but not able to get the work.
B. Voluntary unemployment	II. It leads to a decline in prices in the long run.
C. Deficient Demand	III. It leads to a rise in prices in the long run.
D. Under employment	IV. Factors of production are able but not willing to work.

Choose the correct answer from the options given below:

2025: 29 May Shift 2

If the marginal propensity to consume is 0.6. Then what will be the value of tax multiplier?

2026: 13 May Shift 2

The level of consumption, which is independent of income, is called ?

2022: 16 July Shift 2

Identify the correct statement from the following:

A. Consumption curve starts from the origin

B. The sum of APC and APS is equal to 1

C. Aggregate demand and market demand mean the same

D. The value of MPC and MPS varies between 0 and 1

E. At breakeven point saving is zero

Choose the correct answer from the options given below:

2025: 27 May Shift 2

The equilibrium level of income depends on aggregate demand. Thus, if aggregate demand changes, the equilibrium level of income changes. This can happen in anyone or combination of the following situations:

(A) Change in autonomous consumption.

(B) Change in marginal propensity to consume.

(D) Change in autonomous investment.

Choose the correct answer from the options given below:

2026: 11 May Shift 1

Calculate the value of the multiplier and find the value of the consumption quantity that is independent of income from the following equation.

C=150+0.75Y

Among the following identify the condition where firms face unplanned de-cumulation of inventories.

Solution

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