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Match List-I with List-II

List-IList-II
(A) Ex-post investment(I) AD function shifts upward
(B) Investment multiplier(II) Planned Investment + Unplanned Investment
(C) Ex ante aggregate demand(III) 1/1- MPC
(D) Owing to increase in investment(IV) I=c+cYI = c + cY

Choose the correct answer from the options given below:

Solution

✅ Correct Option: 1

Option 1: (A) - (II), (B) - (III), (C) - (IV), (D) - (I) -> Let's match each concept correctly:

(A) Ex-post investment refers to actual or realized investment after the production period. It equals Planned Investment + Unplanned Investment (inventory changes). Match: (II) ✓

(B) Investment multiplier shows the magnified effect of investment on national income. Its formula is k = 1/(1-MPC) where MPC is marginal propensity to consume. Match: (III) ✓

(C) Ex ante aggregate demand represents planned aggregate demand before actual realization. While the formula notation in (IV) appears unusual, it represents a planned demand function. Match: (IV) ✓

(D) When investment increases in an economy, it causes the aggregate demand curve to shift upward, leading to higher equilibrium income through the multiplier effect. Match: (I) ✓

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

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