Match List-I with List-II
List-I List-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)
Choose the correct answer from the options given below:
Match List-I with List-II
| List-I | List-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) |
Choose the correct answer from the options given below:
Solution
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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