When in a two sector economy, at a particular price level, aggregate demand for final goods equals aggregate supply of final goods, the final goods or product market reaches its equilibrium. In this context, identify the correct statement.

Question

Option 1: Full employment level assumes that there is an only casual unemployment in the economy.

Option 2: The decrease in ex-ante consumption due to income rise is called marginal propensity to consume.

Option 3: Aggregate demand for final goods consists government deficit etc.

Option 4: Aggregate output increases due to rise in autonomous spending by larger amout through multiplier process.

AfterBoards · Accepted Answer

The answer is 'Aggregate output increases due to rise in autonomous spending by larger amout through multiplier process.'. View full solution:

CUET Economics 2026 19th May Shift 2 PYQs

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