Macro

Income & Employment

Medium

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.

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

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

Aggregate demand for final goods consists government deficit etc.

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

✅ Correct Option: 4

Through the multiplier process, a rise in autonomous spending raises aggregate output by a larger amount, since the increase equals the autonomous rise times $\frac{1}{1-MPC}$ ; option 4 is correct. MPC is the increase (not decrease) in ex ante consumption per unit rise in income; a two-sector economy has no government spending in AD; and full employment does not assume only casual unemployment.

2025: 15 May Shift 1

If, in an economy, the minimum level of consumption is 45 and 80% of an increase in income(Y) is consumed, what will be the consumption function of this economy?

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:

2026: 23 May Shift 1

The marginal propensity to consume is defined as:

2025: 14 May Shift 1

Match List-I with List-II

List–I	List–II
(A) Marginal propensity to consume	(I) ΔS/ΔY
(B) Marginal propensity to save	(II) ΔC/ΔY
(C) Average propensity to consume	(III) S / Y
(D) Average propensity to save	(IV) C / Y

Choose the correct answer from the options given below:

2024: 16 May

__________ depicts what has actually happened.

2025: 31 May Shift 1

Among the following, what is assumed as the appropriate justification for taking the price level as fixed?

An economy with unskilled workforce.
An economy having scarcity of resources.
An economy with excess use of resources.
An economy with unused resources.

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.

Solution

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