Macro

Income & Employment

Medium

Which one of the following statements is correct regarding equilibrium level of income in an economy?

If ex ante demand for final goods is greater than its output in a given year, it will lead to accumulation of inventories.

Interest rates and availability of credit do not influence investment in any condition.

Autonomous investment is purely depends on the income level of the economy.

Ex ante supply is equal to ex ante demand only when final goods market is in equilibrium.

✅ Correct Option: 4

The final goods market is in equilibrium precisely when planned (ex ante) aggregate demand equals planned (ex ante) aggregate supply. If ex ante demand exceeds output, inventories fall (not accumulate), so option 1 is wrong. Investment does respond to interest rates and credit availability, and autonomous investment is by definition independent of income, ruling out options 2 and 3.

2025: 21 May Shift 1

At the present level of employment in a hypothetical economy, the aggregate demand is falling short of aggregate supply. What will be the likely change in the level of national income of this economy?

2025: 30 May Shift 2

What is the equilibrium output when autonomous investment increases from 10 to 20 at a given C = 40 + 0.8Y?

2022: 19 July Shift 2

__________ can never be negative while __________ can have value as 1.

2025: 22 May Shift 1

Which of the following statements are true:

(A) Average propensity to consume is the change in consumption per unit to change in income.

(B) Ex-ante depicts what has been planned.

(D) Ex-post depicts what has actually happened.

Choose the correct answer from the options given below:

2025: 13 May Shift 1

If all the people of the economy increase the proportion of income they save, the total value of savings in the economy will not increase - it will either decline or remain unchanged. This result is known as .......

2023: 11 June Shift 3

The shape of investment function when I is autonomous curve is represented through :

Which one of the following statements is correct regarding equilibrium level of income in an economy?

Solution

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