CUET Economics Chapter-Determination of Income and Employment

  • Board
    CBSE
  • Textbook
    NCERT
  • Class
    Class 12
  • Subject
    Economics
  • Chapter
    CUET Economics Chapter-Determination of Income and Employment
  • Chapter Name
    Determination of Income and Employment
  • Category
    CUET (Common University Entrance Test) UG

Important MCQ Questions on CUET Economics Chapter-Determination of Income and Employment with Detailed explanation

HT having an expert teacher of Economics prepared Important MCQ Questions on the CUET Economics Chapter-Determination of Income and Employment with Detailed explanations. All the Chapters in the syllabus of CUET Economics are covered with coverage of the entire syllabus. This page is prepared for Chapter-Determination of Income and Employment and covers all important topics of the competitive exam CUET for domain subject test. Check out the chapter-wise CUET Economics MCQ questions. 

MCQ Questions for CUET Economics Chapter-Determination of Income and Employment Set-1

Macroeconomic Economics - MCQ on Determination of income and Employment

Class XII

Q.1.What is meant by aggregate Demand?

I. Total demand for goods and services

II. Individual demand for goods and services

III. Firm demand for goods and services

IV. Expected demand for goods and services

Answer:

I. Total demand of goods and services

Explanation: Aggregate demand is total demand for goods and services in an economy

Q.2.Net Export is a component of:

I. Aggregate supply

II. Aggregate Demand

III. Expected demand

IV. Expected Supply

Answer:

II. Aggregate demand

Explanation: Aggregate demand has the following components consumption, government expenditure, investments and net exports

Q.3.What do you mean by consumption function?

I. Relation between consumption and expenditure

II. Relation between consumption and Income

III. Relation between production and consumption

IV. Relation between consumption and saving

Answer:

II. Relation between consumption and Income

Explanation: The relationship between consumption and income is called Propensity to consume or consumption function C=f(y)

Q.4.Say’s law of the Market states that

I. Demand creates its supply

II. Demand and Supply bring equilibrium

III. Supply creates its demand

IV. Excess supply does not create demand

Answer:

III. Supply creates its own demand

Explanation: When the supply is greater than the demand then automatically demand is created.

Q.5 Who propounded the modern theory of Income determination?

I. Adam Smith

II. Boulding

III. J.M Keynes

IV. None of the above

Answer:

III. J.M Keynes

Explanation: The modern income determination theory was propounded by J.M.Keynes

Q.6 What is wage-price rigidity?

I. Wages and prices are free to increase and decrease

II. Wages and prices are not free to increase or decrease

III. Wages and prices remain constant

IV. Wage and prices depend on the economic change

Answer:

Wages and prices are not free to increase or decrease

Explanation:.Wage Price rigidity means wages and prices are not free to increase or decrease

Q.7.When is the national income at its equilibrium?

I. Aggregate demand is more than aggregate supply

II. Aggregate demand and supply are equal

III. Aggregate supply is more than aggregate demand

IV. Aggregate demand is more than individual demand

Answer:

II.Aggregate demand and supply are equal

Explanation: The national income is at equilibrium when aggregate demand is equal to aggregate supply

Q.8.What happens to the level of national income if aggregate demand is greater than aggregate supply?

I. National Income will decrease

II. National Income will be constant

III. National Income will rise

IV. None

Answer:

III.National Income will rise

Explanation: If aggregate demand is greater than aggregate supply then national income will rise

Q.9.Can the value of average propensity be greater than one?

I. Yes

II. No

III. Maybe

IV. Not Sure

Answer:

I. Yes

Explanation: APC may be greater than one because at low levels of income, consumption tends to be more than income.

Q.10.What is a propensity to save?

I. Relation between income and saving

II. Relation between saving and investment

III. Relation between income and investment

IV. Relation between prices and saving

Answer:

I. Relation between income and saving

Explanation: When income earned is saved then it is called to propensity to save

Q.11.When is ex-post saving and ex-ante saving equal?

I. At the point of equilibrium of demand and supply of goods

II. At the point of equilibrium of national income

III. At the point of equilibrium of national saving

IV. When saving and investment are equal

Answer:

II. At the point of equilibrium of national income

Explanation:Expost saving and ex ante saving are equal when there national income is at equillibrium

Q.12.What is a multiplier?

I. Change in national income due to change in saving

II. Change in national income due to fluctuation in demand and supply

III. Change in national income ue change in investment

Answer:

IV. Change in national income due to change in investment

Explanation: Multiplier is a rate of change in national income due to change in investment

Thus multiplier = Change in income

Change in investment

Q.13.Marginal efficiency is a determinant of

I. Saving

II. Investment

III. Income

IV. Demand

Answer:

II. Investment

Explanation: Marginal efficiency of investment refers to prospective yield on additional unit of investment

Q.14.What is CDR

I. Current deposit receipt

II. Currency deposit ratio

III. Currency deposit receipt

IV. None

Answer:

III. Currency deposit ratio

Explanation:The currency deposit ratio is fixed

Q.15.What do you understand by Liquidity Trap?

I. Interest rate to rise and bond prices to fall.

II. Interest rate to fall and bond price to rise

III. Interest rate to increase and bond price to rise

IV. None

Answer:

I. Interest rate to rise and bond prices to fall.

Explanation: It is a situation of very low rate of interest where people expect the interest rate to rise in future and bond prices to fall.

Q.16.What is MEI

I. Marginal Effectiveness of investment

II. Marginal efficiency of investment

III. Marginal efficiency of Income

IV. None

Answer:

II. Marginal efficiency of investment

Explanation: Marginal efficiency of investment refers to prospective yield on additional unit of investment

Q.17.On what depends on on on on on the value of the the the multiplier

I. MPS

II. MPC

III. MPP

IV. None

Answer:

II. MPC

Explanation: Value of multiplier depends on the value of Marginal propensity to consume

Q.18.What do you mean by full employment level of output?

I. Partial utilization of resources

II. Complete job satisfaction

III. Full utilization of resources

IV. Equilibrium of employment

Answer:

III. Full utilization of resources

Explanation: Full employment level of output means the largest output that the economy is capable of producing .When all resources are fully employed.

Q.19.What is over equilibrium level of employment

I. Aggregate demand is more than full employment of resources

II. Full employment of resources more than Aggregate demand

III. Aggregate supply of employees is more than the aggregate supply

IV. When demand and supply of employment are equal

Answer:

I. Aggregate demand is more than full employment of resources

Explanation: Over equilibrium level of employment the equilibrium where aggregate demand is in excess of full employment level of resources

Q.20.Name the situation under which aggregate demand is insufficient to eliminate involuntary unemployment

I. Efficient Demand

II. Deficient Demand

III. Excess Demand

IV. Expansion in Demand

Answer:

II. Deficient Demand

Explanation: Deficient demand means that aggregate demand is not sufficient to ensure equilibrium with aggregate supply at the full employment

Q.21.Name the situation under which the planned aggregate expenditure exceeds the equilibrium level of expenditure

I. Efficient Demand

II. Deficient Demand

III. Excess Demand

IV. Expansion in Demand

Answer:

III. Excess Demand

Explanation: Excess Demand may be defined as the excess of aggregate demand over aggregate supply at full employment.

Q.22.What is the cause of excess demand?

I. Decrease in money supply

II. Increase in money supply

III. Regular money supply

IV. Increase money demanded

Answer:

II.Increase in money supply

Explanation: An increase in money supply due to deficit financing

Q.23.What do monetary policies do?

I. Regulate and control the money supply

II. Regulate and control money demand

III. Increase the value of the currency

IV. Monetary policy regulates finance

Answer:

I. Regulate and control money supply

Explanation: Monetary policy may be defined as the policy of central Bank of the country to regulate and control money supply and credit in the economy

Q.24.What is the fiscal measures to correct excess demand

I. Private Expenditure

II. Public Expenditure

III. Government Expenditure

IV. Capital Expenditure

Answer:

II. Public Expenditure

Explanation: Public expenditure and taxation is the fiscal measure to correct excess demand

Q.25.Bank Rate is the rate at which the central bank lends to

I. Private Bank

II. Commercial Bank

III. Cooperative Bank

IV. None

Answer:

II.Commercial Bank

Explanation: Bank Rate is the rate at which central bank lends to commercial bank

MCQ Questions for CUET Economics Chapter-Determination of Income and Employment Set-2

Q.26.Process of buying and selling government securities in the market by the central bank is called

I. Monopoly market operations

II. Trading

III. Closed market operations

IV. Open market operations

Answer:

IV.Open market operations

Explanation: Open market operations may be defined as a process buying and selling government securities in the market by central bank

Q.27.Percentage down payment on borrowing to finance the purchase of stock by firms is called

I. Total requirement

II. Margin requirement

III. Capital Requirement

IV. Securities amount

Answer:

II. Margin requirement

Explanation: Margin requirement is a small amount to purchase of stock by firm

Q.28.Realized investment is called

I. Pre-investment

II. Ex-post investment

III. Ex-ante investment

IV. Planned investment

Answer:

II. Ex-post investment

Explanation: The investment actually made by the people during the year is ex-post investment.