{"id":17633,"date":"2021-02-03T10:18:00","date_gmt":"2021-02-03T04:48:00","guid":{"rendered":"https:\/\/ncertsolutions.guru\/?p=17633"},"modified":"2021-02-03T10:18:00","modified_gmt":"2021-02-03T04:48:00","slug":"mcq-questions-for-class-12-economics-chapter-4-part-a","status":"publish","type":"post","link":"https:\/\/ncertsolutions.guru\/mcq-questions-for-class-12-economics-chapter-4-part-a\/","title":{"rendered":"MCQ Questions for Class 12 Economics Chapter 4 Determination of Income and Employment with Answers"},"content":{"rendered":"

Students who are searching for NCERT MCQ Questions for Class 12 Economics Chapter 4 Determination of Income and Employment with Answers Pdf free download are compiled here to get good practice on all fundamentals. Know your preparation level on MCQ Questions for Class 12 Economics with Answers<\/a>. You can also verify your answers from our provided Determination of Income and Employment Class 12 MCQs Questions with Answers. So, ace up your preparation with MCQ on Determination of Income and Employment Class 12 Objective Questions.<\/p>\n

Determination of Income and Employment Class 12 MCQs Questions with Answers<\/h2>\n

Choose the correct alternative.<\/span><\/p>\n

Question 1.
\nThe value of multiplier is
\n(a) \\(\\frac{1}{MPC}\\)
\n(b) \\(\\frac{1}{MPS}\\)
\n(c) \\(\\frac{1}{1-MPS}\\)
\n(d) \\(\\frac{1}{MPC-1}\\)<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: (b) \\(\\frac{1}{MPS}\\)<\/p>\n<\/details>\n

\n

Question 2.
\nAggregate demand can be increased by
\n(a) increasing bank rate
\n(b) selling government securities by the Reserve Bank of India
\n(c) increasing cash reserve ratio
\n(d) none of the above<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: (d) None of the above<\/p>\n<\/details>\n

\n

Question 3.
\nIf MPC is equal to 1, the value of the multiplier is
\n(a) 0
\n(b) 1
\n(c) Between 0 and 1
\n(d) Infinity<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: (d) Infinity<\/p>\n<\/details>\n

\n

Question 4.
\nIf the marginal propensity to consume is greater than the marginal propensity to save, the value of the multiplier will be:
\n(a) greater than 2
\n(b) less than 2
\n(c) two equal to 2
\n(d) equal to 5<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: (a) greater than 2<\/p>\n<\/details>\n

\n

Question 5.
\nIf MPC is zero, the value of the multiplier is
\n(a) 0
\n(b) 1
\n(c) between 0 and 1
\n(d) infinity<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: (b) 1<\/p>\n<\/details>\n

\n

Question 6.
\nAverage Propensity to Consume can never be ________
\n(a) positive
\n(b) zero
\n(c) more than one
\n(d) less than one<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: (b) zero<\/p>\n<\/details>\n

\n

Question 7.
\nAccording to classical economists, there always exists an equilibrium in the economy.
\n(a) Full employment
\n(b) Underemployment
\n(c) Over full employment
\n(d) None of these<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: (a) Full employment<\/p>\n<\/details>\n

\n

Question 8.
\nWhat will be MPC when MPS = 0?
\n(a) One
\n(b) Zero
\n(c) Two
\n(d) Infinite<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: (a) One<\/p>\n<\/details>\n

\n

Question 9.
\nIf the income is \u20b9 400 crores and consumption is \u20b9 250 crores, what will be the APC?
\n(a) 0.67
\n(b) 0.63
\n(c) 0.60
\n(d) 0.58<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: (b) 0.63<\/p>\n<\/details>\n

\n

Question 10.
\nWhat is a fiscal measure of correcting deficient demand?
\n(a) Decrease in public debt
\n(b) Increase in public expenditure and decrease in taxes
\n(c) Deficit financing
\n(d) All of these<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: (d) All of these<\/p>\n<\/details>\n

\n

Question 11.
\nWhich is the measure of correcting excess demand?
\n(a) Deficit financing
\n(b) Reduction in taxes
\n(c) Increase in public expenditure
\n(d) Increase in public debt<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: (d) Increase in public debt<\/p>\n<\/details>\n

\n

Fill in the blanks with the correct word.<\/span><\/p>\n

Question 12.
\nThe multiplier is the ratio between the change in income and change in ________<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: investment<\/p>\n<\/details>\n

\n

Question 13.
\nIn an economy, break-even point and equilibrium point may lie at the same level of income, if ex-ante investments are _____<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: zero<\/p>\n<\/details>\n

\n

Question 14.
\nThere is a\/an ________ relation between multiplier and MPC.<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: direct<\/p>\n<\/details>\n

\n

Question 15.
\nDeficient demand refers to the situation when Aggregate Demand is _______ Aggregate Supply.<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: less than<\/p>\n<\/details>\n

\n

Question 16.
\nThe price will ________ in the situation of excess demand.<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: Increase<\/p>\n<\/details>\n

\n

Question 17.
\nIn a situation of inflationary gap, the economy faces a situation of ______ output.<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: higher<\/p>\n<\/details>\n

\n

Question 18.
\n________ demand causes inflationary pressure.<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: excess<\/p>\n<\/details>\n

\n

Question 19.
\nDeflationary gap is a measure of ________ demand.<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: excess<\/p>\n<\/details>\n

\n

Question 20.
\n_______ policy is related to revenue and expenditure of the government.<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: fiscal<\/p>\n<\/details>\n

\n

Question 21.
\nBank rate is a _______ instrument of monetary policy.<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: quantitative<\/p>\n<\/details>\n

\n

Question 22.
\n_______ policy is concerned with the supply, availability, and cost of money.<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: monetary<\/p>\n<\/details>\n

\n

Question 23.
\n_______ employment was the main feature of the classical theory of employment.<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: Full<\/p>\n<\/details>\n

\n

Question 24.
\nMPC is always ________<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: positive<\/p>\n<\/details>\n

\n

Question 25.
\nMPC is greater than zero and _______ than one.<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: less<\/p>\n<\/details>\n

\n

State whether the following statements are true or false. Give reasons.<\/span><\/p>\n

Question 26.
\nThere is a direct relationship between multiplier and MPC.<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: True
\nThere is a direct relationship between multiplier and MPC. The higher the MPC, the higher will be the value of the multiplier and vice-versa.<\/p>\n<\/details>\n

\n

Question 27.
\nWhen MPC is zero, the multiplier is 1.<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: True
\nThe relation between multiplier and MPC can be represented as K = \\(\\frac{1}{1-MPC}\\)
\nAt MPC = 0, K = 1.<\/p>\n<\/details>\n

\n

Question 28.
\nThe deflationary gap causes a fall in the level of employment.<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: True
\nWhen there is a deflationary gap, aggregate demand remains less than essential demand at the full employment level. Thus, the problem of involuntary unemployment takes place.<\/p>\n<\/details>\n

\n

Question 29.
\nThe inflationary gap causes a fall in the level of price.<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: False
\nWhen there is an inflationary gap, aggregate demand remains more than essential demand at the full employment level. Thus, there is a significant rise in prices.<\/p>\n<\/details>\n

\n

Question 30.
\nMonetary policy is related to the revenue and expenditure policy of the government.<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: False
\nThe monetary policy includes measures taken by the central bank to expand or contract the money supply. Instead, fiscal policy is related to the revenue and expenditure policy of the government.<\/p>\n<\/details>\n

\n

Question 31.
\nWhen there is excess demand, the rate of taxation is to be reduced.<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: False
\nDuring excess demand, the government reduces the rate of taxes and even imposes some new taxes. It leads to a decrease in the level of aggregate expenditure in the economy and helps to control the situation of excess demand.<\/p>\n<\/details>\n

\n

Question 32.
\nWhen there is deficient demand, public expenditure is to be generally expanded.<\/p>\n

\nAnswer<\/span><\/summary>\n

Answer: True
\nAn increase in public expenditure tends to increase the purchasing power of the public which, in turn, increases the demand for goods and corrects deficient demand.<\/p>\n<\/details>\n

\n

Match the alternatives given in Column II with respective terms in Column I.<\/span><\/p>\n

Question 33.<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Column I<\/td>\nColumn II<\/td>\n<\/tr>\n
(i) Ex-ante Investment<\/td>\n(a) Increase Bank rate<\/td>\n<\/tr>\n
(ii) Ex-post Investment<\/td>\n(b) AS curve is perfectly inelastic<\/td>\n<\/tr>\n
(iii) Monetary Measure to Correct Disequilibrium<\/td>\n(c) Actual Investment<\/td>\n<\/tr>\n
(iv) Fiscal Measure to Correct Disequilibrium<\/td>\n(d) Planned Investment<\/td>\n<\/tr>\n
(v) Components of AD<\/td>\n(e) Changes in Government expenditure<\/td>\n<\/tr>\n
(vi) Components of AS<\/td>\n(f) Consumption and Investment<\/td>\n<\/tr>\n
(vii) Classical Concept of AS<\/td>\n(g) Changing Cash Reserve Ratio<\/td>\n<\/tr>\n
(viii) Keynesian Concept of AS<\/td>\n(h) Consumption and Saving<\/td>\n<\/tr>\n
(ix) To correct excess demand<\/td>\n(i) AS curve is perfectly elastic<\/td>\n<\/tr>\n
(x) To correct deficient demand<\/td>\n(j) Increase government expenditure<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
\nAnswer<\/span><\/summary>\n

Answer:<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Column I<\/td>\nColumn II<\/td>\n<\/tr>\n
(i) Ex-ante Investment<\/td>\n(d) Planned Investment<\/td>\n<\/tr>\n
(ii) Ex-post Investment<\/td>\n(c) Actual Investment<\/td>\n<\/tr>\n
(iii) Monetary Measure to Correct Disequilibrium<\/td>\n(g) Changing Cash Reserve Ratio<\/td>\n<\/tr>\n
(iv) Fiscal Measure to Correct Disequilibrium<\/td>\n(e) Changes in Government expenditure<\/td>\n<\/tr>\n
(v) Components of AD<\/td>\n(f) Consumption and Investment<\/td>\n<\/tr>\n
(vi) Components of AS<\/td>\n(h) Consumption and Saving<\/td>\n<\/tr>\n
(vii) Classical Concept of AS<\/td>\n(b) AS curve is perfectly inelastic<\/td>\n<\/tr>\n
(viii) Keynesian Concept of AS<\/td>\n(i) AS curve is perfectly elastic<\/td>\n<\/tr>\n
(ix) To correct excess demand<\/td>\n(a) Increase Bank rate<\/td>\n<\/tr>\n
(x) To correct deficient demand<\/td>\n(j) Increase government expenditure<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/details>\n
\n

Use the above-provided NCERT MCQ Questions for Class 12 Economics Chapter 4 Determination of Income and Employment with Answers Pdf free download and get a good grip on the fundamentals. Need any support from our end during the preparation of CBSE Class 12 Economics Determination of Income and Employment MCQs Multiple Choice Questions with Answers then leave your comments below. We’ll revert back to you soon.<\/p>\n","protected":false},"excerpt":{"rendered":"

Students who are searching for NCERT MCQ Questions for Class 12 Economics Chapter 4 Determination of Income and Employment with Answers Pdf free download are compiled here to get good practice on all fundamentals. Know your preparation level on MCQ Questions for Class 12 Economics with Answers. You can also verify your answers from our …<\/p>\n

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