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State and discuss any one component of Aggregate Demand in a two-sector economy.
Describe the adjustment mechanism if Aggregate Demand (AD) is less than Aggregate Supply (AS).
“In an economy ex-ante Aggregate Demand is more than ex-ante Aggregate Supply.” Explain its impact on the level of output, income and employment. For a hypothetical economy, assuming there is an increase in the Marginal Propensity to Consume (MPC) from 75% to 90% and change in investment to be Rs. 1,000 crore. Using the concept of investment multiplier, calculate the increase in income due to change in Marginal Propensity to Consume (MPC).
"In an economy ex-ante Aggregate Demand is less than ex-ante Aggregate Supply." Explain its impact on the level of output, income and employment. For a hypothetical economy, assuming there is an increase in the Marginal Propensity to Consume (MPC) from 80% to 90% and change in investment to be Rs. 1000 crore. Using the concept of investment multiplier, calculate the increase in income due to change in Marginal Propensity to Consume.
Read the following statements carefully : Statement 1 : In a two sector economy, consumption expenditure and investment expenditure are the two components of Aggregate Demand. Statement 2 : Aggregate demand curve always start from point of origin with positive slope. In the light of given statements, choose the correct alternative from the following :
"In an economy, ex-ante Aggregate Supply is more than ex-ante Aggregate Demand." Explain its impact on the level of output, income and employment. Complete the following table. Construct/Express the Consumption function at Rs. 200 crore level of income.
In order to discourage any fall in Aggregate Demand, the Government of India may _________ the _________. (Choose the correct alternative to fill in the blanks)
Elaborate the two components of Aggregate Supply in a two-sector economy.
In order to discourage any fall in Aggregate Demand, the Government of India may ________ the ________. (Choose the correct alternative to fill in the blanks)
In a two-sector economy, the Aggregate Demand can be determined by adding __________ and __________. (Choose the correct option to fill in the blanks)
In a two-sector economy, the Aggregate Demand can be determined by adding _________ and _________. (Choose the correct option to fill in the blanks)
In a two-sector economy, Aggregate Supply can be determined by adding ________ and ________. (Choose the correct option to fill in the blanks)
In a two-sector economy, Aggregate Supply can be determined by adding __________ and __________. (Choose the correct option to fill in the blanks)
(a) Estimate the value of Aggregate Demand (AD) in an imaginary economy : (i) Autonomous Investment (I_0) = Rs. 100 crore (ii) Marginal Propensity to Save (MPS) = 0.2 (iii) Level of Income (Y) = Rs. 4,000 crore (iv) Autonomous Consumption Expenditure (c̄) = Rs. 50 crore (b) State the meaning of propensity to consume.
Estimate the value of Aggregate Demand (AD) in an imaginary economy : (i) Autonomous Investment (I_0) = Rs. 200 crore (ii) Investment Multiplier (K) = 5 (iii) Level of Income (Y) = Rs. 4,000 crore (iv) Autonomous consumption expenditure (c̄) = Rs. 50 crore
Estimate the value of Aggregate Demand (AD) in an imaginary economy : (i) Autonomous Investment (I_0) = Rs. 100 crore (ii) Marginal Propensity to Consume (MPS) = 0.2 (iii) Level of Income (Y) = Rs. 4,500 crore (iv) Autonomous Consumption Expenditure (c̄) = Rs. 50 crore
Aggregate expenditure in the economy during an accounting year is also known as _________. (Choose the correct option to fill in the blank)
Aggregate expenditure in the economy during an accounting year is also known as ________. (Choose the correct option to fill in the blank)
The Aggregate Demand (AD) curve lies parallel to consumption curve, indicating that both have _________. (Choose the correct option to fill in the blank)
(I) Calculate the value of Ex-ante Aggregate Demand (AD), if autonomous investment and consumption expenditure (A) = Rs. 50 crore; and Marginal Propensity to Save (MPS) is 0.2 and level of income is Rs. 300 crore. (II) "If an economy is facing fall in inventories below the desired level, its often leads to a decrease in Aggregate Demand." Defend or refute the given statement with valid arguments. (I) Complete the following table : (II) Identify the monetary measure being referred to each of the following and discuss whether the tool would be used during a situation of excess demand or deficient demand. (i) Buying government securities (G-Sec) from public. (ii) Discourage commercial banks to park their surplus funds with the Reserve Bank of India (RBI).
The Aggregate Demand (AD) curve lies parallel to consumption curve, indicating that both have ________. (Choose the correct option to fill in the blank)
Study the given image carefully : The line LK represents _________ curve. (Choose the correct option to fill in the blank)
Explain the adjustment mechanism, if in an economy, ex-ante Aggregate Demand (AD) is more than ex-ante Aggregate Supply (AS). Explain the process of working of Investment Multiplier, for a hypothetical economy with Marginal Propensity to Consume (MPC) as 0.8 and Incremental Investment as Rs. 2,000 crore.
Explain the adjustment mechanism, if in an economy, ex-ante Aggregate Demand (AD) is less than ex-ante Aggregate Supply (AS). Explain the process of working of Investment Multiplier, for a hypothetical economy with Marginal Propensity to Consume (MPC) as 0.8 and Incremental Investment as Rs. 2,500 crore.
In the light of given statements, choose the correct alternative from the following :