Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Determination of Income and Employment

Question:

Match List I with List II

List - I

List – II

(A)

 Y

(I)

 Y - C

(B)

 C

(II)

 $\frac{1}{MPS}$

(C)

 S

(III)

 $\overline{A}+c.Y$

(D)

 Investment multiplier 

(IV)

 $\overline{C}+c.Y$

Choose the correct answer from the options given below:

Options:

A-III, B-IV, C-II, D-I

A-III, B-II, C-I, D-IV

A-III, B-IV, C-I, D-II

A-IV, B-II, C-I, D-III

Correct Answer:

A-III, B-IV, C-I, D-II

Explanation:

Y (ex ante, or planned, ouput of final goods)= $\overline{A}+c.Y$ (where $\overline{A}$ =  $\overline{C}+\overline{I}$ is the total autonomous expenditure in the economy.

The consumers demand can be expressed by the equation C =  $\overline{C}+c.Y$ (Where $\overline{C}$ is Autonomous expenditure and c is the marginal propensity to consume.)

Savings is that part of income that is not consumed. In other words, S = Y - C

The investment multiplier = $\frac{1}{MPS}$