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Home Questions NTJYBCMRAZ
Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Determination of Income and Employment

Question:

Match the following:

Options:

i-b, ii-d, iii-a, iv-c

i-b, ii-c, iii-d, iv-a

i-b, ii-a, iii-c, iv-d

i-b, ii-d, iii- c, iv- a

Correct Answer:

i-b, ii-d, iii- c, iv- a

Explanation:

(i-b) Excess demand means demand is more than supply. This leads to increase in price level meaning inflationary gap.
(ii-d) Deficient demand means demand is less than supply which gives rise to deflationary gap i.e. a fall in price level.
(iii-c) Higher the MPC, higher will be the value of multiplier. So, positive relation between MPC and multiplier value.
(iv-a) Higher the MPS, lower will be the value of multiplier. So, inverse relation between MPS and multiplier value.

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