Comprehension

Based on the following diagram answer the question:

Question: 1

The gap E'F in the diagram indicate

Updated On: Sep 19, 2024
  • Deficient demand
  • Equilibrium income
  • Excess demand
  • Full employment level of output
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The Correct Option is C

Solution and Explanation

The correct option is (C) :Excess demand
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Question: 2

Given initial investment is ₹ 200 crores and MPC=0.8. If autonomous investment increases by ₹ 50 crores, the income will increase by ₹______ crores.

Updated On: Sep 19, 2024
  • 150
  • 200
  • 250
  • 300
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The Correct Option is C

Solution and Explanation

The correct option is (C) :250
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Question: 3

Identify the correct statement from the following statements:

Updated On: Sep 19, 2024
  • MPS and investment multiplier are directly related to each other
  • MPS and investment multiplier are inversely related to each other
  • MPC and investment multiplier are directly related to each other
  • MPC and MPS both have no relation with investment multiplier
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The Correct Option is B

Solution and Explanation

The correct option is (B) :MPS and investment multiplier are inversely related to each other
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Question: 4

To deal with the gap E'F, the central Bank will

Updated On: Sep 19, 2024
  • Decrease the Bank Rate
  • Decrease the cash reserve ratio
  • Decrease the Repo rate
  • Sells securities in the open market
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The Correct Option is D

Solution and Explanation

The correct option is (D) :Sells securities in the open market
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Question: 5

Identify the reason for shifting of the Aggregate Demand (AD) curve from $AD^1$ to $AD^2$.

Updated On: Sep 19, 2024
  • Increase in savings by households
  • Increase in taxes by government
  • Increase in imports
  • Increase in investment
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The Correct Option is D

Solution and Explanation

The correct option is (D) :Increase in investment
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