Read the following statements carefully:
Statement 1: Expost savings and Expost investments are equal at all levels of income.
Statement 2: Under the effective demand principle, the equilibrium output is equal to exante Aggregate Demand (AD). In the light of the given statements, choose the correct alternative from the following:
Read the following statements carefully:
Statement 1: Expost savings and Expost investments are equal at all levels of income.
Statement 2: Under the effective demand principle, the equilibrium output is equal to exante Aggregate Demand (AD). In the light of the given statements, choose the correct alternative from the following:
Show Hint
- Statement 1 is true and Statement 2 is false.
- Statement 1 is false and Statement 2 is true.
- Both Statements 1 and 2 are true.
- Both Statements 1 and 2 are false.
The Correct Option is C
Solution and Explanation
Statement 1 is true: Expost savings and investments are equal because savings always equal investment in an economy when accounting for all income. The total savings will be used for investments.
Statement 2 is true: Under the effective demand principle, the equilibrium output is determined when exante Aggregate Demand (AD) equals actual output, i.e., the economy is at full employment.
Conclusion: Both statements are correct: Expost savings and investment are equal, and the equilibrium output is determined by exante Aggregate Demand.
Top Questions on Demand curve
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- Consider a duopoly market where Firm 1 and Firm 2 produce differentiated products such that the demand function of each firm is given by :
q1(p1, p2) = 18 - p1 + p2
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Read the following statements carefully:
Statement 1: Ex-post savings and Ex-post investments are equal at all levels of income.
Statement 2: Under the effective demand principle, the equilibrium output is equal to ex-ante Aggregate Demand (AD). In the light of the given statements, choose the correct alternative from the following:- GATE XH-C1 - 2024
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Read the following statements carefully:
Statement 1: Ex-post savings and Ex-post investments are equal at all levels of income.
Statement 2: Under the effective demand principle, the equilibrium output is equal to ex-ante Aggregate Demand (AD). In the light of the given statements, choose the correct alternative from the following:- GATE XH-C1 - 2024
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Questions Asked in GATE XH-C1 exam
Eight students (P, Q, R, S, T, U, V, and W) are playing musical chairs. The figure indicates their order of position at the start of the game. They play the game by moving forward in a circle in the clockwise direction.
After the 1st round, the 4th student behind P leaves the game.
After the 2nd round, the 5th student behind Q leaves the game.
After the 3rd round, the 3rd student behind V leaves the game.
After the 4th round, the 4th student behind U leaves the game.
Who all are left in the game after the 4th round?
The 12 musical notes are given as \( C, C^\#, D, D^\#, E, F, F^\#, G, G^\#, A, A^\#, B \). Frequency of each note is \( \sqrt[12]{2} \) times the frequency of the previous note. If the frequency of the note C is 130.8 Hz, then the ratio of frequencies of notes F# and C is:
Here are two analogous groups, Group-I and Group-II, that list words in their decreasing order of intensity. Identify the missing word in Group-II.
Abuse \( \rightarrow \) Insult \( \rightarrow \) Ridicule
__________ \( \rightarrow \) Praise \( \rightarrow \) Appreciate
- Had I learnt acting as a child, I ________ a famous film star.
Select the most appropriate option to complete the above sentence. - A car started from city P at 9:40 AM. The time taken for the car to reach city Q is 4 hours and 50 minutes. The time of arrival of the car at city Q is: