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:
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:
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: Ex-post 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 ex-ante Aggregate Demand (AD) equals actual output, i.e., the economy is at full employment.
Conclusion: Both statements are correct: Ex-post savings and investment are equal, and the equilibrium output is determined by ex-ante Aggregate Demand.
Top Questions on Demand curve
- Demand Curve slopes downward from the left to the right.
- In a perfectly competitive market, suppose the market demand curve is given by P = 10 + W - Q, where P is the market price, W is the average wealth of the consumers in the market, and Q is the industry output. The total cost function for a representative firm is given by C(q) = q3 - 2q2 + 5q, where q is the output of a firm. If W = 80, then the total number of firms in this industry in the long-run will be ______ (in integer)
- GATE XH-C1 - 2024
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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
q2(p1, p2) = 18 + p1 - p2
Here, q1 and q2 are the outputs produced by Firm 1 and Firm 2, respectively, and p1 and p2 are the corresponding per unit prices.
Cost of production for the ith firm is given by Ci(qi) = 2qi ∀ i = 1,2
The firms compete in prices. The price set by Firm 2 such that the market is in Nash equilibrium will be ________ (in integer).- GATE XH-C1 - 2024
- Macroeconomics
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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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- Define Effective Demand Principle.
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Questions Asked in GATE XH-C1 exam
Two players \( A \) and \( B \) are playing a game. Player \( A \) has two available actions \( a_1 \) and \( a_2 \). Player \( B \) has two available actions \( b_1 \) and \( b_2 \). The payoff matrix arising from their actions is presented below:
Let \( p \) be the probability that player \( A \) plays action \( a_1 \) in the mixed strategy Nash equilibrium of the game.
Then the value of p is (round off to one decimal place).- GATE XH-C1 - 2025
- Logical Reasoning
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?
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
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:
- Had I learnt acting as a child, I ________ a famous film star.
Select the most appropriate option to complete the above sentence.