The demand for money L=0.25 Y and the supply of money \(\frac{\overline{M}}{P}\)=500. In this case
- the LM curve is vertical and defined by Y = 2000 and this defines the classical case
- the LM curve is vertical and defined by Y=125 and this defines the case of liquidity trap
- the LM curve is upward sloping and defined by Y = 2000
- the LM curve is horizontal and defined by Y = 2000 and this is a case of liquidity trap
The Correct Option is A
Solution and Explanation
Top Questions on Demand analysis
- There are two firms in an industry producing a homogeneous product. The market demand function is given by \( P = 1 - (q_1 + q_2) \), where \( q_1 \) and \( q_2 \) are the output levels of Firm 1 and Firm 2, respectively. Firm 1’s cost function is common knowledge and equals zero. Firm 2’s cost function is private information. Firm 1 believes that Firm 2’s cost function is \( 0.5q_2 \) with probability 0.5 and that Firm 2’s cost function is \( 0.25q_2 \) with probability 0.5. The firms choose their quantities simultaneously. Let \( q_1^* \) denote the quantity produced by Firm 1 in the Bayesian Nash equilibrium of this game. Then, the value of \( 24q_1^* \) is _____________ (round off to one decimal place).
- GATE XH-C1 - 2025
- Microeconomics
- Demand analysis
Consider the following statements:
Statement 1: The new classical policy ineffectiveness proposition asserts that, systematic monetary policy and fiscal policy actions that change aggregate demand will not affect output and employment even in short run.
Statement 2: According to Real Business Cycle (RBC) model, the aggregate economic variables are the outcomes of the decisions made by many individual agents acting to maximize their utility subject to production possibilities and resource constraints.- GATE XH-C1 - 2025
- Microeconomics
- Demand analysis
- Consider a three-firms oligopoly market with a linear demand function given by \( P = 25 - Q \), where \( P \) is the unit price and \( Q \) is the total quantity supplied. The total quantity \( Q = q_1 + q_2 + q_3 \), where \( q_i \) is the output from the \( i^{th} \) firm with \( i = 1,2,3 \). The total cost (TC) curve of firm \( i \) is given by \( TC_i = \alpha_i + 5q_i \), where \( \alpha_i \)'s are positive real numbers. Assuming a Cournot solution exists, the value of \( Q \) is:
- GATE XH-C1 - 2025
- Microeconomics
- Demand analysis
- The inverse demand function for a monopolist is given by \( P = 100 - kQ \), where \( P \) is the unit price of the good, \( Q \) is the quantity and \( k \) is a constant. The cost function facing the monopolist is given as \( C(Q) = 50 + 2Q(1 + Q) \). If the profit maximizing output is 7, the maximum profit is ________________ (in integer).
- GATE XH-C1 - 2025
- Microeconomics
- Demand analysis
For a closed economy with no government expenditure and taxes, the aggregate consumption function (\(C\)) is given by: \[ C = 100 + 0.75 \, Y_d \] where \( Y_d \) is the disposable income. If the total investment is 80, the equilibrium output is ____________ (in integer).
- GATE XH-C1 - 2025
- Microeconomics
- Demand analysis
Questions Asked in CUET PG exam
- What is the antonym of eradicate?
- CUET (PG) - 2025
- Antonyms
- Who was the first Secretary-General of the UN?
- CUET (PG) - 2025
- United Nations and its Organizations
- What is the correct verb form: He, as well as his friends, ?
- Which preposition is correct: Chanakya lived ?
- CUET (PG) - 2025
- Prepositions
- Identify the possessive noun: My office car is parked elsewhere.