AR INCOME DETERMINATION

ASSERTION (A):

APS can never be one or more than one.

REASONING (R):

APC increases with increase in income.

• A

• B

• C

• D

ASSERTION (A):

MPC of poor is more than that of rich.

REASONING (R):

MPC falls with successive increase in Income.

• a

• b

• c

• d

ASSERTION (A):

Multiplier explains how many times the income increases as a result of an increase in theinvestment.

REASONING (R):

There is an inverse relationship between the value of marginal propensity to save andinvestment multiplier.

• a

• b

• c

• d

ASSERTION (A):

Multiplier explains how many times the income increases as a result of an increase in theinvestment.

REASONING (R):

There is an inverse relationship between the value of marginal propensity to save andinvestment multiplier.

• a

• b

• c

• d

ASSERTION (A):

When Investment Multiplier is 1, the value of MPC is also 1.

REASONING (R):

Consumption can exceed Income but Savings cannot.

• a

• b

• c

• d

Assertion (A): Higher the value of Marginal Propensity to Consume, higher the value of

multiplier and more chances of economic growth and increase in National Income. This

happens when marginal propensity to save falls and marginal propensity to consume rises.

Reason(R): Investment generates income and this additional income causes a change in

consumption. Additional consumption expenditure generates additional income for

producers of goods and services. This process keeps repeating till the total increase in

income equals the product of multiplier and change in investment: ΔY=Kx ΔI

• a

• b

• c

• d

Assertion (A): There is direct relationship between Saving and demand for goods andservices in the economy.

Reason(R): As people save more and more, the demand for goods and services fall in theeconomy

• a

• b

• c

• d

Assertion (A): J M Keynes emphasized more on Investment.

Reason(R): As saving increases, it leads to more and more investment in the

economy and hence more demand for goods and services in the economy

• a

• b

• c

• d

Assertion (A): There is always full employment equilibrium in the economy.

Reason (R): The equilibrium in the economy, where AD=AS may strike even when there is

underemployment.

• a

• b

• c

• d

Assertion: Price has no role to play as a determinant of Aggregate Supply.

Reason: Proportionate increase in aggregate supply due to excess capacity of production

leads to a constant price level in the economy.

• a

• b

• c

• d

Answer explanation