Effects of an Autonomous Change on Equilibrium Demand in the Product Market

Q.

Explain The Relationship Between Mpc And Multiplier With The Help Of An Example

Q.

The investment which is independent of the level of income is called a(an) investment.

1. autonomous
2. induced
3. fixed
4. inventory

Q.

If MPC = 0.75, how much additional investment is required to increase income by Rs. 600? Find the multiplier.

Q.

When C = 300 + 0.8Y and Y = 1, 000, saving at zero income level will be

1. 1, 100

2. 800

3. -300

4. 300

Q.

Explain the meaning of under-employment equilibrium. Explain two measures by which full-employment equilibrium can be reached.

Q.

In an economy, the government makes some additional investment. Find its value when MPC = 0.5 and increase in income = Rs. 1, 000.

Q.

If autonomous expenditure by the government increases by Rs 5, 000, find increase in equilibrium GDP when half of income is always spent on the purchase of goods for consumption.

1. 10, 500

2. 0

3. 10, 000

4. 5, 000

Q.

What will be the value of multiplier if all of the additional income is converted into additional consumption?

Q.

On account of an injection of aggregate demand, the equilibrium level of income

1. Decreases

2. None of these

3. Increases

4. Remains constant

Q. If MPC = 0.75, is the additional investment is required to increase income by Rs 600. The multiplier is .

1. Rs 100
2. 4
3. Rs 150
4. 5

Q.

The investment which is independent of the level of income is called a(an) ____.

1. Autonomous investment

2. Fixed investment

3. Inventory investment

4. Induced investment

Q.

Output always increases when AD increases.

1. True

2. False

Q.

Suppose C = 100 + 0.75Y D, I = 500, G = 750, taxes are 20 per cent of income, X = 150, M = 100 + 0.2Y. Calculate equilibrium income, the budget deficit or surplus and the trade deficit or surplus.

Q.

In an economy, the government makes some additional investment. Find its value when MPC = 0.5 and increase in income = Rs 1, 000.

1. Rs 100

2. Rs 1, 500

3. Rs 1, 000

4. Rs 500

Q. Distinguish between:

Q.

In the above example, if exports change to X = 100, find the change in equilibrium income and the net export balance.

Q. Briefly discuss the concept of over full employment equilibrium. Use diagram.

Q. "Stage of increasing returns (when MP is increasing) is economically redundant because the producer will not strike his equilibrium in this stage." Comment on the statement with justification.

Q. Explain the meaning of under-employment equilibrium.

Q. From the following information about an economy, calculate (i) its equilibrium level of national income, and (ii) saving at equilibrium level of national income. Consumption function: C = 200 + 0.9 Y (where C = consumption expenditure and Y = national income) Investment expenditure: I = 3, 000.

Q.

If MPC = 0.75, how much additional investment is required to increase income by Rs 600? Also, find the multiplier.

1. Rs 600, 5

2. Rs 600, 4

3. Rs 500, 5

4. Rs 500, 4

Q. In an economy S = -50 + 0.5 Y is the saving function (where S = saving and Y = national income) and investment expenditure is Rs. 7, 000. Calculate: (I) Equilibrium level of national Income. (II) Consumption expenditure at equilibrium level of national income.

Q. What are the variable factors of production?

Q.

When C = 300 + 0.8Y and Y = 1, 000, what is the saving at zero income level?

Q. Explain the concept of 'deflationary gap'. Also explain the role of 'margin requirements' in reducing it.

Q. In the long-run equilibrium of a competitive market, firms operate at:

1. The intersection of the marginal cost and marginal revenue
2. Zero economic profit
3. All of the above
4. Their efficient scale

Q. The government makes an additional investment of when MPC = 0.5 and the increase in income is Rs 1, 000.

1. Rs 500
2. Rs 1, 000
3. Rs 1, 500
4. Rs 100

Q. In a situation of constant demand, equilibrium quantity does not change even when supply increases or decreases.

Q. Discuss the factors limiting division of labour in an economy.

Q. At the given price of a commodity, there is excess supply. What changes will establish the equilibrium price? Explain with the help of a diagram.