MCQ Questions for Class 12 Economics Chapter 4 Determination of Income and Employment with Answers

Check the below NCERT MCQ Questions for Class 12 Economics Chapter 4 Determination of Income and Employment with Answers Pdf free download. MCQ Questions for Class 12 Economics with Answers were prepared based on the latest exam pattern. We have provided Determination of Income and Employment Class 12 Economics MCQs Questions with Answers to help students understand the concept very well.


Q1. What is the cause of Keynesian perfectly elastic Aggregate Supply curve?

(A) Wage price rigidity
(B) Constant Marginal Product of Labour
(C) Both of these
(D) None of these

(C) Both of these


Q2. According to classical economists, there always exists __ equilibrium in the economy.

(A) Full employment
(B) Underemployment
(C) Over full employment
(D) None of these

(A) Full employment


Q3. What will be APC when APS = 0?

(A) One
(B) Zero
(C) Two
(D) Infinite

(A) One


Q4. If the income is ₹ 400 crores and consumption is ₹ 250 crores, what will be the APC?

(A) 0.67
(B) 0.63
(C) 0.60
(D) 0.58

(B) 0.63


Q5. What is a fiscal measure of correcting deficient demand?

(A) Increase in public expenditure and decrease in taxes
(B) Decrease in public debt
(C) Deficit financing
(D) All of these

(D) All of these


Q6. Which is the measure of correcting excess demand?

(A) Deficit financing
(B) Reduction in taxes
(C) Increase in public expenditure
(D) Increase in public debt

(D) Increase in public debt


Q7. Suppose in a hypothetical economy, the income rises from ₹ 5,000 crores to ₹ 6,000 crores. As a result, the consumption expenditure rises from ₹ 4,000 crores to ₹ 4,600 crores. Marginal propensity to consume in such a case would be __

(A) 0.8
(B) 0.4
(C) 0.2
(D) 0.6

(D) 0.6


Q8. On the basis of government law, the compulsory payment made by the public is known as _

(A) Expenditure
(B) Investment
(C) Tax
(D) Subsidy

(C) Tax


Q9. Which among is the direct tax?

(A) Income tax
(B) Gift and Corporation tax
(C) Wealth tax
(D) All of these

(D) All of these


Q10. The value of multiplier is:

(A) 1MPC
(B) 1MPS
(C) 11−MPS
(D) 1MPC−1

(B) 1MPS


Q11. If MPC = 1, the value of the multiplier is:

(A) 0
(B) 1
(C) Between 0 and 1
(D) Infinity

(D) Infinity


Q12. Aggregate demand can be increased by:

(A) increasing bank rate
(B) selling govt, securities by RBI
(C) increasing cash reserve ratio
(D) none of these

(D) none of these


Q13. If the marginal propensity to consume is greater than the marginal propensity to save, the value of the multiplier will be

(A) greater than 2
(B) less than 2
(C) equal to 2
(D) equal to 5

(A) greater than 2


Q14. Supply creates its own Demand. Who gave this law?

(a) J.B.Say
(b) J.S.Mill
(c) Keynes
(d) Ricardo

(a) J.B.Say


Q15. Who is the author of the book ‘General Theory of Employment, Interest, and Money’?

(a) A.C. Pigou
(b) Malthus
(c) J.M. Keynes
(d) Marshall

(c) J.M. Keynes


Q16. Which of the following is true for the Classical Theory of Employment?

(a) State of full employment in the economy
(b) No possibility of over-or under-production in the economy
(c) Both (a) and (b)
(d) None of the above

(c) Both (a) and (b)


Q17. On which factor Keynesian Theory of Employment depends?

(a) Effective Demand
(b) Supply
(c) Production Efficiency
(d) None of the above

(a) Effective Demand


Q18. Which is the determining factor for investment?

(a) Marginal Efficiency of Capital
(b) Interest Rate
(c) Both (a) and (b)
(d) None of these

(c) Both (a) and (b)


Q19. According to Keynes, investment implies:

(a) Financial Investment
(b) Real Investment
(c) Both (a) and (b)
(d) None of the above

(b) Real Investment


Q20. With the increase in investment, MEC:

(a) Rises
(b) Falls
(c) Remains Constant
(d) None of these

(b) Falls


Q21. Which of the following is a Read Investment?

(a) Purchasing of a Share
(b) Purchasing of Old Factory
(c) Construction of Buildings
(d) Opening Deposit Account in the Bank

(c) Construction of Buildings


Q22. APC + APS = ?

(a) ?
(b) 2
(c) 1
(d) 0

(b) 2


Class 12 Macroeconomics MCQ with Answers: Introductory Macroeconomics

Chapter 1: Introduction to Macroeconomics
Chapter 2: National Income Accounting
Chapter 3: Money and Banking
Chapter 4: Determination of Income and Employment
Chapter 5: Government Budget and the Economy
Chapter 6: Open Economy Macroeconomics

Class 12 Economics Indian Economic Development MCQ with Answers

Chapter 1: Indian Economy on the Eve of Independence
Chapter 2: Indian Economy 1950-1990
Chapter 3: Liberalisation, Privatisation and Globalisation: An Appraisal
Chapter 4: Poverty
Chapter 5: Human Capital Formation in India
Chapter 6: Rural Development
Chapter 7: Employment: Growth, Informalisation and Other Issues
Chapter 8: Infrastructure
Chapter 9: Environment and Sustainable Development
Chapter 10: Comparative Development Experiences of India and its Neighbours

Unit 6: Development Experience (1947-90) and Economic Reforms Since 1991
Unit 7: Current Challenges Facing Indian Economy
Unit 8: Development Experience of India: A Comparison with Neighbours

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