laboursonline – MCQs, Mock Tests | ICSE XII MCQ Questions for Class 12 Economics Set-4

What is the shape of the Keynesian Aggregate Supply before the level of full employment is attained?

1. Perfectly inelastic
2. Perfectly elastic
3. Unitary elastic
4. More elastic

✅ Correct Answer: 2

According to classical economists, real wage rate is ______ to the Marginal Productivity of Labour.

1. Equal
2. More
3. Less
4. None of these

✅ Correct Answer: 1

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

1. Wage price rigidity
2. Constant Marginal Product of Labour
3. Both of these
4. None of these

✅ Correct Answer: 3

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

1. Full employment
2. Underemployment
3. Over full employment
4. None of these

✅ Correct Answer: 1

What will be APC when APS = 0?

1. One
2. Zero
3. Two
4. Infinite

✅ Correct Answer: 1

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

1. 0.67
2. 0.63
3. 0.60
4. 0.58

✅ Correct Answer: 2

What is a fiscal measure of correcting deficient demand?

1. Increase in public expenditure and decrease in taxes
2. Decrease in public debt
3. Deficit financing
4. All of these

✅ Correct Answer: 4

Which is the measure of correcting excess demand?

1. Deficit financing
2. Reduction in taxes
3. Increase in public expenditure
4. Increase in public debt

✅ Correct Answer: 4

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 ______

1. 0.8
2. 0.4
3. 0.2
4. 0.6

✅ Correct Answer: 4

On the basis of government law, the compulsory payment made by the public is known as _________

1. Expenditure
2. Investment
3. Tax
4. Subsidy

✅ Correct Answer: 3

Which among is the direct tax?

1. Income tax
2. Gift and Corporation tax
3. Wealth tax
4. All of these

✅ Correct Answer: 4

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

1. 0
2. 1
3. Between 0 and 1
4. Infinity

✅ Correct Answer: 4

Aggregate demand can be increased by:

1. increasing bank rate
2. selling govt, securities by RBI
3. increasing cash reserve ratio
4. none of these

✅ Correct Answer: 4

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

1. greater than 2
2. less than 2
3. equal to 2
4. equal to 5

✅ Correct Answer: 1

Supply creates its own Demand. Who gave this law?

1. J.B.Say
2. J.S.Mill
3. Keynes
4. Ricardo

✅ Correct Answer: 1

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

1. A.C. Pigou
2. Malthus
3. J.M. Keynes
4. Marshall

✅ Correct Answer: 3

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

1. State of full employment in the economy
2. No possibility of over-or under-production in the economy
3. Both (a) and (b)
4. None of the above

✅ Correct Answer: 3

On which factor Keynesian Theory of Employment depends?

1. Effective Demand
2. Supply
3. Production Efficiency
4. None of the above

✅ Correct Answer: 1

Which is the determining factor for investment?

1. Marginal Efficiency of Capital
2. Interest Rate
3. Both (a) and (b)
4. None of these

✅ Correct Answer: 3

According to Keynes, investment implies:

1. Financial Investment
2. Real Investment
3. Both (a) and (b)
4. None of the above

✅ Correct Answer: 2

With the increase in investment, MEC:

1. Rises
2. Falls
3. Remains Constant
4. None of these

✅ Correct Answer: 2

Which of the following is a Read Investment?

1. Purchasing of a Share
2. Purchasing of Old Factory
3. Construction of Buildings
4. Opening Deposit Account in the Bank

✅ Correct Answer: 3

APC + APS = ?

1. ?
2. 2
3. 1
4. 0

✅ Correct Answer: 2

MPC = MPS = ?

1. ?
2. 2
3. 1
4. 0

✅ Correct Answer: 3

Which or is true?

1. MPC + MPS = 0
2. MPC + MPS < 1
3. MPC + MPS = 1
4. MPC + MPS > 1

✅ Correct Answer: 3

The main component of aggregate demand is:

1. Individual consumption
2. Public consumption
3. Investment
4. All the above

✅ Correct Answer: 4

Who is the writer of the book, “Trained Economic Politique”?

1. Pigour
2. J.B. Say
3. Keynes
4. Ricardo

✅ Correct Answer: 1

IF MPC = 0.5, then Multiplier (k) will be:

1. 1/4
2. = 0
3. 1
4. 2

✅ Correct Answer: 4

On which concept does classical viewpoint depend?

1. Say’s Law of Market
2. perfect Flexibility of Wage Rate
3. Perfect Flexibility of Interest Rate
4. All of these

✅ Correct Answer: 4

“Wage cut maintains full employment in the economy.” Who put forward this view?

1. Pigou
2. Keynes
3. Marshall
4. None of the above

✅ Correct Answer: 1

Which one of the following is the determining factor of Equilibrium Income is the Keynesian Viewpoint?

1. Aggregate Demand
2. Aggregate Supply
3. Both (a) and (b)
4. None of the above

✅ Correct Answer: 3

In Keynesian viewpoint, the equilibrium level of income and employment in the economy will be established where:

1. AD > AS
2. AS > AD
3. AD = AS
4. None of these

✅ Correct Answer: 3

According to the saving-investment viewpoint, income employment equilibrium will be determined at a point where:

1. S > I
2. I > S
3. S = I
4. None of these

✅ Correct Answer: 3

An increase in aggregate demand of equilibrium level of income and employment causes an increase in:

1. Employment
2. Production
3. Income
4. All of these

✅ Correct Answer: 4

Which one is correct?

1. Y = C + I
2. Y = 0 = N
3. C + S = C + I
4. All of these

✅ Correct Answer: 4

Keynes theory is associated with :

1. Effective demand
2. Propensity to consume
3. Propensity to save
4. All of these

✅ Correct Answer: 4

Keynesian multiplier establishes a relationship between:

1. Investment and Income
2. Income and Consumption
3. Saving and Investment
4. None of the above

✅ Correct Answer: 1

Keynes derived Investment Multiplier from Kahn’s :

1. Income Multiplier
2. Consumption Multiplier
3. Employment Multiplier
4. None of the above

✅ Correct Answer: 3

The value of Keynesian Investment Multiplier depends on:

1. Income Level
2. Marginal Productivity of Capital
3. Marginal Propensity to Consume
4. Investment Level

✅ Correct Answer: 3

Which factor affects Keynesian Multiplier?

1. Marginal Propensity to Save
2. Marginal Propensity to Consume
3. Both (a) and (b)
4. None of the above

✅ Correct Answer: 3

Which of the following is correct?

1. MPC and multiplier have a direct relationship
2. MPS and multiplier have an inverse relationship
3. Both (a) and (b)
4. None of the above

✅ Correct Answer: 3

The value of MPC is:

1. 1
2. 0
3. Greater than 0 but less than 1
4. ?

✅ Correct Answer: 3

If MPC = 0.5, then multiplier (K) will be:

1. 1/2
2. 1
3. 2
4. 0

✅ Correct Answer: 2

If MPC = 0.5 and initial investment is 100 Rs crores, the income generation in the economy will be :

1. 5 crores Rs
2. 100 crores Rs
3. 200 crores Rs
4. 500 crores Rs

✅ Correct Answer: 3

‘The theory of employment multiplier was propounded by:

1. Keynes
2. Kahn
3. Hansen
4. Marshall

✅ Correct Answer: 2

If income equilibrium level in the economy is determined at the level before full employment, it is known as the state of:

1. Deficit Demand
2. Surplus Demand
3. Partial Demand
4. None of these

✅ Correct Answer: 1

In Keynesian economics, the state of Deficit Demand is called as:

1. Full Employment Equilibrium
2. Under Full Employment Equilibrium
3. Both (a) and (b)
4. None of the above

✅ Correct Answer: 2

What are the characteristics of Deficit Demand?

1. Aggregate Demand falls short of Aggregate Demand required at full employment
2. Aggregate Demand remains short of Aggregate Supply required of full employment level
3. Both (a) and (b)
4. None of above

✅ Correct Answer: 3

Deflationary Gap shows the measurement of:

1. Deficit Demand
2. Surplus Demand
3. Full Employment
4. None of these

✅ Correct Answer: 1

Which one is the reason for appearing Deficit Demand condition?

1. Fall in the money supply in the country
2. Fall in investment demand as a result of rising in bank rate
3. Fall in disposable income and consumer demand due to increase in taxes
4. All the above

✅ Correct Answer: 4