List of top Economics Questions on Income and Output Determination

In the context of the Keynesian concept of a multiplier, a 1 increase in government spending financed by a 1 increase in taxes will cause equilibrium income
Which of the following is not true about the Classical and Keynesian aggregate demand (AD) and aggregate supply (AS) schedules?
One of the conditions for national income or output to be in equilibrium is that the desired investment (Id) must equal the realised investment (Ir). If \( I_d > I_r \), the difference results in:

In the context of the Keynesian concept of a multiplier, a \(\$\)1 increase in government spending financed by a \(\$\)1 increase in taxes will cause equilibrium income to:

Which of the following statements are correct about the IS curve? 

(A) It shows the combination of the interest rate and the level of income such that the money market is in equilibrium. 
(B) It is negatively sloped. 
(C) The smaller the multiplier and the more sensitive investment spending is to changes in the interest rate, the steeper the IS curve. 
(D) An increase in government purchases shifts the IS curve to the right. 
Choose the correct answer from the options given below: 
 

Read the following text carefully:
According to a report issued by a research organisation, there is a sharp decline in the overall demand in the economy, particularly in the private consumption segment. This dip in the macroeconomic variables highlights the urgent need for strategic actions to stimulate economic activities.
On the basis of the given text and common understanding, explain the measure which the government may take to solve the indicated problem.
Assuming for a hypothetical economy:
[(i)] Autonomous Consumption Expenditure ($\bar{C}$) = ₹ 250 crore
[(ii)] Marginal Propensity to Save (MPS) = 0.2
[(iii)] Autonomous Investments ($I_0$) = ₹ 200 crore Estimate the Break-even level of Income and Equilibrium level of Income, on the basis of information given above.
In a two-sector economy, the Aggregate Demand can be determined by adding ............ and ...............
Read the following statements carefully:
Statement 1: Marginal Propensity to Consume (MPC) refers to the consumption per unit of income.
Statement 2:As the income increases, the proportionate increase in the level of consumption is always more than the increase in the level of income.
In the light of the given statements, choose the correct option from the following:
Under the Keynesian theory, ‘Reference Line’ is a straight line passing through the origin drawn at an angle of _______.
(Choose the correct option to fill in the blank)
If the GDP of an economy be Rs.100 and the autonomous aggregate investment and ex-post aggregate saving be Rs.30 in equilibrium, what would be the aggregate saving in equilibrium in that economy if the aggregate investment remains at Rs.30 and the average saving propensity increases from 30% to 40%?
The GDP of an economy is Rs.100 crores. The aggregate saving is Rs.30 crores. If the autonomous aggregate investment rises from Rs.30 crores to Rs.45 crores, ceteris paribus, what would be the GDP in that economy in the new equilibrium?
What would be the slope of the LM curve in the interest rate-income plane, if the rate of interest is exogenously determined by the Central bank?
Arrange the following statements based on Keynesian theory.
(A) Level of aggregate income rises in Keynesian world.
(B) Aggregate Saving as a function of GDP rises.
(C) Government expenditure rises.
(D) Fiscal deficit rises, given revenue receipts.
Arrange the followings in a correct order.
(A) Employment and income come down.
(B) Investment demand comes down.
(C) Demand-pull inflation rate comes down.
(D) Repo rate or policy interest rate rises.
Which of the following statements hold true when steady state is attained in the Solow Model?
(A) Capital-Labour ratio does not change
(B) Depreciation does not change
(C) Income per capita does not change
(D) Inequality does not change
Choose the correct answer from the options given below:
Match the measures with the concept that is being measured

List-I(Indicators)

List-II(Description)

AGini CoefficientIMeasures the wearing out of capital
BGDP DeflatorIIMeasures poverty
CHead Count RatioIIIMeasures changes in price level
DDepreciationIVMeasures inequality

Choose the correct answer from the options given below