Tag: concept of excess demand and deficient demand

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Multiple choice economics concept of excess demand and deficient demand unemployment and employment generation the short run fixed price analysis of the product market liquidity preference and profit

The aggregate supply function starts from the origin.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Aggregate supply refers to the desired level of output in the economy during an accounting year. It is through this output only that the producer sector generates income. Aggregate supply function is a upward sloping curve which denotes the direct relation between the level of output produced in the economy and income generates. The curve starts from the origin indicating the income at zero level of output in the economy. 

Multiple choice economics concept of excess demand and deficient demand unemployment and employment generation the short run fixed price analysis of the product market liquidity preference and profit

Aggregate supply function is a ___________ curve.

  1. upward sloping

  2. horizontal curve, followed by a upward sloping

  3. downward sloping

  4. upward sloping curve at first, followed by a vertical
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Aggregate supply refers to the desired level of output in the economy during an accounting year. It is through this output only that the producer sector generates income. Aggregate supply function is a upward sloping curve which denotes the direct relation between the level of output produced in the economy and income generates. The curve become vertical after full employment level of output indicating the maximum amount of output which can be produced in the economy generating the respective national income. 

Multiple choice economics concept of excess demand and deficient demand unemployment and employment generation the short run fixed price analysis of the product market liquidity preference and profit

Aggregate supply function becomes parallel to the Y-axis, after the full employment level has been achieved in the economy.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Aggregate supply refers to the desired level of output in the economy during an accounting year. It is through this output only that the producer sector generates income. Aggregate supply function is a upward sloping curve which denotes the direct relation between the level of output produced in the economy and income generates. The curve become vertical i.e. parallel to Y-axis after full employment level of output indicating the maximum amount of output which can be produced in the economy generating the respective national income. 

Multiple choice economics concept of excess demand and deficient demand unemployment and employment generation the short run fixed price analysis of the product market liquidity preference and profit

For open economy aggregate demand is equal to Consumption + Investment + Government expenditure.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

An open economy is an economy in which there are economic activities between the domestic country with the other countries.

Hence, for an open economy, aggregate demand is equal to Consumption + Investment + Government expenditure + (X-M) where X is the income from Exports and M is the expenditure on imports

AD = C + I + G + (X-M)

Multiple choice economics concept of excess demand and deficient demand unemployment and employment generation the short run fixed price analysis of the product market liquidity preference and profit

Equilibrium price and quantity is determined by ___________.

  1. Mid-point of demand curve

  2. Central planning agency

  3. Intersection of demand and supply curve

  4. Mutual discussion of trade and consumer associations
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

In a competitive market, the equilibrium price and quantity are established where the quantity demanded by consumers equals the quantity supplied by producers, which is the intersection point of the demand and supply curves.