Tag: income-output determination

Questions Related to income-output determination

___________ refers to the amount of sales proceeds which an entrepreneur actually expects from the sale of output produced at a given level of employment during the year.

economics income-output determination public debt public debt main feature of tax

  1. Aggregate demand

  2. Market demand

  3. Aggregate supply

  4. Aggregate income

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Correct Option: A
Explanation:

Aggregate Demand refers to the desired level of expenditure in the economy during an accounting year. So it can also be expressed as the sale proceeds because the expenditure from consumer's point of view is sales proceeds or earnings from producer's point of view. Therefore, Aggregate demand is the amount of sales proceeds which an entrepreneur actually expects from the sale of output produced during the year assuming it to be the full employment level of output. 

____________ is the expenditure incurred for those goods and services which satisfy the wants of private individuals and institutions directly.

economics income-output determination public debt public debt main feature of tax

  1. Consumption expenditure

  2. Investment expenditure

  3. Induced expenditure

  4. None of the above

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Correct Option: A
Explanation:

Consumption expenditure refers to the expenditure which is incurred on the basic act of consuming goods and services to satisfy the wants of the individuals. It is usually incurred directly by private individuals and institutions. 

Who propounded the 'market law'?

economics income-output determination public debt public debt main feature of tax

  1. Adam Smith

  2. J B Say

  3. T R Malthus

  4. David Recardo

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Correct Option: B
Explanation:

Law was propounded by J.B say
This law means that ‘supply always creates its own demand.’ In other words, according to J.B. Say, there cannot be general over­production or general unemployment on account of the excess of supply over demand because whatever is supplied or produced is automatically exchanged for money.

What is the break even point?

economics income-output determination public debt public debt main feature of tax

  1. Marginal revenue equals marginal cost

  2. Average revenue equals average cost

  3. Total revenue equals total cost

  4. None of the above

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Correct Option: C
Explanation:

Break-even point is that point where the producer is able to recover the total cost of production through sale of output and incurs no profit or loss. The total revenue here must equal the total cost for the firm to break-even at a given level of production of output.

Graphically, when demand curve moves upward, there is __________.

economics income-output determination public debt public debt main feature of tax

  1. more demand 

  2. more supply

  3. equilibrium

  4. none of these

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Correct Option: D
Explanation:

The demand curve is a graphical representation of the relationship between the price of a good or service and the quantity demanded for a given period of time.

When the demand curve moves upward this shows that the price of good increases and the demand for goods falls this will show the upward movement in the demand curve

Geometric method is also known as Point Method.

economics income-output determination public debt public debt main feature of tax

  1. True

  2. False

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Correct Option: A
Explanation:

Geometric method was suggested by Prof. Marshall and is used to measure the elasticity at a point on the demand curve. When there are infinitely small changes in price and demand, then the 'Geometric Method' is used. This method is also known as 'Graphic Method' or 'Point Method' or 'Arc Method'.

Due to government expenditure demand increases.

economics income-output determination public debt public debt main feature of tax

  1. True

  2. False

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Correct Option: A
Explanation:

True. Government expenditure increases demand. Its one of the components to determine demand. Aggregate demand takes into account all the expenditure incurred in the country during the year. Government spending can be in the form of welfare, pension etc which increases the purchasing power of the people thereby increasing demand. 

In economics, equilibrium is a situation in which __________.

economics income-output determination public debt public debt main feature of tax

  1. there is no inherent tendency to change

  2. quantity demanded equals quantity supplied

  3. the market clears and becomes stable

  4. all of the above

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Correct Option: D
Explanation:

Equilibrium state is a state at which the quantity supplied is equal to the quantity demanded. Hence, neither buyers nor sellers want to change their behaviour. They are exact same. Hence, in economics, equilibrium is a situation in which there is no inherent tendency to change. Also, the market clears and becomes stable.

In economics, equilibrium is a situation in which _________.

economics income-output determination public debt public debt main feature of tax

  1. the market becomes unstable

  2. there is no inherent tendency to change

  3. quantity demanded is more than quantity supplied

  4. when firm start to make profit

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Correct Option: B
Explanation:

Equilibrium state is a state at which the quantity supplied is equal to the quantity demanded. Hence, neither buyers nor sellers want to change their behaviour. They are exact same. Hence, in economics, equilibrium is a situation in which there is no inherent tendency to change.

The Foreign Exchange Reserves of India consist of __________.

economics income-output determination public debt public debt main feature of tax

  1. Foreign Currency Assets held by RBI

  2. Gold Holdings of RBI

  3. Special Drawing Rights (SDRs)

  4. All of the above

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Correct Option: D
Explanation:

Foreign exchange reserves of India Consists of Foreign currency assets held by RBI, gold holding of RBI, Special drawings Rights. Foreign exchange reserves of India are holdings of cash, bank deposits, bonds and other financial assets.