Tag: public debt

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

The factors causing deficient demand are:

  1. Fall in consumption expenditure

  2. Decrease in private investment

  3. Decrease in government expenditure

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Aggregate demand is the total consumption of goods and services as it is not practically possible to count all the goods and services consumed and hence, the total expenditure undertaken by each household for consumption, private investment, expenditure by government on consumption and investments and net exports. Hence, deficient demand can be because of fall in household consumption, decrease in private investment, decrease in government expenditure. 

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

The relationship between rate of interest and investment demand is ___________.

  1. direct

  2. inverse

  3. constant

  4. none of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Marginal efficiency of investment (MEI) refers to the expected rate of return from the allocation of a proportion of income or capital invested in the business. There is a inverse relation between the rate of interest and investment. If the rate of interest is high then people will take less loan from the bank and they will have less money to invest in whereas if rate of interest is low then people will take more loan from the bank to invest in the business. 

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

Induced consumption expenditure is ___________ in nature.

  1. income inelastic

  2. income elastic

  3. either A or B

  4. neither A nor B
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Induced consumption refers to that consumption which occurs on the basis of change in income. It changes when there is some same change in the level of income in the economy. Therefore, it is income elastic as it depends on the level of income in the economy. 

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

Determinants of aggregate demand is symbolically expressed as _______________.

  1. $AD = C+I$

  2. $AD = C+I+G+(X-M)$

  3. $AD = C+I+(X-M)$

  4. None of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Aggregate Demand refers to the desired level of expenditure in the economy during an accounting year. It is what people wish to spend on the purchase of goods and services during an accounting year.

The determinants of aggregate demand is expressed as: 

Aggregate demand= C+I+G+ (X-M) where

C= Consumption expenditure

I= Investment expenditure

G= Government expenditure

(X-M)= Net export.

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

____________ consumption expenditure refers to the expenditure, which is independent of income.

  1. Autonomous

  2. Induced

  3. Aggregate

  4. None of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Autonomous consumption refers to that consumption which occurs when there is no income in the economy. It is the minimum level of consumption that takes place in the economy. It is the consumption expenditure which is not affected by the income in the economy. 

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

The expected rate of return from an additional unit of capital invested is termed as _____________.

  1. Marginal efficiency of capital (MEC)

  2. Marginal efficiency of investment (MEI)

  3. Both A & B

  4. Neither A nor B
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Marginal efficiency of capital (MEC) or Marginal efficiency of investment (MEI) refers to the expected rate of return from the allocation of a proportion of income or capital invested in the business. It is the rate of return which is expected as per the economic behavior of the business since past few years. 

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

___________ 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.

  1. Aggregate demand

  2. Market demand

  3. Aggregate supply

  4. Aggregate income
Reveal answer Fill a bubble to check yourself
A Correct answer
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. 

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

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

  1. Consumption expenditure

  2. Investment expenditure

  3. Induced expenditure

  4. None of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
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. 

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

Who propounded the 'market law'?

  1. Adam Smith

  2. J B Say

  3. T R Malthus

  4. David Recardo
Reveal answer Fill a bubble to check yourself
B Correct answer
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.

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

What is the break even point?

  1. Marginal revenue equals marginal cost

  2. Average revenue equals average cost

  3. Total revenue equals total cost

  4. None of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
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.