Tag: liquidity preference and profit

Questions Related to liquidity preference and profit

The aggregate supply and employment in the economy depends upon the stock of __________, its quality and use.

economics income-output determination unemployment and employment generation the short run fixed price analysis of the product market liquidity preference and profit

  1. inventory

  2. capital

  3. either A or B

  4. neither A nor B

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Correct Option: B
Explanation:

Capital refers to the amount which is been invested by the owners of the firm which is used to employ people to work in the production process and also to acquire assets which is used in the production process, Therefore, he aggregate supply and employment depends on the quality and use of this stock of capital because if it is not used efficiently then it will not yield the desired level of output. 

The productive efficiency of labour and capital increases with the use of __________.

economics income-output determination unemployment and employment generation the short run fixed price analysis of the product market liquidity preference and profit

  1. natural resources

  2. technology

  3. both A and B

  4. neither A nor B

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Correct Option: B
Explanation:

The productive efficiency of labour and capital increases with the use of technology as it refers to the technical way of doing something in a more efficient and easy manner with discovery of some new techniques which increases the efficiency in production when mixed with other factors of production. 

_____ refers to that period in which supply of a commodity cannot be increased beyond its existing stock even if the demand has increased.

economics income-output determination unemployment and employment generation the short run fixed price analysis of the product market liquidity preference and profit

  1. Very short period

  2. Short period

  3. Long period

  4. Very long period

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Correct Option: A

Deficiency in demand has no effect on the country's output and prices.

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

  1. True

  2. False

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Correct Option: B
Explanation:

Deficiency in demand causes deflation. Deflation refers to the reduction of the general level of prices in an economy. Thus, deficient demand has effect on the country's output and prices.

Increase in margin requirements helps to control the situation of deficient demand.

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

  1. True

  2. False

Show answer
Correct Option: B
Explanation:

Margin requirements needs to be reduced to enhance the credit creating power of commercial banks and to correct the deficient demand.

If planned investment falls short of planned saving, then stock of goods tend to pile up.

economics income determination unemployment and employment generation the short run fixed price analysis of the product market liquidity preference and profit

  1. True

  2. False

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Correct Option: A
Explanation:

True. 

When Planned investment is less than the planned savings , then the planned inventory will accumulate as their will be less consumption due to high savings in the economy.

When aggregate demand is greater than aggregate supply, inventories: 

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

  1. Fall

  2. Rise

  3. Do not change

  4. First fag, then rise

Show answer
Correct Option: A
Explanation:

When Aggregate demand  is more than Aggregate supply, then the planned inventory would fall below the desired level as the demand is more than the supply in the market. To bring back the Inventory at the desired level, the producers expand the output More output means more income. Rise in output means rise in AS and rise in income means rise in AD. 

If net income from abroad is negative it means value of exports is less than value of imports.

economics income determination unemployment and employment generation the short run fixed price analysis of the product market liquidity preference and profit

  1. True

  2. False

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Correct Option: A

Aggregate demand in an economy is measured in terms of the total expenditure on goods and services.

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

  1. True

  2. False

Show answer
Correct Option: A
Explanation:

True.

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.

_______________ is the minimum amount of money, which all the entrepreneurs in the economy must receive from the sale of output produced by them, at any given level of employment.

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

  1. Aggregate supply price

  2. Aggregate profit

  3. Aggregate demand price

  4. Aggregate income

Show answer
Correct Option: A
Explanation:

Aggregate supply price refers to the minimum value of money which all the entrepreneurs  in the economy must expect from the sale of output produced by them using the factors of production, at any given level of employment. This is the rate of return from the  business according to which the firms make their long term and short term plans.