Tag: liquidity preference and profit

Questions Related to liquidity preference and profit

When due to introduction of new machinery, some workers tend to be replaced by machines, it is termed as ____________ unemployment.

economics employment: growth, informalisation and other issues unemployment and employment generation the short run fixed price analysis of the product market liquidity preference and profit

  1. structural

  2. technological

  3. mechanical

  4. seasonal.

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Correct Option: B
Explanation:

When due to introduction of new machinery (change in technology) some workers tend to be replaced by machines; their unemployment is termed as Technological unemployment.

Aggregate Supply and __________ are always equal.

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

  1. National Income

  2. Aggregate Demand

  3. Marginal Propensity to save are always equal.

  4. Average Propensity to Consume

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Correct Option: A
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. Therefore, aggregate supply= consumption + savings. 

The gap by which actual aggregate demand exceeds the aggregate supply required to establish full employment equilibrium is known as ______.

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

  1. Deficient Demand

  2. Deflationary gap

  3. Inflationary Gap

  4. Excess Demand

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Correct Option: C
Explanation:
Inflationary gap is the excess of aggregate demand over and above its level required to maintain full employment equilibrium in the economy. It implies two things-
1) Planned aggregate demand in the economy happens to exceed its full employment level.
2) The level of aggregate demand surpasses the level of aggregate supply even when the available factors are fully utilized.

Effective demand is determined at the point of equality between aggregate demand and aggregate supply. 

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:

The point at which aggregate demand (AD)  is equals aggregate supply (AS) is the point of effective demand  because at this level there is no tendency for income and output to change and the market is entirely clear.

If aggregate demand exceeds aggregate supply, the income rises. 

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 Aggregate demand  is more than Aggregate supply, then the planned inventory would fall below the desired level. 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. 

Which among the following determinants of aggregate supply are held to be constant in the short run?

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. Stock of capital

  3. State of technical knowledge

  4. All of the above

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Correct Option: D
Explanation:

Aggregate supply refers to the sales proceeds from the desired level of output in the economy during an accounting year. It is through this output only that the producer sector generates income in the economy at any given level of employment. The determinants of aggregate supply are natural resources, Human resources which refers to labor, stock of capital which refers to machinery and tools used in production and state of technical knowledge.

Which among the following determinants of aggregate supply is held to be variable in the short run?

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

  1. Human resources

  2. Stock of capital

  3. State of technology

  4. Natural resources

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Correct Option: A
Explanation:

Aggregate supply refers to the sales proceeds from the desired level of output in the economy during an accounting year. Human resources which refers to labor is held to be variable in short run as its application can be changed depending on the requirement of the output in the market. Human resources can be increased or decreased as per the requirement in the market. 

Aggregate supply refers to the total value of output of goods and services produced in an economy in a year.

economics income-output 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:

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. Therefore, aggregate supply= consumption + savings.

_____________ refers to the minimum amount of sales proceeds which entrepreneurs expect to receive from the sale of output at any given point level of employment.

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

  1. Aggregate revenue

  2. Aggregate supply

  3. Aggregate income

  4. None of the above

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Correct Option: B
Explanation:

Aggregate supply refers to the sales proceeds from the desired level of output in the economy during an accounting year. It is through this output only that the producer sector generates income in the economy at any given level of employment. Therefore, aggregate supply= consumption + savings.

Natural resources, also termed as land in economics, include all those natural gifts which are on the surface, below the surface and above the surface of the earth.

economics income-output 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:

Natural resources which a determinant of aggregate supply also known as land in economics refers to all the natural gifts which are present in the nature including air, water and land that can be used in the production process for the production of desired level of output in the economy.