Income and Employment Test

Question 1
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Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:
Assertion (A): Aggregate Demand is expressed in terms of total expenditure made in the economy.
Reason (R): Aggregate Demand constitutes of Consumption Expenditure, Investment Expenditure, Government Expenditure and Net Exports.

A
A. Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

B
B. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

C
C. Assertion (A) is true, but Reason (R) is false.

D
D. Assertion (A) is false, but Reason (R) is true.

Question 2
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Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:
Assertion (A): Private Consumption Expenditure is determined by the level of personal disposable income of the economy.
Reason (R): The total demand for all goods or services by the household in an economy during an accounting year, is termed as Private Consumption Expenditure.

A
A. Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

B
B. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

C
C. Assertion (A) is true, but Reason (R) is false.

D
D. Assertion (A) is false, but Reason (R) is true.

Question 3
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Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:
Assertion (A): Full employment is the situation where all those workers who are able to work and willing to work get employment at the prevailing wage rate.
Reason (R): The situation of full employment is achieved only when the economy is in equilibrium.

A
A. Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

B
B. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

C
C. Assertion (A) is true, but Reason (R) is false.

D
D. Assertion (A) is false, but Reason (R) is true.

Question 4
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Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:
Assertion (A): If AD>AS, the firm will employ more factors of production.
Reason (R): When AD is more, in order to get back to the equilibrium level the economy bringing AD equal to AS.

A
A. Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

B
B. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

C
C. Assertion (A) is true, but Reason (R) is false.

D
D. Assertion (A) is false, but Reason (R) is true.

Question 5
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Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:
Assertion (A): There is an inverse relationship between the value of marginal propensity to save and investment multiplier.
Reason (R): Saving is a leakage in the circular flow of income. Greater the saving, greater the leakage and lower the value of investment multiplier.

A
A. Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

B
B. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

C
C. Assertion (A) is true, but Reason (R) is false.

D
D. Assertion (A) is false, but Reason (R) is true.

Question 6
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Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:
Assertion (A): The minimum value of investment multiplier is equal to one.
Reason (R): The minimum value of investment multiplier is 1, when MPC is 0 and MPC can never be negative.

A
A. Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

B
B. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

C
C. Assertion (A) is true, but Reason (R) is false.

D
D. Assertion (A) is false, but Reason (R) is true.

Question 7
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Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:
Assertion (A): Aggregate demand refers to planned purchase of goods and services during a year.
Reason (R): AD is the sum total of expenditure that the people plan or desire to incur on the purchase of goods and services produced in an economy during an accounting year.

A
A. Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

B
B. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

C
C. Assertion (A) is true, but Reason (R) is false.

D
D. Assertion (A) is false, but Reason (R) is true.

Question 8
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Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:
Assertion (A): When income is zero, consumption is also zero.
Reason (R): There is always some minimum level of consumption in the economy even when income is zero.

A
A. Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

B
B. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

C
C. Assertion (A) is true, but Reason (R) is false.

D
D. Assertion (A) is false, but Reason (R) is true.

Question 9
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Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:
Assertion (A): If S>I, then equilibrium income will have a tendency to reduce.
Reason (R): As according to Keynes, the income employment equilibrium is determined at the point where investments and savings are equal.

A
A. Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

B
B. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

C
C. Assertion (A) is true, but Reason (R) is false.

D
D. Assertion (A) is false, but Reason (R) is true.

Question 10
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Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:
Assertion (A): AS increases proportionate to the increase in AD so long as there is excess capacity in the economy.
Reason (R): Excess capacity arises because of excess supply.

A
A. Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

B
B. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

C
C. Assertion (A) is true, but Reason (R) is false.

D
D. Assertion (A) is false, but Reason (R) is true.

Question 11
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Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:
Assertion (A): Saving and investment are always equal.
Reason (R): Planned S and Planned I are equal only at equilibrium level.

A
A. Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

B
B. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

C
C. Assertion (A) is true, but Reason (R) is false.

D
D. Assertion (A) is false, but Reason (R) is true.

Question 12
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Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:
Assertion (A): The maximum value of investment multiplier is equal to infinity.
Reason (R): The maximum value of investment multiplier is ∞, when MPC is 1, i.e., whole additional income is converted into additional consumption.

A
A. Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

B
B. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

C
C. Assertion (A) is true, but Reason (R) is false.

D
D. Assertion (A) is false, but Reason (R) is true.

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Income and Empl...

Question 1

A. Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

B. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

C. Assertion (A) is true, but Reason (R) is false.

D. Assertion (A) is false, but Reason (R) is true.

Question 2

A. Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

B. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

C. Assertion (A) is true, but Reason (R) is false.

D. Assertion (A) is false, but Reason (R) is true.

Question 3

A. Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

B. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

C. Assertion (A) is true, but Reason (R) is false.

D. Assertion (A) is false, but Reason (R) is true.

Question 4

A. Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

B. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

C. Assertion (A) is true, but Reason (R) is false.

D. Assertion (A) is false, but Reason (R) is true.

Question 5

A. Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

B. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

C. Assertion (A) is true, but Reason (R) is false.

D. Assertion (A) is false, but Reason (R) is true.

Question 6

A. Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

B. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

C. Assertion (A) is true, but Reason (R) is false.

D. Assertion (A) is false, but Reason (R) is true.

Question 7

A. Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

B. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

C. Assertion (A) is true, but Reason (R) is false.

D. Assertion (A) is false, but Reason (R) is true.

Question 8

A. Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

B. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

C. Assertion (A) is true, but Reason (R) is false.

D. Assertion (A) is false, but Reason (R) is true.

Question 9

A. Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

B. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

C. Assertion (A) is true, but Reason (R) is false.

D. Assertion (A) is false, but Reason (R) is true.

Question 10

A. Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

B. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

C. Assertion (A) is true, but Reason (R) is false.

D. Assertion (A) is false, but Reason (R) is true.

Question 11

A. Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

B. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

C. Assertion (A) is true, but Reason (R) is false.

D. Assertion (A) is false, but Reason (R) is true.

Question 12

A. Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

B. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

C. Assertion (A) is true, but Reason (R) is false.

D. Assertion (A) is false, but Reason (R) is true.

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