Please refer to Chapter 10 Determination of Income and Employment MCQ Class 12 Economics with answers below. These multiple-choice questions have been prepared based on the latest NCERT book for Class 12 Economics. Students should refer to MCQ Questions for Class 12 Economics with Answers to score more marks in Grade 12 Economics exams. Students should read the chapter Determination of Income and Employment and then attempt the following objective questions.

MCQ Questions Class 12 Economics Chapter 10 Determination of Income and Employment

Determination of Income and Employment MCQ Class 12 Economics provided below covers all important topics given in this chapter. These MCQs will help you to properly prepare for exams.

Question. What will be MPC when MPS = 0?   
(a) One
(b) Zero
(c) Two
(d) Infinite

Question. Wage cut maintains full employment in the economy.” Who put forward this view?           
(a) Pigou
(b) Keynes
(c) Marshall
(d) None of the above

Question. Which one is the corrective measure for Deficient Demand ?   
(a) Fiscal Measures
(b) Monetary Measures
(c) Both (a) & (b)
(d) None of the above

Question. Deflationary Gap shows the measurement of:     
(a) Deficit Demand
(b) Surplus Demand
(c) Full Employment
(d) None of these

Question. If MPC is equal to 1, the value of the multiplier is   
(a) 0
(b) 1
(c) Between 0 and 1
(d) Infinity

Question. If the marginal propensity to consume is greater than the marginal propensity to save, the value of the multiplier will be:           
(a) greater than 2
(b) less than 2
(c) two equal to 2
(d) equal to 5

Question. APC + APS = ?           
(a) ?
(b) 2
(c) 1
(d) 0

Question. The ‘difference between the Aggregate Demand at above full employment and Aggregate Demand at full employment is known as :   
(a) Inflationary Gap
(b) Deflationary Gap
(c) Both (a) and (b)
(d) None of the above

Question. Aggregate demand can be increased by:   
(a) increasing bank rate
(b) selling govt, securities by RBI
(c) increasing cash reserve ratio
(d) none of these

Question. On account of injections and withdrawals, equilibrium level of income undergoes :           
(a) A shift
(b) No shift
(c) A dispersal
(d) No change

Question. The main component of aggregate demand is :           
(a) Individual consumption
(b) Public consumption
(c) Investment
(d) All the above

Question. If MPC = 0.5 and initial investment is 100 Rs crores, the income generation in the economy will be : 
(a) 5 crores Rs
(b) 100 crores Rs
(c) 200 crores Rs
(d) 500 crores Rs

Question. According to Keynes, investment implies:               
(a) Financial Investment
(b) Real Investment
(c) Both (a) and (b)
(d) None of the above

Question. Which one of the following is the determining factor of Equilibrium Income is Keynesian View point ?   
(a) Aggregate Demand
(b) Aggregate Supply
(c) Both (a) and (b)
(d) None of the above

Question. Which is the determining factor for investment ?   
(a) Marginal Efficiency of Capital
(b) Interest Rate
(c) Both (a) and (b)
(d) None of these

Question. The relation between consumption and savings are:             
(a) Inverse
(b) Direct
(c) Inverse and direct both
(d) Neither inverse nor direct.

Question. With increase in investment, MEC :           
(a) Rises
(b) Falls
(c) Remains Constant
(d) None of these

Question. Which is the measure of correcting excess demand?   
(a) Deficit financing
(b) Reduction in taxes
(c) Increase in public expenditure
(d) Increase in public debt

Question. If MPS is 0.6,what will be ∆S when income increases by Rs.100 ?               
(a) Rs. 60
(b) Rs. 50
(c) Rs. 40
(d) Rs.70

Question. Classical theory is based on the assumption of:           
(a) Say’s law of market
(b) Flexibility in wage rates
(c) Flexibility in interest rate
(d) All of the above.

Question. On which concept does classical viewpoint depend ?         
(a) Say’s law of Market
(b) perfect Flexibility of Wage Rate
(c) Perfect Flexibility of Interest Rate
(d) All of these

Question. Which monetary measure is to be adopted in correcting Inflationary     
(a) Increase in Bank Rate
(b) Selling of Securities in Open Market
(c) Increase in Cash Reserve Ratio
(d) All the above

Question. Supply creates its own Demand. Who gave this law ? 
(a) J.B.Say
(b) J.S.Mill
(c) Keynes
(d) Ricardo

Question. Which one of the following is the determining factor of Equilibrium Income is Keynesian View point ?       
(a) Aggregate Demand
(b) Aggregate Supply
(c) Both (a) and (b)
(d) None of the above

Question. Keynes derived Investment Multiplier from Kahn’s :   
(a) Income Multiplier
(b) Consumption Multiplier
(c) Employment Multiplier
(d) None of the above

Question. Who is the author of the book ‘General Theory of Employment, Interest, and Money’?         
(a) A.C. Pigou
(b) Malthus
(c) J.M. Keynes
(d) Marshall

Question. Which method Central Bank adopts for controlling quantitative of credit ?   
(a) Bank Rate
(b) Open Market Operations
(c) Change in Cash Reserve Ratio
(d) All the above

Question. Multiplier is —————— related to the MPS.         
(a) Negatively
(b) directly
(c) not
(d) rarely

Question. Which among is the direct tax?           
(a) Income tax
(b) Gift and Corporation tax
(c) Wealth tax
(d) All of these

Question. Who is the writer of the book, “Traited Economic Politique” ?   
(a) Pigour
(b) J.B. Say
(c) Keynes
(d) Ricardo

Question. According to classical economists, real wage rate is ______ to the Marginal Productivity of Labour.   
(a) Equal
(b) More
(c) Less
(d) None of these

Question. Which is the measure of correcting excess demand?           
(a) Deficit financing
(b) Reduction in taxes
(c) Increase in public expenditure
(d) Increase in public debt

Question. When MPS value is 0.25 , the value of investment multiplier will be?           
(a) 1.33
(b) 2
(c) 5
(d) 4

Question. If MPC = 0.5 and initial investment is 100 Rs crores, the income generation in the economy will be :         
(a) 5 crores Rs
(b) 100 crores Rs
(c) 200 crores Rs
(d) 500 crores Rs

Question. Which one is correct ?   
(a) Y = C + I
(b) Y = 0 = N
(c) C + S = C + I
(d) All of these

Question. _________ refers to a situation where aggregate demand is equals to aggregate supply and resources are not fully employed in an economy.
(a) Full employment equilibrium
(b) Over full employment equilibrium
(c) Under full employment equilibrium
(d) None of the above

Question. If MPC = 1, the value of the multiplier is:
(a) 0
(b) 1
(c) Between 0 and 1
(d) Infinity

Question. Supply creates its own Demand. Who gave this law?
(a) J.B.Say
(b) J.S.Mill
(c) Keynes
(d) Ricardo

Question. Which is the determining factor for investment?
(a) Marginal Efficiency of Capital
(b) Interest Rate
(c) Both (a) and (b)
(d) None of these

Question. ______ is called planned investment.
(a) Ex-ante investment
(b) Ex-post investment
(c) Both (a) and (b)
(d) None of the above

Question. If ratio between MPC and MPS is 4:1, then value of multiplier is:
(a) 3
(b) 4
(c) 5
(d) 6

Question. With the increase in investment, MEC:
(a) Rises
(b) Falls
(c) Remains Constant
(d) None of these

Question. Which is the determining factor for investment?
(a) Marginal Efficiency of Capital
(b) Interest Rate
(c) Both (a) and (b)
(d) None of these

Question. If C = 20 + 0.80 Y and Investment Expenditure is ₹50 crores, then Equilibrium Income is:
(a) ₹350 crores 
(b) ₹400 crores
(c) ₹200 crores
(d) ₹100 crores

Question. If MPS = 0.30, Autonomous Consumption = ₹50 crores and Investment = ₹100 crores, then Equilibrium Income will be:
(a) ₹300 crores 
(b) ₹150 crores
(c) ₹500 crores
(d) ₹45 crores

Question. “Supply creates it own demand”. This statement was given by the economist:   
(a) Keynes
(b) Pigou
(c) J. B.Say
(d) Adam Smith.

Question. According to classical economists, there always exists __ equilibrium in the economy.       
(a) Full employment
(b) Underemployment
(c) Over full employment
(d) None of these

Question. Average Propensity to Consume can never be __           
(a) positive
(b) zero
(c) more than one
(d) less than one

Question. If income equilibrium level in the economy is determined at the level before full employment, it is known as the state of:             
(a) Deficit Demand  
(b) Surplus Demand
(c) Partial Demand
(d) None of these

Question. Increase in aggregate demand of equilibrium level of income and employment causes increase in :           
(a) Employment
(b) Production
(c) Income
(d) All of these

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