Worksheets › Class 12 › Determination of Income and Employment
Class 12 Determination of Income and Employment worksheet
CBSE Social Science. Consumption function, MPC and MPS, aggregate demand, equilibrium income, the multiplier, unplanned inventories and the paradox of thrift. Every sheet has 20 questions in three sections and an answer key, and the numbers change every time.
Sample questions
Real questions from this chapter, as the app sets them. Tap Answer to see the answer and working.
Section A · multiple choice
- 1.
The change in consumption per unit change in income is the:
- multiplier
- marginal propensity to save
- average propensity to consume
- marginal propensity to consume
Answer
(d) marginal propensity to consume
- 2.
What is meant by “marginal propensity to consume”?
- change in consumption per unit change in income
- equilibrium output below full employment
- trying to save more leaves total saving unchanged
- income at which all factors are employed
Answer
(a) change in consumption per unit change in income
- 3.
If the marginal propensity to consume is 0.5, what is the investment multiplier?
- 0.5
- 5
- 3
- 2
Answer
(d) 2
1 ÷ (1 − 0.5)
Section B · short answer
- 4.
What is the marginal propensity to consume? What values can it take?
Answer
ΔC/ΔY, the share of extra income spent; usually between 0 and 1.
- 5.
Explain each term: (a) full employment income (b) paradox of thrift
Answer
(a) income at which all factors are employed (b) trying to save more leaves total saving unchanged
Section C · long answer
- 6.
Explain how equilibrium output is determined with the consumption function and investment.
Answer
AD = C̄ + cY + Ī; output adjusts until Y = AD, giving Y = (C̄ + Ī)/(1 − c).
Fresh sheets for your child
In the app, every Determination of Income and Employment sheet is new: the app remembers the questions your child has already had and leaves them out. Print the sheet as a PDF, or use notebook mode and write the answers in a notebook.
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