{"id":17036,"date":"2021-01-12T15:26:03","date_gmt":"2021-01-12T09:56:03","guid":{"rendered":"https:\/\/mcq-questions.com\/?p=17036"},"modified":"2022-03-02T11:16:08","modified_gmt":"2022-03-02T05:46:08","slug":"ncert-solutions-for-class-12-economics-chapter-4","status":"publish","type":"post","link":"https:\/\/mcq-questions.com\/ncert-solutions-for-class-12-economics-chapter-4\/","title":{"rendered":"NCERT Solutions for Class 12 Economics Chapter 4 Determination of Income and Employment"},"content":{"rendered":"

Detailed, Step-by-Step NCERT Solutions for Class 12 Economics<\/a> Chapter 4\u00a0Determination of Income and Employment were solved by Expert Teachers as per NCERT (CBSE) Book guidelines covering each topic in chapter to ensure complete preparation.<\/p>\n

Determination of Income and Employment NCERT Solutions for Class 12 Economics Chapter 4<\/h2>\n

Determination of Income and Employment Questions and Answers <\/span>Class 12 Economics Chapter 4<\/h3>\n

Question 1.
\nWhat is marginal propensity to consume? How is it related to marginal propensity to save? (C.B.S.E. 2011 Comp.)
\nAnswer:
\nMarginal Propensity to Consume (MPC) is the ratio of change in consumption due to the change in ‘ income. It is the rate of in umption due to a unit increment in income.
\n\\(M P C=\\frac{\\Delta C}{\\Delta Y}\\)<\/p>\n

Marginal Propensity to Save (MPS) is the ratio of change in saving due to the change in income. It is the rate of increase in ex-ante saving due to a unit increment in income.
\n\\( \\mathrm{MPS}=\\frac{\\Delta \\mathrm{S}}{\\Delta Y}\\)<\/p>\n

\"NCERT<\/p>\n

Question 2.
\nWhat is the difference between ex-ante investment and ex-post investment?
\nAnswer:
\nFollowing are the points of difference between ex-ante investment and ex-post investment:<\/p>\n\n\n\n\n\n
S. No.<\/strong><\/td>\nEx-ante Investment<\/strong><\/td>\nEx-post Investment<\/strong><\/td>\n<\/tr>\n
1.<\/td>\nEx-ante investment refers to the investment which is planned to be made by the firms during a period of one year.<\/td>\nEx-post investment refers to the investment which is actually realised by the firms during aperiod of one year.<\/td>\n<\/tr>\n
2.<\/td>\nEx-ante investment is also known as planned
\ninvestment.<\/td>\n		Ex-post investment is also known as realised or actual investment.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Question 3.
\nWhat do you understand by \u2018parametric shift of a line\u2019? How does a line shift when its
\n(i) slope decreases and (ii) its intercept increase?
\nAnswer:
\nParametric shift means a shift in the straight line curve due to a change in the value of a parameter. As the value of the parameter changes, the straight line curve rotates upward or downward along the same vertical intercept .
\n(i) When the slope of a line decreases, the line rotates downwards along the same-vertical intercept. It can be shown with the help of a diagram.
\n\"NCERT
\nIn the diagram, the original line is represented by an equation: b = a + 2. The slope is I. As the slope decreases from I to 0.5, the line shifts downwards to b = 0.5a + 2.<\/p>\n

\"NCERT<\/p>\n

(ii) When the intercept of a line increases, there is a parallel shift in the line. It can be shown with the help of a diagram
\n\"NCERT
\nIn the diagram, the original line is represented by an equation: b = 0.5a + 2. The intercept is 2. As the intercept increases from 2 to 3, the line shifts upwards to b = 0.5a + 3.<\/p>\n

Question 4.
\nWhat is \u2018effective demand\u2019? How will you drive the autonomous expenditure multiplier when price of final goods and the ratio of interest are given?
\nAnswer:
\nEffective demand refers to the Aggregate Demand, which is equal to the Aggregate Supply under the conditions of fixed price of final goods and constant rate of interest in the economy. The supply of final goods is assumed to be infinitely elastic at constant price over short period of time.<\/p>\n

Autonomous expenditure multiplier is the ratio of change in aggregate output or income to a change in autonomous spending. That is, \\(\\text { Autonomous Expenditure Multiplier }=\\frac{\\text { Change in Aggregate Output }}{\\text { Change in Autonomous Spending }}\\) An increase or decrease in autonomous spending causes more than proportionate increase in the aggregate output of final goods through the multiplier process.<\/p>\n

Question 5.
\nMeasure the level of ex-ante Aggregate Demand when autonomous investment and consumption expenditure (A) is \u20b9 50 crore, and MPS is 0.2 and level of income (Y) is \u20b9 4000 crores. State whether the economy is in equilibrium or not (cite reasons).
\nAnswer:
\nLevel of income (Y) = \u20b9 4,000 crores
\nAutonomous expenditure \\(\\overline{\\mathrm{A}}\\) = \u20b9 50 crores
\nMarginal Propensity to Save (MPS) = 0.2
\nHence, Marginal Propensity to Consume (MPC = c) = 1 – MPS = 1 – 0.2 = 0.8
\nEx-ante Aggregate Demand = \\(\\overline{\\mathrm{A}}\\) + cY
\nSubstituting the appropriate values; we get
\nEx-ante Aggregate Demand
\n= 50 + (0.8 x 4000)
\n= 50 + 3200
\n= 3250
\nThus, the level of ex-ante Aggregate Demand is \u20b9 3,250 crores.
\nSince the ex-ante Aggregate Demand is less than the level of income (output), there is an excess supply in the economy. Thus, \u20b9 4,000 crores is not the equilibrium level of income in the economy.<\/p>\n

\"NCERT<\/p>\n

Question 6.
\nExplain \u2018Paradox of Thrift.\u2019
\nAnswer:
\nThe attempt by an economy as a whole to save more, not only results in a decrease in amount they actually succeed to save, but may reduce the equilibrium level of income and output. The unexpected result is called Paradox of thrift When individuals try to save more, they end up consuming less. The decline in consumption will-lead to a fall in Aggregate Demand, which causes producers to cut back production and lay people off. Eventually, income falls, and both consumption and savings decline.
\n\"NCERT<\/p>\n

In other words, the increase in the Marginal Propensity to Save means a decrease in the Marginal Propensity to Consume, and therefore, a fall in the value of the multiplier. Given autonomous spending, the new macroeconomic equilibrium associated with the new value of the multiplier will be lower, meaning lower output, income, and employment. The phenomena can be explained with the help of a diagram.<\/p>\n

\"NCERT<\/p>\n

In the diagram, the initial level of equilibrium is E, and the level of output corresponding to equilibrium is OY*. A decline is Marginal Propensity to Consume (MPC) reduces the slope of the Aggregate Demand (AD) curve. As a result the AD curve shifts downwards from AD to AD, The equilibrium level shifts from E to E, which reduces the income from OY* to OY*.<\/p>\n","protected":false},"excerpt":{"rendered":"

Detailed, Step-by-Step NCERT Solutions for Class 12 Economics Chapter 4\u00a0Determination of Income and Employment were solved by Expert Teachers as per NCERT (CBSE) Book guidelines covering each topic in chapter to ensure complete preparation. Determination of Income and Employment NCERT Solutions for Class 12 Economics Chapter 4 Determination of Income and Employment Questions and Answers …<\/p>\n

NCERT Solutions for Class 12 Economics Chapter 4 Determination of Income and Employment<\/span> Read More »<\/a><\/p>\n","protected":false},"author":9,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"default","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"default","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","spay_email":""},"categories":[3],"tags":[],"yoast_head":"\nNCERT Solutions for Class 12 Economics Chapter 4 Determination of Income and Employment - MCQ Questions<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/mcq-questions.com\/ncert-solutions-for-class-12-economics-chapter-4\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"NCERT Solutions for Class 12 Economics Chapter 4 Determination of Income and Employment - MCQ Questions\" \/>\n<meta property=\"og:description\" content=\"Detailed, Step-by-Step NCERT Solutions for Class 12 Economics Chapter 4\u00a0Determination of Income and Employment were solved by Expert Teachers as per NCERT (CBSE) Book guidelines covering each topic in chapter to ensure complete preparation. Determination of Income and Employment NCERT Solutions for Class 12 Economics Chapter 4 Determination of Income and Employment Questions and Answers … NCERT Solutions for Class 12 Economics Chapter 4 Determination of Income and Employment Read More »\" \/>\n<meta property=\"og:url\" content=\"https:\/\/mcq-questions.com\/ncert-solutions-for-class-12-economics-chapter-4\/\" \/>\n<meta property=\"og:site_name\" content=\"MCQ Questions\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/NCERTSolutionsGuru\/\" \/>\n<meta property=\"article:published_time\" content=\"2021-01-12T09:56:03+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-03-02T05:46:08+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/mcq-questions.com\/wp-content\/uploads\/2021\/01\/NCERT-Solutions-Guru.png\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@ncertsolguru\" \/>\n<meta name=\"twitter:site\" content=\"@ncertsolguru\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Prasanna\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebSite\",\"@id\":\"https:\/\/mcq-questions.com\/#website\",\"url\":\"https:\/\/mcq-questions.com\/\",\"name\":\"MCQ Questions\",\"description\":\"MCQ Questions for Class 1 to 12\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/mcq-questions.com\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"ImageObject\",\"@id\":\"https:\/\/mcq-questions.com\/ncert-solutions-for-class-12-economics-chapter-4\/#primaryimage\",\"inLanguage\":\"en-US\",\"url\":\"https:\/\/i0.wp.com\/mcq-questions.com\/wp-content\/uploads\/2021\/01\/NCERT-Solutions-Guru.png?fit=170%2C17&ssl=1\",\"contentUrl\":\"https:\/\/i0.wp.com\/mcq-questions.com\/wp-content\/uploads\/2021\/01\/NCERT-Solutions-Guru.png?fit=170%2C17&ssl=1\",\"width\":170,\"height\":17,\"caption\":\"NCERT Solutions\"},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/mcq-questions.com\/ncert-solutions-for-class-12-economics-chapter-4\/#webpage\",\"url\":\"https:\/\/mcq-questions.com\/ncert-solutions-for-class-12-economics-chapter-4\/\",\"name\":\"NCERT Solutions for Class 12 Economics Chapter 4 Determination of Income and Employment - MCQ Questions\",\"isPartOf\":{\"@id\":\"https:\/\/mcq-questions.com\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/mcq-questions.com\/ncert-solutions-for-class-12-economics-chapter-4\/#primaryimage\"},\"datePublished\":\"2021-01-12T09:56:03+00:00\",\"dateModified\":\"2022-03-02T05:46:08+00:00\",\"author\":{\"@id\":\"https:\/\/mcq-questions.com\/#\/schema\/person\/4ba9570f32f2057e70e670c7885e47f3\"},\"breadcrumb\":{\"@id\":\"https:\/\/mcq-questions.com\/ncert-solutions-for-class-12-economics-chapter-4\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/mcq-questions.com\/ncert-solutions-for-class-12-economics-chapter-4\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/mcq-questions.com\/ncert-solutions-for-class-12-economics-chapter-4\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/mcq-questions.com\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"NCERT Solutions for Class 12 Economics Chapter 4 Determination of Income and Employment\"}]},{\"@type\":\"Person\",\"@id\":\"https:\/\/mcq-questions.com\/#\/schema\/person\/4ba9570f32f2057e70e670c7885e47f3\",\"name\":\"Prasanna\",\"image\":{\"@type\":\"ImageObject\",\"@id\":\"https:\/\/mcq-questions.com\/#personlogo\",\"inLanguage\":\"en-US\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/174540ad43736c7d1a4c4f83c775e74d?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/174540ad43736c7d1a4c4f83c775e74d?s=96&d=mm&r=g\",\"caption\":\"Prasanna\"},\"url\":\"https:\/\/mcq-questions.com\/author\/prasanna\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"NCERT Solutions for Class 12 Economics Chapter 4 Determination of Income and Employment - MCQ Questions","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/mcq-questions.com\/ncert-solutions-for-class-12-economics-chapter-4\/","og_locale":"en_US","og_type":"article","og_title":"NCERT Solutions for Class 12 Economics Chapter 4 Determination of Income and Employment - MCQ Questions","og_description":"Detailed, Step-by-Step NCERT Solutions for Class 12 Economics Chapter 4\u00a0Determination of Income and Employment were solved by Expert Teachers as per NCERT (CBSE) Book guidelines covering each topic in chapter to ensure complete preparation. Determination of Income and Employment NCERT Solutions for Class 12 Economics Chapter 4 Determination of Income and Employment Questions and Answers … NCERT Solutions for Class 12 Economics Chapter 4 Determination of Income and Employment Read More »","og_url":"https:\/\/mcq-questions.com\/ncert-solutions-for-class-12-economics-chapter-4\/","og_site_name":"MCQ Questions","article_publisher":"https:\/\/www.facebook.com\/NCERTSolutionsGuru\/","article_published_time":"2021-01-12T09:56:03+00:00","article_modified_time":"2022-03-02T05:46:08+00:00","og_image":[{"url":"https:\/\/mcq-questions.com\/wp-content\/uploads\/2021\/01\/NCERT-Solutions-Guru.png"}],"twitter_card":"summary_large_image","twitter_creator":"@ncertsolguru","twitter_site":"@ncertsolguru","twitter_misc":{"Written by":"Prasanna","Est. reading time":"5 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebSite","@id":"https:\/\/mcq-questions.com\/#website","url":"https:\/\/mcq-questions.com\/","name":"MCQ Questions","description":"MCQ Questions for Class 1 to 12","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/mcq-questions.com\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"ImageObject","@id":"https:\/\/mcq-questions.com\/ncert-solutions-for-class-12-economics-chapter-4\/#primaryimage","inLanguage":"en-US","url":"https:\/\/i0.wp.com\/mcq-questions.com\/wp-content\/uploads\/2021\/01\/NCERT-Solutions-Guru.png?fit=170%2C17&ssl=1","contentUrl":"https:\/\/i0.wp.com\/mcq-questions.com\/wp-content\/uploads\/2021\/01\/NCERT-Solutions-Guru.png?fit=170%2C17&ssl=1","width":170,"height":17,"caption":"NCERT Solutions"},{"@type":"WebPage","@id":"https:\/\/mcq-questions.com\/ncert-solutions-for-class-12-economics-chapter-4\/#webpage","url":"https:\/\/mcq-questions.com\/ncert-solutions-for-class-12-economics-chapter-4\/","name":"NCERT Solutions for Class 12 Economics Chapter 4 Determination of Income and Employment - MCQ Questions","isPartOf":{"@id":"https:\/\/mcq-questions.com\/#website"},"primaryImageOfPage":{"@id":"https:\/\/mcq-questions.com\/ncert-solutions-for-class-12-economics-chapter-4\/#primaryimage"},"datePublished":"2021-01-12T09:56:03+00:00","dateModified":"2022-03-02T05:46:08+00:00","author":{"@id":"https:\/\/mcq-questions.com\/#\/schema\/person\/4ba9570f32f2057e70e670c7885e47f3"},"breadcrumb":{"@id":"https:\/\/mcq-questions.com\/ncert-solutions-for-class-12-economics-chapter-4\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/mcq-questions.com\/ncert-solutions-for-class-12-economics-chapter-4\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/mcq-questions.com\/ncert-solutions-for-class-12-economics-chapter-4\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/mcq-questions.com\/"},{"@type":"ListItem","position":2,"name":"NCERT Solutions for Class 12 Economics Chapter 4 Determination of Income and Employment"}]},{"@type":"Person","@id":"https:\/\/mcq-questions.com\/#\/schema\/person\/4ba9570f32f2057e70e670c7885e47f3","name":"Prasanna","image":{"@type":"ImageObject","@id":"https:\/\/mcq-questions.com\/#personlogo","inLanguage":"en-US","url":"https:\/\/secure.gravatar.com\/avatar\/174540ad43736c7d1a4c4f83c775e74d?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/174540ad43736c7d1a4c4f83c775e74d?s=96&d=mm&r=g","caption":"Prasanna"},"url":"https:\/\/mcq-questions.com\/author\/prasanna\/"}]}},"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/mcq-questions.com\/wp-json\/wp\/v2\/posts\/17036"}],"collection":[{"href":"https:\/\/mcq-questions.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mcq-questions.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mcq-questions.com\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/mcq-questions.com\/wp-json\/wp\/v2\/comments?post=17036"}],"version-history":[{"count":1,"href":"https:\/\/mcq-questions.com\/wp-json\/wp\/v2\/posts\/17036\/revisions"}],"predecessor-version":[{"id":35040,"href":"https:\/\/mcq-questions.com\/wp-json\/wp\/v2\/posts\/17036\/revisions\/35040"}],"wp:attachment":[{"href":"https:\/\/mcq-questions.com\/wp-json\/wp\/v2\/media?parent=17036"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mcq-questions.com\/wp-json\/wp\/v2\/categories?post=17036"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mcq-questions.com\/wp-json\/wp\/v2\/tags?post=17036"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}