To control a situation of excess demand (inflationary pressure) in the economy, which of the following monetary measures would the central bank most appropriately adopt?

Decrease the cash reserve ratio (CRR)

Purchase government securities in the open market

According to Keynes, the equilibrium level of income, determined where aggregate demand equals aggregate supply, need not correspond to the level of full employment. What is the reason for this?

Aggregate demand may be deficient, leaving some workers involuntarily unemployed even at equilibrium

Full employment automatically ensures equilibrium in a free market

Wages and prices adjust instantly to clear the labour market

Aggregate supply always exceeds aggregate demand in a market economy

Chapter testEconomicsIncluded in the seriesTest 23 of 46

Bihar Board Class 12 Arts Economics · Ch 4: Determination of Income and Employment

Bihar Board Class 12 Arts Economics · Ch 4: Determination of Income and Employment is an online chapter test in the Bihar Board Class 12 Arts pattern, covering Determination of Income and Employment. Attempt it on SeatBeat with a timer like the real exam, then see a detailed solution for every question and your score and weak-topic analysis.

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Topics in this test

Topic	Subject	Questions
Determination of Income and Employment	Economics	30

Difficulty: 7 medium · 23 hard

Determination of Income and Employment MCQ questions with answers

The first 3 of 30 questions. Unlock the series for the rest, each with a solution.

Q1. To control a situation of excess demand (inflationary pressure) in the economy, which of the following monetary measures would the central bank most appropriately adopt?
अर्थव्यवस्था में अतिरिक्त माँग (मुद्रास्फीतिक दबाव) की स्थिति को नियंत्रित करने के लिए, केंद्रीय बैंक निम्नलिखित में से कौन-सा मुद्रा नीति उपाय सबसे उपयुक्त रूप से अपनाएगा?
- A. Increase the repo rate / रेपो दर में वृद्धि करना
- B. Decrease the repo rate / रेपो दर में कमी करना
- C. Decrease the cash reserve ratio (CRR) / नकद आरक्षित अनुपात (CRR) में कमी करना
- D. Purchase government securities in the open market / खुले बाजार में सरकारी प्रतिभूतियों की खरीद करना
Solution
Raising the repo rate makes it costlier for commercial banks to borrow, which reduces credit creation and money supply, helping to control excess demand.
रेपो दर बढ़ाने से व्यावसायिक बैंकों के लिए उधार लेना अधिक महंगा हो जाता है, जिससे साख सृजन और मुद्रा पूर्ति कम होती है, जो अतिरिक्त माँग को नियंत्रित करने में सहायक होता है।
Q2. If the marginal propensity to consume in an economy rises from 0.5 to 0.8, how does the value of the investment multiplier change?
यदि किसी अर्थव्यवस्था में सीमांत उपभोग प्रवृत्ति 0.5 से बढ़कर 0.8 हो जाती है, तो निवेश गुणक के मूल्य में क्या परिवर्तन होगा?
- A. It remains constant at 2 / यह 2 पर स्थिर रहता है
- B. It rises from 2 to 5 / यह 2 से बढ़कर 5 हो जाता है
- C. It falls from 5 to 2 / यह 5 से घटकर 2 हो जाता है
- D. It rises from 1.5 to 1.8 / यह 1.5 से बढ़कर 1.8 हो जाता है
Solution
The multiplier $k = \frac{1}{1-MPC}$ equals $\frac{1}{0.5}=2$ when MPC is 0.5, and $\frac{1}{0.2}=5$ when MPC is 0.8, so it rises from 2 to 5.
गुणक $k = \frac{1}{1-MPC}$ का मान MPC के 0.5 होने पर $\frac{1}{0.5}=2$ और MPC के 0.8 होने पर $\frac{1}{0.2}=5$ होता है, इसलिए यह 2 से बढ़कर 5 हो जाता है।
Q3. According to Keynes, the equilibrium level of income, determined where aggregate demand equals aggregate supply, need not correspond to the level of full employment. What is the reason for this?
कीन्स के अनुसार, आय का संतुलन स्तर, जो समग्र माँग के समग्र पूर्ति के बराबर होने पर निर्धारित होता है, पूर्ण रोजगार के स्तर के अनुरूप होना आवश्यक नहीं है। इसका कारण क्या है?
- A. Full employment automatically ensures equilibrium in a free market / स्वतंत्र बाजार में पूर्ण रोजगार स्वतः ही संतुलन सुनिश्चित करता है
- B. Aggregate demand may be deficient, leaving some workers involuntarily unemployed even at equilibrium / समग्र माँग अपर्याप्त हो सकती है, जिससे संतुलन पर भी कुछ श्रमिक अनैच्छिक रूप से बेरोजगार रह जाते हैं
- C. Wages and prices adjust instantly to clear the labour market / मजदूरी और कीमतें तुरंत समायोजित होकर श्रम बाजार को संतुलित कर देती हैं
- D. Aggregate supply always exceeds aggregate demand in a market economy / बाजार अर्थव्यवस्था में समग्र पूर्ति सदैव समग्र माँग से अधिक होती है
Solution
Keynes held that if aggregate demand is not large enough, the economy can settle in equilibrium with some willing workers still involuntarily unemployed.
कीन्स का मत था कि यदि समग्र माँग पर्याप्त रूप से बड़ी नहीं है, तो अर्थव्यवस्था संतुलन में स्थिर हो सकती है, जबकि कुछ इच्छुक श्रमिक अनैच्छिक रूप से बेरोजगार बने रह सकते हैं।

Frequently asked questions

How many questions are in the Bihar Board Class 12 Arts Economics · Ch 4: Determination of Income and Employment?

30 questions for 30 marks, to be answered in 20 minutes.

Is there negative marking in the Bihar Board Class 12 Arts Economics · Ch 4: Determination of Income and Employment?

No — wrong answers are not penalised in this test.

Which topics does the Bihar Board Class 12 Arts Economics · Ch 4: Determination of Income and Employment cover?

Determination of Income and Employment (30 questions).

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It is part of the BSEB Class 12 Arts Test Series 2027 — Chapter-wise + Full Tests (46 tests, ₹149). You can first try Hindi · Ch 1: Chandradhar Sharma Guleri for free.

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