In NCERT Class 12 Economics Chapter 4, titled "Determination of Income and Employment," students explore the macroeconomic factors that influence national income and employment levels. This chapter delves into concepts such as aggregate demand (AD) and aggregate supply (AS), equilibrium income, and the multiplier effect. Additionally, it examines consumption, saving, and investment functions, providing a comprehensive understanding of macroeconomic equilibrium.
This article is an all-in-one preparation resource for exams. It includes sample MCQs and subjective questions for CBSE and CUET, along with downloadable PDFs of Class 12 Economics Chapter 4 MCQs and previous year questions for detailed practice of NCERT Class 12 Determination of Income and Employment.
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NCERT Class 12 Economics Chapters
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CUET Free Master Classes:
Class 12 Economics Chapter 4 MCQs
This question bank includes previous years' CUET and CBSE MCQs, along with questions curated by subject experts. Below are 5 sample multiple-choice questions (MCQs) for Class 12 Economics Chapter 4: Determination of Income and Employment. For the full set of 50 questions, download the PDF using the link provided below.
1- Statement 1: In a two sector economy, consumption expenditure and investment expenditure are the two components of Aggregate Demand.
Statement 2: Aggregate demand curve always start from point of origin with positive slope.
In the light of given statements, choose the correct alternative from the following:
(a) Statement 1 is true and Statement 2 is false
(b) Statement 1 is false and Statement 2 is true
(c) Both statements 1 and 2 are true
(d) Both statements 1 and 2 are false
2. Statement 1: The induced consumption shows, the direct relation between consumption and income.
Statement 2: With a certain increase in income, induced consumption also increases.
In the light of the given statements, choose the correct alternative from the following:
(a) Statement 1 is true and Statement 2 is false
(b) Statement 1 is false and Statement 2 is true
(c) Both Statements 1 and 2 are true
(d) Both Statements 1 and 2 are false
3. Aggregate demand can be increased by: (choose the correct alternative)
(a) increasing bank rate
(b) selling government securities by Reserve Bank of India
(c) increasing cash reserve ratio
(d) none of the above
4. Given AD = C + I + CY, change in autonomous consumption will lead to:
A. Change in equilibrium level of income
B. Change in aggregate demand
C. Change in Investment
D. Change in aggregate demand and no change in equilibrium level of income
E. Change in marginal propensity to consume
Choose the correct answer from the options given below:
(a) D only
(b) A and B only
(c) C and D only
(d) B and E only
5. Consider the following as a facts related to problems of excess demand/deficit demand, their measures and propensity to consume.
A. APC=0 when APS=1
B. Margin requirement is one of the monetary tools.
C. RBI will increase SLR in case of underemployment equilibrium.
D. At Break Even Point, APC=Unity.
E. Government reduces CRR to overcome the problems of deficient demand.
Choose the correct answer from the options given below:
(a) B, C and E only
(b) B and D only
(c) C, D and E only
(d) B, D and E only
Class 12 Economics Chapter 4 Subjective Questions Without Solutions
This question bank includes previous years' CBSE subjective questions (2 marks and above) without solutions, along with expert-curated questions. Below are 5 sample subjective questions for Class 12 Economics Chapter 4: Determination of Income and Employment. To access all questions, download the PDF from the link provided below.
- State and discuss any one component of Aggregate Demand in a two-sector economy.
(CBSE 2022, 2M)
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- Calculate equilibrium level of income for a hypothetical economy, for which it is given that:
- Autonomous Investments (Io) = Rs. 2,500 crores, and
- Consumption Function; C = 1000 + 0.8Y where C = Consumption and Y = Income
(CBSE 2022, 2M)
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- If Marginal Propensity to Save is 20% and is constant at all levels of income and the autonomous consumption is Rs. 100 crores, construct consumption function of the given hypothetical economy.
(CBSE 2019, 3M)
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- What is aggregate demand? State its components.
(CBSE 2016, 3M)
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- State and discuss the components of Aggregate Demand in a two sector economy.
(CBSE 2019)
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Sub Areas of Chapter 4: Determination of Income and Employment
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Chapter Name
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Sub Topics
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Determination of Income and Employment
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4.1 Aggregate Demand and Supply
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4.2 Equilibrium Income and Employment
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4.3 Consumption and Saving Functions
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4.4 Multiplier Effect
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4.5 Investment Function
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Review of NCERT Class 12 Economics Chapter 4
In NCERT Class 12 Economics Chapter 4, "Determination of Income and Employment," students gain a solid foundation in understanding the equilibrium levels of income and employment in an economy. The chapter explains key concepts such as aggregate demand, aggregate supply, and the multiplier effect, helping students analyze how changes in these variables influence economic performance.
Mastering this chapter is essential for understanding macroeconomic theories and preparing for exams like CBSE, CUET, and other competitive exams.