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AP Intermediate 2nd Year Determination of Income and Employment — practice questions

Explore 50 free Determination of Income and Employment questions in AP Intermediate 2nd Year Economics. Open each question or exercise to read its content, reference answers and available explanation.

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Determination of Income and Employment questions and exercises with answers

Showing questions 1–30 of 50.

In macroeconomics, what do ex ante values of consumption describe?Read the answer and worked solution →Which term denotes the actual values of consumption and investment measured in a year?Read the answer and worked solution →In the simple Keynesian consumption function, consumption mainly depends on what?Read the answer and worked solution →What is autonomous consumption?Read the answer and worked solution →In C = C-bar + cY, which term is the induced component of consumption?Read the answer and worked solution →The marginal propensity to consume is the ratio of what?Read the answer and worked solution →What is the maximum value the marginal propensity to consume can take?Read the answer and worked solution →MPC equal to zero means consumers do what as income changes?Read the answer and worked solution →If C = 100 + 0.8Y, how much is consumed when income is zero?Read the answer and worked solution →With C = 100 + 0.8Y, income rises by Rs 100. By how much does consumption rise?Read the answer and worked solution →In the Keynesian model, how is savings defined?Read the answer and worked solution →If the marginal propensity to consume is c, what is the marginal propensity to save?Read the answer and worked solution →If the MPC of an economy is 0.7, what is its MPS?Read the answer and worked solution →If MPS is 0.2, what is the MPC?Read the answer and worked solution →Average propensity to consume is defined as what?Read the answer and worked solution →Saving divided by income gives which measure?Read the answer and worked solution →Which of these counts as investment in macroeconomics?Read the answer and worked solution →Why are machines produced in a year counted as final goods?Read the answer and worked solution →Which variable largely influences a firm's decision to buy a new machine?Read the answer and worked solution →What happens to firms' investment as the interest rate rises?Read the answer and worked solution →Easy availability of credit has what effect on investment?Read the answer and worked solution →In the two-sector model without a government, what is ex ante aggregate demand?Read the answer and worked solution →In the two-sector model, how is total autonomous expenditure A obtained?Read the answer and worked solution →Which autonomous component fluctuates periodically over time?Read the answer and worked solution →Autonomous consumption represents which level of consumption in an economy?Read the answer and worked solution →When does ex ante supply of final goods equal ex ante demand?Read the answer and worked solution →If planned output exceeds ex ante demand, what piles up in warehouses?Read the answer and worked solution →What is a depletion of inventories called?Read the answer and worked solution →Which inventory change arises when a firm deliberately keeps some stocks?Read the answer and worked solution →Unplanned inventory investment arises when what happens?Read the answer and worked solution →

Worked practice questions

In macroeconomics, what do ex ante values of consumption describe?

  1. Planned values
  2. Recorded values
  3. Past averages
  4. Taxed values
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Correct answer: A. Planned values

Ex ante refers to what economic agents plan to do in a period, not to what finally happens.

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Which term denotes the actual values of consumption and investment measured in a year?

  1. Ex ante
  2. Ex post
  3. Autonomous
  4. Induced
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Correct answer: B. Ex post

Ex post values are the actual outcomes recorded by the economy's activities during the year.

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In the simple Keynesian consumption function, consumption mainly depends on what?

  1. The rate of interest
  2. The price level
  3. Government spending
  4. Household income
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Correct answer: D. Household income

The most important determinant of consumption demand is household income, which the consumption function links to consumption.

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