alleryWith a government that levies tax T, how is disposable income Yd written?
- Y + T
- Y - T
- Y x T
- Y / T
Show answer and solution
Correct answer: B. Y - T
Taxes take part of income away from households, so disposable income is income minus tax.
AP Intermediate 2nd Year Determination of Income and Employment — practice questions — page 2
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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Showing questions 31–50 of 50.
With a government that levies tax T, how is disposable income Yd written?Read the answer and worked solution →Which pair are the fiscal variables treated as autonomous in this model?Read the answer and worked solution →Why can the price level be treated as fixed in the first stage of analysis?Read the answer and worked solution →With unused resources, which law does not apply as output expands?Read the answer and worked solution →The income determination model is based on the theory of which economist?Read the answer and worked solution →What does the assumption of ceteris paribus mean?Read the answer and worked solution →Which two variables are held constant in the income model?Read the answer and worked solution →In the Keynesian cross, where is equilibrium income found?Read the answer and worked solution →In the Keynesian cross, what does the 45-degree line represent?Read the answer and worked solution →Who first presented the Keynesian cross in a widely used economics book?Read the answer and worked solution →The Keynesian cross formalises ideas from which work of Keynes?Read the answer and worked solution →In Keynesian theory, at what employment level is equilibrium typically assumed to occur?Read the answer and worked solution →In the simplest Keynesian cross, closed economy means net exports are what?Read the answer and worked solution →Aggregate employment in the Keynesian cross is set by what?Read the answer and worked solution →Given C = 40 + 0.8Y and I = 10, what is the equilibrium income?Read the answer and worked solution →Autonomous expenditure rises by 10 and MPC is 0.8. By how much does income rise?Read the answer and worked solution →What is the investment multiplier in terms of the MPC, c?Read the answer and worked solution →What happens to the multiplier as the MPC becomes larger?Read the answer and worked solution →What is the value of the multiplier when the MPC is 0.5?Read the answer and worked solution →If the MPC is 0.9, by what factor does autonomous spending get multiplied?Read the answer and worked solution →
Worked practice questions
Which pair are the fiscal variables treated as autonomous in this model?
- Saving and interest
- Output and jobs
- Taxes and spending
- Prices and wages
Show answer and solution
Correct answer: C. Taxes and spending
The government affects demand through tax (T) and government spending (G), both taken as autonomous.
Why can the price level be treated as fixed in the first stage of analysis?
- The economy has unused resources
- Prices are set by the RBI
- Output is always at full capacity
- Demand is perfectly inelastic
Show answer and solution
Correct answer: A. The economy has unused resources
With idle machines, buildings and labour, extra output needs no higher marginal cost, so the price level does not move.
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