Chapter 10 - Determinants Of Aggregates Economics Solutions for Class 12 Commerce Economics

Chapter 10 - Determinants Of Aggregates

Economics Solutions for Class 12 Commerce Economics

Fill in the blanks with appropriate alternatives given in the brackets.
1) The General Theory of Employment, Interest and Money was written by __________. 
(David Ricardo/ Adam Smith/J.M. Keynes/Alfred Marshal)
2) That part of income, which is not spent on consumption, is called __________. 
(expenditure/saving/investment/public debt)
3) Intersection between aggregate demand and aggregate supply curves determines the point of __________ demand. 
(composite/complementary/joint/effective)
4) __________ consumption cannot be zero. 
(Induced/Autonomous/Government/Private)
5) Investment made by the government is __________ investment. 
(induced/autonomous/gross/unplanned)
1) The general theory of employment interest and money was written by J.M. Keynes.
Explanation:
J.M.Keynes, a British economist, wrote the book ‘General theory of employment, interest and money’, where he introduced the general theory of employment, which was a criticism of the classical theory of full employment.
2) That part of income, which is not spent on consumption, is called saving.
Explanation:
Individuals incur expenditure on consumption from the income. However, not all of the income is spent on consumption, rather a part of it remains unspent. This unspent part of the income is called as savings.
Saving = Income – Consumption
3) Intersection between aggregate demand and aggregate supply curves determine the point of effective demand.
Explanation:
Effective demand is the actual demand for goods and services by the people in an economy. It is determined at the point where aggregate demand intersects aggregate supply.
4) Autonomous consumption cannot be zero.
Explanation:
Autonomous consumption is the minimum consumption expenditure that an individual incurs irrespective of his income. It is the consumption of basic goods and services i.e consumption of those goods and services that are essential for living. For example, food, medicines, clothes etc. Such a consumption cannot fall to zero as it is essential for survival.
5) Investment made by the government is autonomous investment.
Explanation:
Autonomous investment is that investment which is independent of the profit motive i.e. which is made without an aim of earning some profit on that investment. Government investment on public welfare is an example of an autonomous investment. Governments investment in railways, electricity, construction of dams, roads etc for the welfare of the public rather than profit.

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