The 'Keynesian cross' model shows equilibrium income where: MCQ with Answer and Explanation

Question
The 'Keynesian cross' model shows equilibrium income where:
A. interest rate equals inflation
B. money supply equals money demand
C. exports equal imports
D. aggregate demand equals aggregate supply
Answer: Option D
Solution (By JKSSB Mock Tests)
The Keynesian cross shows equilibrium where aggregate demand equals aggregate supply.
This question belongs to: Economy GK Economy Set 1
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Practice More Economy Set 1 Questions

Question #1
The 'unemployment rate' in India measured by PLFS is the percentage of unemployed among:
A. labour force
B. total population
C. employed persons
D. working-age population
Discuss
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Correct Answer: Option A

Explanation:
Unemployment rate is unemployed as a percentage of the labour force.
This question belongs to: Economy GK Economy Set 1
Question #2
The term 'Gross Value Added at basic prices' equals GDP at market prices minus:
A. depreciation
B. indirect taxes plus subsidies
C. factor income from abroad
D. indirect taxes net of subsidies plus net product taxes
Discuss
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Correct Answer: Option D

Explanation:
GVA at basic prices equals GDP at market prices minus net product taxes and other adjustments.
This question belongs to: Economy GK Economy Set 1
Question #3
Which of the following is a feature of the 'New Classical' school of macroeconomics?
A. Importance of fiscal policy for stabilisation
B. Emphasis on sticky wages and prices
C. Rational expectations and continuous market clearing
D. Liquidity trap as a central concept
Discuss
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Correct Answer: Option C

Explanation:
New Classical economics assumes rational expectations and continuous market clearing, implying that systematic monetary policy cannot systematically affect real output.
This question belongs to: Economy GK Economy Set 1
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