Determination of Income and EmploymentClass 12 Introductory Macroeconomics Assertion & Reason Questions

Assertion (A): The sum of the Marginal Propensity to Consume (MPC) and the Marginal Propensity to Save (MPS) is always equal to one.

Reason (R): Any incremental change in income is either spent on consumption or is saved; there are no other uses for it in a simple two-sector model.

Assertion (A): In the simple Keynesian model, the investment curve is a horizontal line parallel to the income (X) axis.

Reason (R): Investment is assumed to be autonomous, meaning it is a constant amount that does not change with the level of income.

Assertion (A): The equilibrium level of output is always achieved at the full employment level.

Reason (R): Equilibrium in the final goods market occurs when ex-ante aggregate demand equals ex-ante aggregate supply.