Question : Which of the following statement are true?
- According to the Keynesian theory of employment, a state of under-employment can never exist in an economy.
- When MPS is 1, Increase in national income will be exactly equal to increase in investment.
Option 1: Both are true.
Option 2: Both are false.
Option 3: Statement 1 is true, statement 2 is false.
Option 4: Statement 1 is false, statement 2 is true.
Answer (1)
25th Jan, 2024
Correct Answer:
Statement 1 is false, statement 2 is true.
Solution :
According to Keynesian theory of employment the state of under employment can exist. This occurs at the level of income will aggregate demand and aggregate supply happens at less than full employment level.
When MPS=1, K=1, It means that increase in national income will be exactly equal to increase in investment.
Hence, Option D is correct.
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