Practice Summary (4) - Chapter 2: Theory of Income and Employment - ICSE 12 Economics
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Practice Questions

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Question 1 Easy

Define Aggregate Demand.

💡 Hint: Think about what people and businesses spend money on.

Question 2 Easy

What happens when AD is greater than AS?

💡 Hint: Consider what might happen if everyone wants something that’s not enough.

4 more questions available

Interactive Quizzes

Quick quizzes to reinforce your learning

Question 1

What does aggregate demand consist of?

Consumption
Investment
Exports
Government Spending
Only Investment
Only Government Spending

💡 Hint: Remember the formula AD = C + I + G + (X - M).

Question 2

True or False: Keynesian economics supports the idea of a self-correcting market.

True
False

💡 Hint: Think about each theory's stance on government involvement.

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Challenge Problems

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Challenge 1 Hard

Design a fiscal policy intervention that could help reduce unemployment in a recession. What components would you include?

💡 Hint: Consider sectors that create immediate jobs.

Challenge 2 Hard

Discuss the implications if an economy's aggregate demand consistently exceeds its aggregate supply. What are potential long-term effects?

💡 Hint: Look at historical examples of inflation to draw conclusions.

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