Multiple Choice Questions on In Keynesian viewpoint the equilibrium level of income and employment in the economy will be establi........... for 12th Standard Preparation

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In Keynesian viewpoint, the equilibrium level of income and employment in the economy will be established where:

AD > AS

AS > AD

AD = AS

None of these

Explanation:

- Option 1: AD > AS

- This situation indicates that aggregate demand exceeds aggregate supply. It leads to upward pressure on prices and may cause inflation as demand outstrips supply.

- Option 2: AS > AD

- Here, aggregate supply is greater than aggregate demand. It can lead to unemployment and underutilized resources as production exceeds consumption.

- Option 3: AD = AS

- This reflects equilibrium in the economy where aggregate demand equals aggregate supply. It leads to stable prices and full employment, aligning with Keynesian economics.

- Option 4: None of these

- This suggests that none of the above situations apply, which is not correct regarding standard economic equilibrium.

Option 3: AD = AS is the correct answer.

By: santosh

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