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Match the following:
| Column A | Column B |
|---|---|
| 1. Marginal Efficiency of Capital | A. Spending on consumer goods |
| 2. Autonomous Investment | B. Tendency for employment to fluctuate |
| 3. Consumption Function | C. Expected rate of return on investment |
| 4. Paradox of Thrift | D. Investment independent of income |
| 5. Cyclical Unemployment | E. Increased saving reduces total demand |
C, 2-D, 3-A, 4-E, 5-B
C, 2-D, 3-E, 4-A, 5-B
D, 2-C, 3-A, 4-E, 5-B
C, 2-D, 3-A, 4-B, 5-E
C, 2-D, 3-A, 4-E, 5-B
In macroeconomic theory, matching the key economic concepts with their definitions gives: Marginal Efficiency of Capital (MEC) is the expected rate of return on investment, Autonomous Investment is investment independent of income, Consumption Function relates spending on consumer goods to income, Paradox of Thrift states that increased saving reduces total demand, and Cyclical Unemployment is the tendency for employment to fluctuate with business cycles.
In macroeconomic theory, matching the key economic concepts with their definitions gives: Marginal Efficiency of Capital (MEC) is the expected rate of return on investment, Autonomous Investment is investment independent of income, Consumption Function relates spending on consumer goods to income, Paradox of Thrift states that increased saving reduces total demand, and Cyclical Unemployment is the tendency for employment to fluctuate with business cycles.
Key macroeconomic concepts established by classical and Keynesian economists such as John Maynard Keynes in 'The General Theory of Employment, Interest and Money' (1936) form the bedrock of Indian economic planning and fiscal policy exam questions.
Marginal Efficiency of Capital (MEC) represents the net expected rate of return from a capital asset over its cost.
Autonomous investment is determined by external factors like technology and population growth, not national income levels.
Paradox of thrift posits that if everyone increases savings during a recession, aggregate demand drops, leading to lower total savings.
Cyclical unemployment rises during economic recessions and falls during economic expansions due to fluctuations in aggregate demand.
Consumption function typically takes the form C = Cbar + bY, where Cbar is autonomous consumption and b is the marginal propensity to consume.
Option A correctly matches all 5 pairs as tested in recent Indian competitive examinations.
A is correct тАФ Option A (1 - C, 2 - D, 3 - A, 4 - E, 5 - B) accurately pairs each economic term with its correct definition.
Keynesian economic concepts frequently appear in Indian Economy sections of exams like RRB JE, SSC CGL, and UPSC Civil Services prelims, particularly under National Income Accounting and Monetary Policy.
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