Chapter Exam

Unit 8: Theories of Employment and Public Finance — Online MCQ Test

Q: The Keynesian theory of employment mainly emphasizes the role of:

Answer: B. Aggregate demand — Keynes argued that employment depends on effective aggregate demand. When demand is insufficient, output and employment fall.

Q: In the Keynesian framework, equilibrium level of employment is determined where:

Answer: A. Aggregate demand equals aggregate supply — Keynes explained equilibrium employment through the equality of aggregate demand and aggregate supply. At that point, firms have no incentive to expand or reduce output.

Q: A rise in government expenditure on infrastructure is most likely to affect employment by:

Answer: B. Increasing aggregate demand and output — Higher government expenditure raises aggregate demand. In Keynesian theory, this can increase output and employment through multiplier effects.

Q: Which of the following is the correct pair?

Answer: C. Deficit budget — expenditure exceeds receipts — A deficit budget exists when government expenditure is greater than its receipts. The other pairs are incorrectly matched.

ECONOMICS · CLASS 11 INTERMEDIATE 1 YEAR · Telangana State Board

Practice Unit 8: Theories of Employment and Public Finance with a free chapter-wise online MCQ test for Telangana State Board CLASS 11 INTERMEDIATE 1 YEAR ECONOMICS. This chapter covers: This chapter covers Classical theory of employment Keynesian income employment theory aggregate demand supply public revenue public expenditure public debt and budget concepts.. AI-generated questions from basic to board-exam level, with instant results and explanations.

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Unit 8: Theories of Employment and Public Finance — Important Questions & Answers (FAQ)

Frequently asked questions from Telangana State Board CLASS 11 INTERMEDIATE 1 YEAR ECONOMICS — Unit 8: Theories of Employment and Public Finance, with answers and explanations. These are sample questions; the exam has its own separate question set.

According to the Classical theory of employment, unemployment occurs mainly due to:

A. Deficiency of aggregate demand
B. Wage rigidity and interference in the labour market ✓
C. Excessive government spending
D. Over-saving by households only

Answer: B. Wage rigidity and interference in the labour market
The Classical theory assumes flexible wages and full employment. Unemployment is explained as a result of wage rigidity or market interference.

The Keynesian theory of employment mainly emphasizes the role of:

A. Supply of labour
B. Aggregate demand ✓
C. Population growth
D. Money supply only

Answer: B. Aggregate demand
Keynes argued that employment depends on effective aggregate demand. When demand is insufficient, output and employment fall.

In the Keynesian framework, equilibrium level of employment is determined where:

A. Aggregate demand equals aggregate supply ✓
B. Money supply equals price level
C. Taxes equal expenditure
D. Exports equal imports

Answer: A. Aggregate demand equals aggregate supply
Keynes explained equilibrium employment through the equality of aggregate demand and aggregate supply. At that point, firms have no incentive to expand or reduce output.

A rise in government expenditure on infrastructure is most likely to affect employment by:

A. Reducing aggregate demand
B. Increasing aggregate demand and output ✓
C. Increasing unemployment immediately
D. Having no effect on income

Answer: B. Increasing aggregate demand and output
Higher government expenditure raises aggregate demand. In Keynesian theory, this can increase output and employment through multiplier effects.

Which of the following is the correct pair?

A. Tax revenue — voluntary payment
B. Public debt — revenue without repayment
C. Deficit budget — expenditure exceeds receipts ✓
D. Balanced budget — expenditure exceeds revenue

Answer: C. Deficit budget — expenditure exceeds receipts
A deficit budget exists when government expenditure is greater than its receipts. The other pairs are incorrectly matched.

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