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Match the Following Group 'A' with Group 'B': (A) Electricity (1) Joint Demand (B) Perfectly Elastic Demand (2) Lord Keynes (3) Prof. Pigou (C) Aggregate Supply - Economics

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Question

Match the following Group 'A' with Group 'B':   

Group 'A' Group 'B'
(a) Electricity (1) Joint demand
(b) Perfectly elastic demand (2) Lord Keynes
(c) Aggregate supply (3) Prof. Pigou
(d) Propensity to consume (4) Fixed deposits
(e) Higher interest rate (5) Composite demand
  (6) Demand curve parallel to 'X' axis
  (7) Natural resources

Solution

Group 'A' Group 'B'
(a) Electricity (5) Composite demand
(b) Perfectly elastic demand (6) Demand curve parallel to 'X' axis
(c) Aggregate supply (7) Natural resources
(d) Propensity to consume (2) Lord Keynes
(e) Higher interest rate (4) Fixed deposits

Explanation:
(a) Electricity has a composite demand. Demand for a commodity which is used to satisfy various wants at a single time is said to be composite demand. As electricity has several different uses, its demand is said to be composite demand.
(b) Perfectly elastic demand is the one where the demand curve is parallel to 'X' axis of the graph. Herein, the demand for a commodity remains the same, irrespective of a change in its price.
(c) Aggregate supply refers to the aggregate production or the total sales at any given level of employment. Natural resources is an important determinant of aggregate supply, wherein, natural resources include natural gifts such as land, water and minerals. If a country has high endowment of natural resources, then its aggregate supply is likely to be higher and vice-versa.
(d) Propensity to consume or the consumption function states the relationship between the aggregate consumption expenditure and aggregate income. This concept was introduced by Lord Keynes under his psychological law of consumption which states that as income increases, consumption also increases but at a lesser rate than increase in income.
(e) Fixed deposits are the ones where deposits are held for a fixed period of time, Here, due to the longer lock-in period involved in the fixed account deposits, these deposits involve a higher rate of interest than that earned on the savings account deposits.

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APPEARS IN

 2012-2013 (March) (with solutions)
Question 1.4 | 5.00 marks
Solution Match the Following Group 'A' with Group 'B': (A) Electricity (1) Joint Demand (B) Perfectly Elastic Demand (2) Lord Keynes (3) Prof. Pigou (C) Aggregate Supply Concept: Types of Demand.
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