Question
Match List-I with List-II:
List-I (Concepts) List-II (Given by) A. Paradox of thrift I. K. Boulding B. Water-Diamond paradox II. A.C. Pigou C. Wage employment paradox III. J.M. Keynes D. Macroeconomic paradox IV. Adam Smith
Choose the correct answer from the options given below:
The correct answer is
A-III, B-IV, C-II, D-I
Matching Economic Concepts and Economists
This question requires matching specific economic concepts presented in List-I with the economists credited with developing or discussing them in List-II. Let's break down each match:
- A. Paradox of Thrift: This concept is primarily associated with J.M. Keynes (III). Keynes argued that while increased individual saving might seem prudent, if everyone tries to save more simultaneously, it leads to a decrease in aggregate demand and overall economic output. This reduced output can paradoxically lead to lower total savings than anticipated.
- B. Water-Diamond Paradox: Also known as the paradox of value, this was famously discussed by Adam Smith (IV). Smith observed that essential goods like water, which have high utility, often have low prices, whereas non-essential goods like diamonds, with lower utility, have high prices. He explained this using the labor theory of value and distinctions between use-value and exchange-value.
- C. Wage Employment Paradox: This concept relates to discussions on unemployment and wages. A.C. Pigou (II) explored the relationship between wages and employment, particularly in his work addressing the persistence of unemployment. While Keynes challenged classical assumptions, Pigou's contributions delved into the complexities of wage flexibility and its impact on employment levels, making him a relevant figure for paradoxes in this area.
- D. Macroeconomic Paradox: This is a broader term, but within the context of the given options, K. Boulding (I) is the corresponding economist. Boulding, a prolific economist known for his work on general systems theory and economics, often highlighted counterintuitive or paradoxical outcomes in macroeconomic systems and policies.
Correct Matching Summary
Based on the explanations above, the correct matching is:
- A matches with III (J.M. Keynes)
- B matches with IV (Adam Smith)
- C matches with II (A.C. Pigou)
- D matches with I (K. Boulding)
Therefore, the correct option is the one reflecting this specific combination.
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Important Questions from Macroeconomics
- Real-factor demand-pull inflection can be caused by:
A. Increase in investment
B. Decrease in consumer demand
C. Decrease in imports given the exports
D. Decrease in exports given the imports
E. Decrease in government expenditure without change in tax revenue.
Choose the correct answer from the options given below : - Which of the followings are the effects of increase in government spending in IS-LM framework in a closed economy?
A. Increase in income by multiplier times government expenditure.
B. Shift in IS curve to the right leading to disequilibrium in money market at given level of interest rate.
C. Quantity of money demand will be higher.
D. Interest rate will decrease.
Ε. Private investment will increase leading to increase in aggregate demand.
Choose the correct answer from the options given below : - If the marginal propensity to consume is 0.8 and initial increase in tax revenues by the government is Rs. 100, then the impact on national income would be:
- Which of the followings are true about New Classical approach.
A. The main protagonist was R.E. Lucas Jr.
B. It is based on adaptive expectation.
C. It was developed during 1950s.
D. Complete wage and price flexibility.
Ε. Difference between actual and expected price is a random error.
Choose the most appropriate answer from the options given below : - If the value of Keynesian investment multiplier is 4, which one of the following will be the corresponding saving function?
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