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Assuming for a… (Class 12 Economics SQP 2026-27, Q15)

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EconomicsCBSE Class 12 · Sample paper, session 2026-27 · 4 marks · Short answer

CBSE Class 12 Economics sample paper 2026-27: question 15

From the official CBSE sample question paper for 2026-27, section A, question 15, for 4 marks. Try it first; the hints and our step-by-step solution are below.

Q15 · 4 marks · Short answerDetermination of Income and Employment

Assuming for a hypothetical simplified economy,
Consumption function,
Autonomous Investment () = 250
Full employment level of income () = 1,600

  1. (I)

    Determine the equilibrium level of income.

    2 marks
  2. (II)

    Outline whether the economy is facing the situation of excess demand or deficient demand and state its impact on the level of output, employment and general price level in the economy.

    2 marks

Source: official sample paper from cbseacademic.nic.in (PDF). See it in the full Sample paper 2026-27.

Hints

Open one hint at a time and try again before the next.

Hint 1

Set Y = C + I and solve.

Hint 2

Compare equilibrium income with full-employment income.

Step-by-step solution

Each step shows the marks it earns, as an examiner would award them. Checked by an independent re-solve from the question paper.

  1. (I) At equilibrium, Y = C + I.

    1 mark

  2. Y = 150 + 0.8Y + 250, so 0.2Y = 400.

    ½ mark

  3. Y = 2,000.

    ½ mark

  4. (II) Equilibrium income (2,000) is greater than full-employment income (1,600), so the economy faces excess demand (an inflationary gap).

    1 mark

  5. (II) Since resources are already fully employed, output and employment cannot rise; excess demand only raises the general price level (inflation).

    1 mark

Answer: (I) Equilibrium income = 2,000. (II) Excess demand: output and employment stay unchanged while the general price level rises.

Where the marks are

  • Equilibrium condition, working, Y = 2,000 (1 + ½ + ½)
  • Excess demand identified (1)
  • Impact on output, employment and prices (1)

Revise the chapter

Practise this chapterBoard-style questions from Determination of Income and Employment, one at a time, marked against the answer key and marking points.Back to the full paperSample paper 2026-27: every question, by section.

The question is transcribed from the official paper; figures are described in words. The solution, hints and chapter tag are ours. Spotted an error? Write tosupport@questionbuddy.in.