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With reference to the given… (Class 12 Economics 2026, Q2)

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EconomicsCBSE Class 12 · Board exam 2026, set 58/5/1 · 1 mark · MCQ

CBSE Class 12 Economics 2026: question 2

Set in the CBSE Class 12 board exam of 2026, paper 58/5/1, section A, question 2, for 1 mark. Try it first; the hints and our step-by-step solution are below.

Q2 · 1 mark · MCQCompetency-basedDetermination of Income and Employment

With reference to the given diagram, OL indicates ___________ . (Choose the correct option to fill in the blank)

(i) Autonomous Consumption (ii) Autonomous Investment (iii) Induced Consumption (iv) Induced Investment

  1. (A)Only (i)
  2. (B)Only (ii)
  3. (C)Sum of (i) and (ii)
  4. (D)Sum of (i) and (iii)

Figure in the paper: Graph with X-axis 'Level of Income' and Y-axis 'Consumption, Investments'. A line AD starts at point L on the Y-axis and rises; consumption line C = C̄ + MPC (Y) starts at M on the Y-axis (below L and J) and rises; a horizontal investment line I at height J on the Y-axis. Order on the Y-axis from top: L, J, M, O. The consumption line crosses the investment line. See it in the official paper.

Source: official question paper from cbse.gov.in (PDF). See it in the full 2026 board paper, set 58/5/1.

Hints

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

Hint 1

What is AD when income is zero?

Hint 2

Induced consumption is zero at zero 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. In the diagram, M (the intercept of C = C̄ + MPC·Y) is autonomous consumption C̄, and J (the height of the flat I line) is autonomous investment Ī. The AD curve is C + I, drawn parallel to the C line and above it by the amount of I.

  2. So the AD intercept OL = OM + OJ = autonomous consumption + autonomous investment (AD at zero income). Option (C).

    1 mark

Answer: (C) Sum of (i) and (ii)

Where the marks are

  • OL = C̄ + Ī (1 mark)

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 paper2026 board paper, set 58/5/1: 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.