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An economy may operate at a… (Class 12 Economics 2026, Q6)

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

CBSE Class 12 Economics 2026: question 6

Set in the CBSE Class 12 board exam of 2026, paper 58/5/1, section A, question 6, for 1 mark. Try it first; the hints and our step-by-step solution are below.

Q6 · 1 mark · MCQDetermination of Income and Employment

An economy may operate at a level below full employment due to a deficiency in Aggregate Demand (AD) leading to a/an ___________ employment equilibrium.
(i) Full
(ii) Over
(iii) Under
(Choose the correct option to fill in the blank)

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

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

Is the economy above or below full employment here?

Hint 2

Which word describes equilibrium with unemployment?

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. Keynes showed that equilibrium (AD = AS) can occur at a level of output below full employment when aggregate demand is deficient.

  2. Such an equilibrium, with involuntary unemployment, is called an under-employment equilibrium. Option (C).

    1 mark

Answer: (C) Only (iii)

Where the marks are

  • Deficient AD leads to under-employment equilibrium (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.