12th Economics Lesson 4 Online Test | Consumption and Investment Functions

12th Economics Lesson 4 Online Test | Consumption and Investment Functions

1➤ The average propensity to consume is measured by –

(a) C / Y (b) C × Y (c) Y / C (d) C + Y

2➤ An increase in the marginal propensity to consume will:

(a) Lead to consumption function becoming steeper (b) Shift the consumption function upwards (c) Shift the consumption function downwards (d) Shift savings function upwards

3➤ If the Keynesian consumption function is C = 10 + 0.8 Y then, if disposable income is Rs 1000, what is amount of total consumption?

(a) ₹ 0.8 (b) ₹ 800 (c) ₹ 810 (d) ₹ 0.81

4➤ If the Keynesian consumption function is C = 10 + 0.8 Y then, when disposable income is Rs 100, what is the marginal propensity to consume?

(a) ₹ 0.8 (b) ₹ 800 (c) ₹ 810 (d) ₹ 0.81

5➤ If the Keynesian consumption function is C = 10 + 0.8 Y then, and disposable income is ₹ 100, what is the average propensity to consume?

(a) ₹ 0.8 (b) ₹ 800 (c) ₹ 810 (d) ₹ 0.9

6➤ As national income increases –

(a) The APC falls and gets nearer in value to the MPC.(b) The APC increases and diverges in value from the MPC.(c) The APC stays constant(d) The APC always approaches infinity.

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7➤ As increase in consumption at any given level of income is likely to lead –

(a) Higher aggregate demand (b) An increase in exports (c) A fall in taxation revenue (d) A decrease in import spending

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8➤ Lower interest rates are likely to:

a) Decrease in consumption(b) increase cost of borrowing(c) Encourage saving(d) increase borrowing and spending

9➤ The MPC is equal to:

(a) Total spending / total consumption(b) Total consumption / total income(c) Change in consumption / change in income(d) None of the above

10➤ The relationship between total spending on consumption and the total income is the –

(a) Consumption function(b) Savings functionc) Investment functiond) aggregate demand function

11➤ The sum of the MPC and MPS is –

(a) 1 (b) 2 (c) 0.1 (d) 1.1

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12➤ As income increases, consumption will –

(a) fall (b) not change (c) fluctuate (d) increase

13➤ When investment is assumed autonomous the slope of the AD schedule is determined by the –

(a) marginal propensity to invest (b) disposable income(c) marginal propensity to consumed) average propensity to consume

14➤ The multiplier tells us how much changes after a shift in –

a) Consumption, income(b) investment, output(c) savings, investmentd) output, aggregate demand

15➤ The multiplier is calculated as –

(a) 1 / (1 – MPC) (b) 1 / MPS (c) 1 / MPC (d) a and b

16➤ It the MPC is 0.5, the multiplier is –

(a) 2 (b) 1/2 (c) 0.2 (d) 20

17➤ In an open economy import ………………………. the value of the multiplier

(a) Reduces (b) increase (c) does not change (d) changes

18➤ According to Keynes, investment is a function of the MEC and –

(a) Demand (b) Supply (c) Income (d) Rate of interest

19➤ The term super multiplier was first used by –

(a) J.R.Hicks (b) R.G.D. Allen (c) Kahn (d) Keynes

20➤ The term MEC was introduced by –

(a) Adam Smith (b) J.M. Keynes (c) Ricardo (d) Malthus

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