Higher Interest rates likely to

(a)

Reduce investment

(b)

Decrease the cost of borrowing

(c)

Discourage saving

(d)

Increase borrowing and spending

If the Keynesian consumption function is C = 10 + 0.9Y then, if disposable income is Rs 1000, what is amount of total consumption?

(a)

0.9

(b)

800

(c)

0.91

(d)

910

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

(a)

810

(b)

190

(c)

0.8

(d)

0.81

If the Keynesian consumption function is C = 10 + 0.5Y then, and disposable income is 100, what is the average propensity to consume?

(a)

0.5

(b)

0.6

(c)

0.7

(d)

0.8

Decrease in consumption at any given level of income is likely to lead

(a)

Lower aggregate demand

(b)

An increase in exports

(c)

Higher aggregate demand

(d)

An increase in Investment

Formula for calculating Multiplier

(a)

\(K=\frac{1}{1-MPC}\)

(b)

\(\frac{ΔY}{ΔI}\)

(c)

\(\frac{1}{MPS}\)

(d)

All the above

If the MPC = 0.6, find MPS

(a)

1

(b)

0.4

(c)

0.6

(d)

2

Consumption function is the relationship ______ between and the national income.

(a)

Consumption expenditure

(b)

Government expenditure

(c)

Distribution expenditure

(d)

Investment expenditure

__________ principle explains the relationship between consumption expenditure and capital expenditure

(a)

Multiplier

(b)

Accelerator

(c)

Super Multiplier

(d)

All the above

In the long run, the autonomous consumption will become _______

(a)

Maximum

(b)

Minimum

(c)

Negative

(d)

Zero

In the short run, consumption function ________________

(a)

increase

(b)

decrease

(c)

remain constant

(d)

none of these

Investment is the addition to real ___________

(a)

Input

(b)

Output Asset

(c)

Capital Assets

(d)

None of these

According to Keynes, employment depends on ___________

(a)

savings

(b)

Income

(c)

Interest

(d)

Investment

MPC Stands for ___________

(a)

Marginal Physical Consumption

(b)

Marginal Propensity to Consume

(c)

Marginal Price of the Commodity

(d)

None of these

The term consumption function explains the relationship between ___________ and ___________

(a)

Labour and Consumer

(b)

Income and Consumption

(c)

Consumer and Consumption

(d)

Organisation and Consumption