The average propensity to consume is measured by _____.

(a)

C/Y

(b)

CxY

(c)

Y/C

(d)

C+Y

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

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

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

(a)

₹ 0.8

(b)

₹ 800

(c)

₹ 810

(d)

₹ 0.81

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

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

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

Lower interest rates are likely to :

(a)

Decrease in consumption

(b)

increase cost of borrowing

(c)

Encourage saving

(d)

increase borrowing and spending

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

The relationship between total spending on consumption and the total income is the_______.

(a)

Consumption function

(b)

Savings function

(c)

Investment function

(d)

aggregate demand function

The sum of the MPC and MPS is________.

(a)

1

(b)

2

(c)

0.1

(d)

1.1

As income increases, consumption will______

(a)

fall

(b)

not change

(c)

fluctuate

(d)

increase

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 consume

(d)

average propensity to consume

The multiplier tells us how much _______ changes after a shift in _____.

(a)

Consumption, income

(b)

investment, output

(c)

savings, investment

(d)

output, aggregate demand

The multiplier is calculated as

(a)

1/(1-MPC)

(b)

1/MPS

(c)

1/MPC

(d)

a and b

It the MPC is 0.5, the multiplier is ______.

(a)

2

(b)

1/2

(c)

0.2

(d)

20

In an open economy import _______ the value of the multiplier

(a)

Reduces

(b)

increase

(c)

does not change

(d)

changes

According to Keynes, investment is a function of the MEC and ____.

(a)

Demand

(b)

Supply

(c)

Income

(d)

Rate of interest

The term super multiplier was first used by

(a)

J.R.Hicks

(b)

R.G.D. Allen

(c)

Kahn

(d)

Keynes

The term MEC was introduced by

(a)

Adam Smith

(b)

J.M. Keynes

(c)

Ricardo

(d)

Malthus