Description : Which of the following relations always holds true? (1) Income = Consumption + Investment (2) Income = Consumption + Saving (3) Saving = Investment (4) Income = Consumption + Saving + Investment
Last Answer : (2) Income = Consumption + Saving Explanation: Consumers do one of two things with their disposable income: They save it or they spend it. So Income = Consumption + Saving.
Description : An economy is in equilibrium when - (1) planned consumption exceeds planned saving (2) planned consumption exceeds planned investment (3) intended saving equals intended investment (4) intended investment exceeds intended savings
Last Answer : (3) intended saving equals intended investment Explanation: In economics, economic equilibrium is a state of the world where economic forces are balanced and in the absence of external influences ... and intended investment. An economy is in equilibrium when total savings equal total investment.
Description : An economy is in equili-brium when (1) planned consumption exceeds planned saving (2) planned consumption exceeds planned investment (3) intended investment equals intended investment (4) intended investment exceeds intended savings
Last Answer : intended investment equals intended investment
Description : Saving is that portion of money income that is - (1) spent for development of Industries (2) not spent on consumption (3) spent on health and education (4) spent for consumer durables
Last Answer : (2) not spent on consumption Explanation: Saving is income not spent, or deferred consumption. In economics, it refers to any income not used for immediate consumption- consuming less out of a ... is the decision to defer consumption and to store this deferred consumption in some form of asset.
Description : Saving is that portion of money income that is (1) spent for development of Industries (2) not spent on consumption (3) spent on health and education (4) spent for consumer durables
Last Answer : not spent on consumption
Description : According to Acceleration principle investment depends on change in the level of------ (a) rate of interest. (b) level of income. © price (d) saving.
Last Answer : (b) level of income.
Description : Consumptions function refers to - (1) relationship between income and employment (2) relationship between savings and investment (3) relationship between input and output (4) relationship between income and consumption
Last Answer : (4) relationship between income and consumption Explanation: The Consumption function is a single mathematical function used to express consumer spending. It was developed by John Maynard Keynes and ... by current income and induced consumption that is influenced by the economy's income level.
Description : The value of investment multiplier relates to - (1) change in income due to change in autonomous investment. (2) change in autonomous investment due to change in income. (3) change in income due to change in consumption. (4) change in the income due to change in induced investment.
Last Answer : (2) change in autonomous investment due to change in income. Explanation: The term investment multiplier refers to the concept that any increase in public or private investment spending has a ... . The investment multiplier tries to determine the financial impact for a public or private project.
Description : Investment multiplier shows the effect of investment on - (1) Employment (2) Savings (3) Income (4) Consumption
Last Answer : (3) Income Explanation: Investment multiplier is simply the multiplier effect of an injection of investment into an economy. The multiplier effect refers to the idea that an initial spending rise can lead to even greater increase in national income
Description : Investment and savings are kept equal through a change in the level of - (1) Consumption (2) Investment (3) Government expenditure (4) Income
Last Answer : (1) Consumption Explanation: Desired savings are kept equal to desired investment by responses to interest rate changes. Savings identity or the savings investment identity is a concept in ... brings savings and investment into balance without any intention by business to increase investment.
Description : Consumption function expresses the relationship between consumption and - (1) savings (2) income (3) investment (4) price
Last Answer : (2) income Explanation: The consumption function is a mathematical formula laid out by famed economist John Maynard Keynes. The formula was designed to show the relationship between real disposable ... being what Keynes considered the most important determinant of short-term demand in an economy.
Description : Investment Multiplier is a (a) ratio between income and investment. (b) ratio between investment and savings (c) ratio between consumption and investment (d) None of the abov
Last Answer : (b) ratio between investment and savings
Description : The value of investment multiplier relates to (1) change in income due to change in autonomous investment. (2) change in autonomous investment due to change in income. (3) change in income due to change in consumption. (4) change in the income due to change in induced investment.
Last Answer : change in autonomous investment due to change in income.
Description : Investment multiplier shows the effect of investment on (1) Employment(2) Savings (3) Income (4) Consumption
Last Answer : Income
Description : Consumption function expresses the relationship between consumption and (1) savings (2) income (3) investment (4) price
Last Answer : income
Description : Consumptions function refers to (1) relationship between income and employment (2) relationship between savings and investment (3) relationship between input and output (4) relationship between income and consumption
Last Answer : relationship between income and consumption
Description : Investment and savings are kept equal through a change in the level of (1) Consumption (2) Investment (3) Government expenditure (4) Income
Last Answer : Consumption
Description : In free economy the decision about investment, saving and consumption are decided by (a) Price mechanism ; (b) Central bank ;(c) Planning Commission ;(d) Finance budget
Last Answer : (a) Price mechanism
Description : Expenditure on advertisement and public relations by an enterprise is a part of its (1) consumption of fixed capital (2) final consumption expenditure (3) intermediate consumption (4) fixed capital
Last Answer : intermediate consumption
Description : Lower interest rates are likely to (a) Decrease consumption. (b) Increase cost of borrowing. © Encourage saving. (d) Increase borrowing and spending.
Last Answer : (d) Increase borrowing and spending.
Description : Gross Profit means - (1) Total investment over total saving (2) Changes in methods of production (3) Changes in the form of business organisation (4) Total receipts over total expenditure
Last Answer : (4) Total receipts over total expenditure Explanation: In accounting, gross profit or sales profit is the difference between revenue and the cost of making a product or providing a service, before deducting ... . Gross profit = Net sales (total receipts) - Cost of goods sold (total expenditure).
Description : Gross Profit means (1) Total investment over total saving (2) Changes in methods of production (3) Changes in the form of business organisation (4) Total receipts over total expenditure
Last Answer : Total receipts over total expenditure
Description : The relationship between aggregate consumption expenditure and aggregate income of household sector is known as ………………………. function. (a) Consumption ; (b) Saving ; (c) Expenditure ; (d) Income
Last Answer : (a) Consumption
Description : If saving exceeds investment, how will the national income? -Do You Know?
Last Answer : answer:
Description : 1. Capital formation, Saving, Income, Investment, Production.
Last Answer : Arrange in proper order: 1. Capital formation, Saving, Income, Investment, Production. 2. ... Cards, White Ration Cards, Yellow Ration Cards.
Description : Goods which are meant either for consumption or for investment are called - (1) Final goods (2) Giffen goods (3) Inferior goods (4) Intermediate goods
Last Answer : (1) Final goods Explanation: All goods which are meant either (i) for consumption by consumers or (ii) for investment by firms are called final goods. They are finished goods, meant for final ... stages of production. Cars, television sets, cloth, food, machinery, equipments etc. are final goods.
Description : According to Keynes, business cycles are due to variation in the rate of investment caused by fluctuations, in the - (1) Marginal efficiency of capital (2) Marginal propensity to save (3) Marginal propensity to consumption (4) Marginal efficiency to investment
Last Answer : (1) Marginal efficiency of capital Explanation: According to Keynes' General Theory of Employment, Interest, and Money,' business cycles are caused by variations in the rate of investment ... efficiency of capital. Marginal efficiency of capital means the expected profits from new investments.
Description : Payment of water charges by the farmers to the government represents - (1) intermediate consumption (2) final consumption (3) fixed investment (4) inventory investment
Last Answer : (1) intermediate consumption Explanation: Intermediate consumption is an accounting concept which measures the value of the goods and services consumed as inputs by a process of production. It excludes fixed assets whose ... .g. bulk sugar) or completely used up (e.g. electric power, water, etc).
Description : Steel sheets used in the production of furnitures is an example of (1) an intermediate good (2) a final good (3) an investment good (4) a consumption good
Last Answer : (1) an intermediate good Explanation: Intermediate goods are semifinished products are goods that are used as inputs in the production of oilier goods including final goods. It comprises material or ... , intermediate goods either become part of the final product, or are changed beyond recognition.
Description : The "actual"• value of the variables like consumption, investment, output, etc, is known as: a) ex post measures b) ex ante measures c) ex pre measures d) none of the above
Last Answer : b) ex ante measures 4) What is "mps"• or the 'marginal propensity t
Description : The "planned"• value of the variables like consumption, investment, output, etc, is known as: a) ex post measures b) ex ante measures c) ex pre measures d) none of the above
Last Answer : a) ex post measures
Description : What is the term in economics for the consumption of fixed capital? a) Investment b) Value added c) Production flow d) Depreciation
Last Answer : d) Depreciation
Description : Which of the following does not cause a shift in aggregate demand ? (a) Consumption (b) Government expenditure (c) Investment (d) Prices
Last Answer : (d) Prices
Last Answer : an intermediate good
Description : According to Keynes, business cycles are due to variation in the rate of investment caused by fluctuations , in the (1) Marginal efficiency of capital (2) Marginal propensity to save (3) Marginal propensity to consumption (4) Marginal efficiency to investment
Last Answer : Marginal efficiency of capital
Description : Goods which are meant either for consumption or for investment are called (1) Final goods (2) Giffen goods (3) Inferior goods (4) Intermediate goods
Last Answer : Final goods
Description : Payment of water charges by the farmers to the govern-ment represents (1) intermediate consumption (2) final consumption (3) fixed investment (4) inventory investment
Description : Consumption demand does not depend upon the level of (a) Income ; (b) Propensity to consume ; (c) Consumer spending ; (d) Marginal efficiency of investment.
Last Answer : (d) Marginal efficiency of investment.
Description : According to the classical system, saving is a function of - (1) Income (2) The interest rate (3) The real wage (4) The Price level
Last Answer : (1) Income Explanation: Saving function is a mathematical relation between saving and income by the household sector. This function captures the saving-income relation, the flip side of the consumption-income relation that forms one of the key building blocks for Keynesian economics.
Description : Cheap money means - (1) Low rates of interest (2) Low level of saving (3) Low level of income (4) Low level of standard of livtrig
Last Answer : (1) Low rates of interest Explanation: Cheap money is a loan or credit with a low interest rate, or the setting of low interest rates by a central bank like the Federal Reserve. ... funds, CDs and bonds. Cheap money can have detrimental economic consequences as borrowers take on excessive leverage.
Description : According to the classical system, saving is a function of (1) Income (2) The interest rate (3) The real wage (4) The Price level
Description : A siuation where we have people whose level of income is not sufficient to meet the minimum consumption expenditure is considered as - (1) Absolute Poverty (2) Relative Poverty (3) Urban Poverty (4) Rural Poverty
Last Answer : (1) Absolute Poverty Explanation: Absolute poverty is defined as a situation in which the individual's basic needs are not covered, in other words, there is a lack of basic goods and services ( ... shelter, education and information. It depends not only on income but also on access to services."
Description : When income increase, consumption also increases : (1) in a lower proportion (2) in a higher proportion (3) in the same proportion (4) None of the options
Last Answer : (1) in a lower proportion Explanation: According to the Keynesian Consumption theory, "men are disposed, as a rule and on average, to increase their consumption as their income increases, but ... consume decreases, i.e., house-holds spend a decreasing proportion of marginal income on consumption.
Description : The Keynesian consumption function shows a relation between - (1) aggregate consumption and total population. (2) aggregate consumption and general price level. (3) aggregate consumption and aggregate income (4) aggregate consumption and interest rate
Last Answer : (3) aggregate consumption and aggregate income Explanation: According to Keynesian Theory of consumption, the current real disposable income is the most important determinant of consumption in the short run. It bases consumption on current income.
Description : The Psychological law of consumption states that - (1) proportionate increase in consumption is less than proportionate increase in income (2) increase in income is equal to increase in consumption (3) ... is greater than increase in income (4) consumption does not change with a change in income
Last Answer : (1) proportionate increase in consumption is less than proportionate increase in income Explanation: According to Keynes' psychological law of consumption, increased aggregate consumption due to increased ... demand of the people are already fulfilled, they start saving the extra additional income.
Description : Average propensity to consume is defined as - (1) Aggregate consumption +Total population (2) Aggregate income ÷ Aggregate consumption (3) Change in consumption ÷ Change in income (4) Aggregate consumption +Aggregate income
Last Answer : (4) Aggregate consumption +Aggregate income Explanation: In economics, the average propensity to consume (APC) is defined as the ratio of aggregate or total consumption to aggregate income in a given ... propensity to consume, for any income level, may be found by dividing consumption by income.
Description : The functional relationship between income and consumption expenditure is explained by - (1) Consumer' Surplus (2) Law of Demand (3) Law of Supply (4) Keynes's psychological law of consumption
Last Answer : (4) Keynes's psychological law of consumption Explanation: Keynes defined Psychological Law of Consumption in terms of, "The fundamental psychological law, upon which we are entitled to depend with great ... consumption as their income increases but not by as much as the increase in the income."
Description : Income and consumption are : (1) inversely related (2) directly related (3) partially related (4) unrelated.
Last Answer : (2) directly related Explanation: Consumption and income arc directly or positively related. An increase in income is associated with an increase in income; a decrease in consumption accompanies a decrease in income.
Description : Forced Savings refer to - (1) Reduction of consumption consequent to a rise in prices (2) Taxes on individual income and wealth (3) Compulsory deposits imposed on income tax payers (4) Provident fund contribution of private sector employees
Last Answer : (1) Reduction of consumption consequent to a rise in prices Explanation: Forced saving is an economic situation in which consumers spend less than their disposable income, not because they want to ... free economy, this situation would normally result in increase in prices and inflow of more goods.