Description : n the simple Keynesian model investment is (a) Fixed. (b) A function of level of income. © Either fixed or a function of level of income. (d) None of the above.
Last Answer : © Either fixed or a function of level of income.
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 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 : aggregate consumption and aggregate income
Description : Which of the following are not characteristics of Keynesian consumption function? (a) The main influence on consumption in the short run is current disposable income (b) The marginal ... consume decreases as income increases (d) The average propensity to consume increases as income increases
Last Answer : d) The average propensity to consume increases as income increases
Description : If the Keynesian consumption function is, C=10+.8Y, if income is Rs 1000/- what is total consumption. (a) Rs .8/- (b) Rs 800/- © Rs 810/- (d) Rs .81/
Last Answer : © Rs 810/-
Description : n simple Keynesian model, stability of equilibrium exists, if (a) APC is less than one. (b) APS is less than one. © MPC is less than one. (d) None of the above.
Last Answer : (a) APC is less than one.
Description : Which of the following statement is incorrect,- In simple Keynesian model,- (a) MPC+MPS=1 (b) APC+ APS=1 © Both (a) and (b) (d) Neither (a) nor (b).
Last Answer : (d) Neither (a) nor (b).
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 : .Induced investment depends on (a) Price level and rate of interest (b) Level of income and rate of interest © Level of employment and wage rate (d) Price level and wage rate.
Last Answer : (b) Level of income and rate of interest
Description : A price consumption curve, traces the utility maximizing combination of two goods when (a) the price of one good changes (b) the consumer’s preference change © the consumer’s income changes (d) the demand curve for one of the goods shifts rightward
Last Answer : (a) the price of one good changes
Description : An increase in consumption at any given level of income will lead to (a) Higher aggregate demand. (b) An increase in exports. © A fall in taxation revenue. (d) A decrease in import spending.
Last Answer : (a) Higher aggregate demand.
Description : Leontief’s input output model is based on the concept of----- (a) Consumption function (b) Partial Equilibrium © General Equilibrium. (d) All of the above.
Last Answer : © General Equilibrium.
Description : Keynesian theory of investment is known as ----- (a) Marginal Efficiency of Capital Theory. (b) Marginal Efficiency of Investment Theory. © Optimum Stock of Capital Theory. (d) Actual Stock of Capital Theory.
Last Answer : (b) Marginal Efficiency of Investment Theory.
Description : Keynesian analysis is (a) A short run analysis. (b) Long run analysis. © Both short and long run analysis. (d) Neither short nor long run analysis.
Last Answer : (a) A short run analysis.
Description : Assume that the consumption function is of the form, C= 50+.8Y. If income is Rs 1000/- then consumption is,- (a) Rs 50/- 9b) Rs 1050/- © Rs 50/- (d) Rs 850/-
Last Answer : (d) Rs 850/-
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 : 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 : Income
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 : The marginal propensity to consume is equal to (a) Total spending/Total consumption (b) Total consumption/ Total income. © Change in consumption/ Change in income (d) Change in consumption/ Change in savings.
Last Answer : © Change in consumption/ Change in income
Description : Marginal Propensity to Consume is (a) Increase in consumption due to one unit increase in income. (b) Total consumption divided by total income. © Both (a) and (b). (d) Neither (a) nor (b).
Last Answer : (a) Increase in consumption due to one unit increase in income.
Description : On the basis of the Keynesian model of output determination, a multiplier of 3 implies that (a) An increase in consumption by `3 will result in an increase in investment by Re. 1 (b) An increase in ... 2 (d) An increase in investment by Re. 1 will result in an increase in consumption by Re. 1
Last Answer : (c) An increase in investment by Re. 1 will result in an increase in consumption by `2
Description : When tariff is imposed on imports which of the following will increase? (a) Domestic output. (b) Domestic demand. © Domestic price. (d) Domestic consumption.
Last Answer : © Domestic price.
Description : Speculative demand for cash is determined by - (1) The rate of interest (2) the level of income (3) the general price level (4) the market conditions
Last Answer : (1) The rate of interest Explanation: Speculative demand is the demand for financial assets, such as securities, money or foreign currency that is not dictated by real transactions such as trade, or financing. ... rate, more people will expect a rise in interest rate (or a fall in bond prices).
Description : Speculative demand for cash is determined by (1) The rate of interest (2) the level of income (3) the general price level (4) the market conditions
Last Answer : The rate of interest
Description : An increase in investment is caused by (a) Lower interest rates (b) Expectations of lower national income © A decrease in the marginal propensity to consume (d) An increase in withdrawals
Last Answer : (a) Lower interest rates
Description : An increase in marginal propensity to consume will (a) Lead to the consumption function becoming steeper. (b) Shift the consumption function upwards. © Shift the consumption function downwards. (d) Shift the savings function upwards.
Last Answer : d) Lead to the consumption function becoming steeper.
Description : Acording to Keynesian theory of income determination, at full employment, a fall in aggregate demand causes - (1) a fall in prices of output and resources (2) a fall in real gross National product ... a rise in real gross National product and investment (4) a rise in prices of output and resources
Last Answer : (1) a fall in prices of output and resources Explanation: In 1936, John Maynard Keynes published the book "The General Theory of Employment, Interest and Money to explain the prolonged and ... at a below-full-employment equilibrium. Suppose that the economy is at the full-employment equilibrium.
Description : According to Keynesian theory of income determination, at full employment, a fall in aggregate demand causes (1) a fall in prices of output and resources (2) a fall in real gross National product and ... rise in real gross National product and investment (4) a rise in prices of output and resources
Last Answer : a fall in prices of output and resources
Description : As the number of investments made by a firm increases, its internal rate of return - (1) declines due to diminishing marginal productivity. (2) declines because the market rate of interest will ... the firm for the current consumption foregone. (4) increases because the level of savings will fall.
Last Answer : (3) increases to compensate the firm for the current consumption foregone. Explanation: Internal rates of return are commonly used to evaluate the desirability of investments or projects. The higher a ... of return is greater than an established minimum acceptable rate of return or cost of capital.
Description : The relationship between the rate of interest and level of consumption was first visualized by - (1) Amartya K. Sen (2) Milton Friedman (3) Irving Fisher (4) James Duesenberry
Last Answer : (3) Irving Fisher Explanation: Irving Fisher, in His Theory of Interest (1930), found the relationship between interest rates (nominal interest rate and real interest rate) and the ... interest rate on savings and gives an inverse relationship between nominal interest rates and consumer expenditures
Description : The relationship between the rate of interest and level of consumption was first visualized by (1) Amartya K. Sen (2) Milton Friedman (3) Irving Fisher (4) James Duesenberry
Last Answer : Irving Fisher
Description : As the number of investments made by a firm increases, its internal rate of return (1) declines due to diminishing marginal productivity. (2) declines because the market rate of interest will fall ... firm for the current consumption foregone. (4) increases because the level of savings will fall.
Last Answer : increases to compensate the firm for the current consumption foregone.
Description : Which type of deposit gives highest rate of interest? (a) Current deposit (b) Fixed deposit © Recurring deposit. (d) None of these.
Last Answer : (b) Fixed deposit
Description : Which of the following is an example of fiscal policy (a) Change in interest rate (b) Change in tax rate © Controlling money supply (d) Manipulating bank rate
Last Answer : (b) Change in tax rate
Description : Demand pull inflation may be caused by (a) An increase in cost (b) A decrease in interest rate © A reduction in government spending (d) An outward shift of aggregate supply.
Last Answer : (b) A decrease in interest rate
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 : Consumption function expresses the relationship between consumption and (1) savings (2) income (3) investment (4) price
Last Answer : income
Description : Marginal utility means (a) change in total utility due to one unit change in consumption (b) change in total utility due to no change in consumption © change in utility due to change in price (d) change in utility due to change in income
Last Answer : (a) change in total utility due to one unit change in consumption
Description : The quantity demanded depends on (a) its price (b) income © price of other goods (d) all of the above
Last Answer : (d) all of the above
Description : Price elasticity of demand shows the relationship between demand for a commodity and (a) price of other commodities (b) price of that commodity © tastes and preferences of the consumer (d) income of the consumer
Last Answer : (b) price of that commodity
Description : Which of the following statement is inconsistent with Say's Law (a) The economy has flexible wages and prices. (b) The economy's level of investment solely depends on the level of income. © The ... produce at full employment level of output. (d) The economy has an environment of laissez faire .
Last Answer : (b) The economy’s level of investment solely depends on the level of income.
Description : In autarky equilibrium (a) production=consumption. (b) export=import © there is no trade (d) all of the above.
Last Answer : (a) production=consumption.
Description : Gains from trade can be divided into two parts (a) gains from exports and gains from imports. (b) gains from specialization and gains from exchange. © gains from consumption and gains from production. (d) gains from profit and gains from loss.
Last Answer : (b) gains from specialization and gains from exchange.
Description : “Higher the indifference curve, higher will be the level of satisfaction” (a) always true (b) always false © sometimes true and sometimes false (d) true only if price effect is positive.
Last Answer : (b) always false
Description : Demand curve shifts downwards when (a) at the same price level demand falls (b) price increases and demand falls © price falls and demand also falls (d) at the same price level demand increases
Last Answer : © price falls and demand also falls
Description : Cheap Money means - (1) Low Rate of Interest (2) Low level of Savings (3) Low level Income (4) Excess of Black Money
Last Answer : (1) Low Rate 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. Cheap money ... see the same low interest rates on investments like savings accounts, money market funds, CDs and bonds.
Description : According to monetary approach of Balance of Payments, the demand for money is a stable function of (a) income, prices and rate of interest (b) income and prices (c) prices and rate of interest (d) income, prices and foreign exchange reserves
Last Answer : income, prices and rate of interest
Description : Which of the following is not a component of GDP? (a) Government spending (b) Investment © Interest (d) Net exports
Last Answer : © Interest
Description : .An increases in investment is most likely to be caused by (a) Lower interest rates (b) Expectations of lower national incomes © A decrease in the marginal propensity to consume (d) An increase in withdrawals.
Description : An increase in interest rates (a) is likely to reduce savings (b) is likely to reduce external value of currency © Leads to a shift in the MEC schedule (d) Leads to a movement along MEC schedule.
Last Answer : (d) Leads to a movement along MEC schedule