Question 1

If an upward sloping straight line consumption function makes an intercept at the Y-axis at a positive coordinate, it implies that Marginal Propensity to Consume (MPC) ___________ and Average Propensity to Consume (APC) ___________ as the income increases. (Choose the correct option to fill in the blanks)

Accepted Answer

(D) falls, falls

Question 2

Suppose, the consumption function is given as : C = 205 + 0.9 Y (where C = Total Consumption and Y = National Income) The value of Investment Multiplier (K) would be ____________. (Choose the correct option to fill in the blank)

Accepted Answer

(D) 9.0

Question 3

Read the following statements : Assertion (A) and Reason (R). Choose the correct alternative from those given below. Assertion (A) : Ex-ante savings and Ex-ante investments are never equal to each other. Reason (R) : At equilibrium level of income, aggregate demand may not be equal to the aggregate supply. Alternatives :

Accepted Answer

(D) Assertion (A) is false, but Reason (R) is true.

Question 4

An increase in National Income occurs by Rs. 3,000 crore, as investments increased by Rs. 1,200 crore. The value of investment multiplier would be _________. (Choose the correct alternative to fill up the blank)

Accepted Answer

(D) 5

Question 5

Total consumption expenditure by households under Keynesian Economics is a combination of __________ and __________. Choose the correct alternative to fill in the blanks)

Accepted Answer

(D) Autonomous Consumption, Induced Consumption

Income Determination and Multiplier

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