McqMate
These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Bachelor of Arts in Economics (BA Economics) .
| 51. |
Employment equilibrium in the Classical theory is achievedthrough: |
| A. | wage-price flexibility. |
| B. | changes in aggregate demand |
| C. | changes in aggregate supply |
| D. | none of these. |
| Answer» A. wage-price flexibility. | |
| 52. |
Market does not clear is a proposition of: |
| A. | neoclassical theory. |
| B. | keynesian economics |
| C. | monetarism |
| D. | rational expectations |
| Answer» B. keynesian economics | |
| 53. |
The interest rate paid on bonds is known as: |
| A. | call rate |
| B. | coupon rate |
| C. | repo rate |
| D. | bank rate |
| Answer» B. coupon rate | |
| 54. |
The monetary policy is completely ineffective when the LM curve is: |
| A. | vertical . |
| B. | horizontal. |
| C. | upward sloping. |
| D. | downward sloping |
| Answer» B. horizontal. | |
| 55. |
Monetarism is associated with: |
| A. | keynesian school |
| B. | chicago school |
| C. | cambridge school. |
| D. | neo-classical school. |
| Answer» B. chicago school | |
| 56. |
Changes in the subjective or objective factors |
| A. | never affect consumption function |
| B. | always cause downward shift in consumption function |
| C. | always cause upward shift in consumption function |
| D. | they cause upward or downward shifts in consumption function |
| Answer» D. they cause upward or downward shifts in consumption function | |
| 57. |
Saving is a function of |
| A. | export |
| B. | import |
| C. | investment |
| D. | income |
| Answer» D. income | |
| 58. |
Entrepreneurs will have no tendency to expand or contract output and employment when |
| A. | ad>as |
| B. | ad<as |
| C. | ad=as |
| D. | none of the above |
| Answer» C. ad=as | |
| 59. |
The slope of the consumption function is called |
| A. | mpc |
| B. | mps |
| C. | apc |
| D. | aps |
| Answer» A. mpc | |
| 60. |
The concept of effective demand is associated with the nameof |
| A. | marshall |
| B. | keynes |
| C. | krugman |
| D. | say |
| Answer» B. keynes | |
| 61. |
In a closed economy, the value of multiplier , when MPC is 0.90 |
| A. | 25 |
| B. | 90 |
| C. | 10 |
| D. | 9 |
| Answer» C. 10 | |
| 62. |
Income is a ------- variable |
| A. | flow |
| B. | discontinuous |
| C. | stock |
| D. | none of the above |
| Answer» A. flow | |
| 63. |
Ratio of consumption expenditure to any particular level ofincome |
| A. | mps |
| B. | aps |
| C. | apc |
| D. | mpc |
| Answer» C. apc | |
| 64. |
Psychological law of consumption states that the value of MPC is lies between zero and |
| A. | 1 |
| B. | 2 |
| C. | 3 |
| D. | 4 |
| Answer» A. 1 | |
| 65. |
Net investment is also known as |
| A. | depreciation |
| B. | induced investment |
| C. | autonomousinvestment |
| D. | capital formation |
| Answer» D. capital formation | |
| 66. |
In the saving function S = -a + (1-b)Y, the term ‘b’ denotes |
| A. | saving |
| B. | mpc |
| C. | mps |
| D. | aps |
| Answer» B. mpc | |
| 67. |
Who propounded Psychological law of consumption |
| A. | adam smith |
| B. | ricardo |
| C. | keynes |
| D. | pigou |
| Answer» C. keynes | |
| 68. |
When MPS = 0.2, MPC will be |
| A. | 0.8 |
| B. | 0.2 |
| C. | 1.2 |
| D. | 20 |
| Answer» A. 0.8 | |
| 69. |
In the linear consumption function C = a + bY, coefficient ‘a’ denotes |
| A. | mpc |
| B. | apc |
| C. | autonomous consumption |
| D. | induced consumption |
| Answer» C. autonomous consumption | |
| 70. |
According to Keynes, rising aggregate income is always associated with |
| A. | higher saving rate |
| B. | higher import |
| C. | lower export |
| D. | low production |
| Answer» A. higher saving rate | |
| 71. |
When MPC = 0.5, the value of multiplier is |
| A. | 5 |
| B. | 0.5 |
| C. | 2 |
| D. | 4 |
| Answer» C. 2 | |
| 72. |
Who postulated the law Supply creates its own demand |
| A. | keynes |
| B. | j b say |
| C. | marshall |
| D. | pigou |
| Answer» B. j b say | |
| 73. |
Autonomousinvestment is |
| A. | income inelastic |
| B. | instable |
| C. | interest elastic |
| D. | incomeelastic |
| Answer» A. income inelastic | |
| 74. |
MEC for a capital good was found out to be 10% and the market rate of interest is 9%, then the investment is |
| A. | not profitable |
| B. | profitable |
| C. | breakeven |
| D. | cannot say |
| Answer» B. profitable | |
| 75. |
In the Keynesian two sector economy, AD>AS, then |
| A. | s=i |
| B. | s>i |
| C. | s<i |
| D. | s=0 |
| Answer» C. s<i | |
| 76. |
Value of MPC is |
| A. | >1 |
| B. | <1 |
| C. | 0 |
| D. | 0≤ mpc ≥1 |
| Answer» D. 0≤ mpc ≥1 | |
| 77. |
Schedule that expressesrelationship between rate of interest and corresponding amount of investment |
| A. | mei |
| B. | mec |
| C. | effective demand |
| D. | aggregate demand |
| Answer» A. mei | |
| 78. |
Net investment is |
| A. | value of gross minus subsidies |
| B. | investment after providing for depreciation |
| C. | value of gross output before providing forsubsidies |
| D. | none of the above |
| Answer» B. investment after providing for depreciation | |
| 79. |
MEC is directly related to |
| A. | prospective yield |
| B. | supply price |
| C. | rate of interest |
| D. | all of the above |
| Answer» A. prospective yield | |
| 80. |
According to Keynes the most important determinant ofconsumption |
| A. | rate of interest |
| B. | saving |
| C. | income |
| D. | investment |
| Answer» C. income | |
| 81. |
In the Keynesian two sector economy, AD<AS, then |
| A. | s=i |
| B. | s>i |
| C. | s<i |
| D. | s=0 |
| Answer» B. s>i | |
| 82. |
In the equation C = 60 + 0.6 Y, MPCis |
| A. | 60 |
| B. | 0.6 |
| C. | 0 |
| D. | 1 |
| Answer» B. 0.6 | |
| 83. |
Keynes assumed thepresence of --------- economy for the fundamental law of consumption |
| A. | capitalistic |
| B. | socialistic |
| C. | planned |
| D. | none of the above |
| Answer» A. capitalistic | |
| 84. |
According to Keynes the most important determinant ofinvestment |
| A. | mec |
| B. | effective demand |
| C. | aggregate demand |
| D. | rate of interest |
| Answer» A. mec | |
| 85. |
When disposable income risesfrom Rs 500 to Rs 600 and consumption expenditure changes from Rs 470 to Rs 560, MPC will be equalto |
| A. | 900 |
| B. | 100 |
| C. | 0.9 |
| D. | 1 |
| Answer» C. 0.9 | |
| 86. |
In a two sector economy, aggregate demand is equalto |
| A. | c+i |
| B. | c+s |
| C. | s+i |
| D. | all of the above |
| Answer» A. c+i | |
| 87. |
In Keynesian terminology, investment means: |
| A. | financial investment |
| B. | real investment |
| C. | induced investment |
| D. | none of the above |
| Answer» B. real investment | |
| 88. |
Rate of change in savings to change in income: |
| A. | aps |
| B. | apc |
| C. | mps |
| D. | mpc |
| Answer» C. mps | |
| 89. |
Keynesian economics is also known as: |
| A. | supply side economics |
| B. | monetary economics |
| C. | rational expectations |
| D. | depression economics |
| Answer» D. depression economics | |
| 90. |
Which of the following can cause shifts in consumption function: |
| A. | psychological attitude |
| B. | social practices |
| C. | business motives |
| D. | changes in price level |
| Answer» D. changes in price level | |
| 91. |
APC is determined by the following equation: |
| A. | c/y |
| B. | s/y |
| C. | ∆c/∆y |
| D. | ∆s/∆y |
| Answer» A. c/y | |
| 92. |
In the Keynesian two sector model, when AD = AS, then: |
| A. | s<i |
| B. | s>i |
| C. | s=i |
| D. | i=0 |
| Answer» C. s=i | |
| 93. |
Which of the following is not correct: |
| A. | mpc declines as income increases |
| B. | mpc is positive but less than one |
| C. | mps is always positive |
| D. | all the above |
| Answer» C. mps is always positive | |
| 94. |
According to Keynes, saving is: |
| A. | private virtue but not social virtue |
| B. | private and social virtue |
| C. | is neither private virtue nor social virtue |
| D. | is either social virtue or private virtue |
| Answer» A. private virtue but not social virtue | |
| 95. |
MEC isinversely related to: |
| A. | prospective yield |
| B. | supply price |
| C. | investment |
| D. | rate of interest |
| Answer» A. prospective yield | |
| 96. |
Keynes considered subjective and objective factors: |
| A. | important determinants of consumption |
| B. | unimportant determinants of consumption |
| C. | determinants of investment |
| D. | determinants of business’s willingness to pay |
| Answer» B. unimportant determinants of consumption | |
| 97. |
The sum of marginal propensity to consume plus marginal propensity to save must equal to: |
| A. | 0 |
| B. | 1 |
| C. | 100 |
| D. | 1000 |
| Answer» B. 1 | |
| 98. |
Keynesian economics is: |
| A. | macro |
| B. | micro |
| C. | both |
| D. | none |
| Answer» A. macro | |
| 99. |
The MEC increases when: |
| A. | capitalstock increases |
| B. | capitalstock decreases |
| C. | capital remains constant |
| D. | none of the above |
| Answer» B. capitalstock decreases | |
| 100. |
Which of the following is correct? |
| A. | 1+mps =mpc |
| B. | 1- mpc =mps |
| C. | mpc + mps >1 |
| D. | mpc+ mps<1 |
| Answer» B. 1- mpc =mps | |
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