Quiz about Macroeconomics Theories and Policies 1

Question 1

The most important determinant of consumption and saving is the:

Accepted Answer

level of income.

Answer

price level.

Answer

interest rate.

Answer

level of bank credit.

Question 2

As disposable income goes up, the:

Accepted Answer

average propensity to consume falls.

Answer

volume of investment diminishes.

Answer

average propensity to save falls.

Answer

volume of consumption declines absolutely

Question 3

The investment demand curve suggests:

Accepted Answer

there is an inverse relationship between the real rate of interest and the level of investment spending.

Answer

that changes in the real interest rate will not affect the amount invested.

Answer

there is a direct relationship between the real rate of interest and the level of investment spending.

Answer

that an increase in business taxes will tend to stimulate investment spending.

Question 4

Other things equal, if the real interest rate falls and business taxes rise:

Accepted Answer

we will be uncertain as to the resulting change in investment.

Answer

we can be certain that investment will rise.

Answer

investment will rise until it is equal to saving.

Answer

we can be certain that investment will fall.

Question 5

Which of the following statement is inconsistent with Say’s Law

Accepted Answer

the economy’s level of investment solely depends on the level of income.

Answer

the economy has flexible wages and prices.

Answer

the economy will produce at full employment level of output.

Answer

the economy has an environment of”laissez faire”

Question 6

An increase in investment is caused by

Accepted Answer

lower interest rates

Answer

expectations of lower national income

Answer

a decrease in the marginal propensity to consume

Answer

an increase in withdrawals

Question 7

Which type of bank deals with short term credit?

Accepted Answer

commercial bank

Answer

agricultural bank

Answer

industrial bank

Answer

none of these

Question 8

Demand pull inflation may be caused by

Accepted Answer

a decrease in interest rate

Answer

an increase in cost

Answer

a reduction in government spending

Answer

an outward shift of aggregate supply

Question 9

An increase in aggregate demand is more likely to lead to demand pull inflation

Accepted Answer

if aggregate supply is completely inelastic

Answer

if aggregate supply is completely elastic

Answer

if aggregate supply is unitary elastic

Answer

if aggregate supply is moderately elastic

Question 10

Which of the following is an example of fiscal policy

Accepted Answer

change in tax rate

Answer

change in interest rate

Answer

controlling money supply

Answer

manipulating bank rate

Practice Test On: Macroeconomics Theories and Policies 1

Practice Test On:
Macroeconomics Theories and Policies 1