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#### Consumption and Investment Functions Important Questions

12th Standard EM

Reg.No. :
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Economics

Time : 01:00:00 Hrs
Total Marks : 50
5 x 1 = 5
1. The average propensity to consume is measured by

(a)

C/Y

(b)

CxY

(c)

Y/C

(d)

C+Y

2. As increase in consumption at any given level of income is likely to lead

(a)

Higher aggregate demand

(b)

An increase in exports

(c)

A fall in taxation revenue

(d)

A decrease in import spending

3. The relationship between total spending on consumption and the total income is the_________

(a)

Consumption function

(b)

Savings function

(c)

Investment function

(d)

aggregate demand function

4. If the Keynesian consumption function is C = 10 + 0.5Y then, and disposable income is 100, what is the average propensity to consume?

(a)

0.5

(b)

0.6

(c)

0.7

(d)

0.8

5. Decrease in consumption at any given level of income is likely to lead

(a)

Lower aggregate demand

(b)

An increase in exports

(c)

Higher aggregate demand

(d)

An increase in Investment

6. 5 x 1 = 5
7. APC

8. (1)

f(r)

9. Determinants of consumption function

10. (2)

Profit motive

11. I

12. (3)

Average propensity to consume

13. Investment that is not dependent on the national income

14. (4)

Subjective and Objective

15. Induced Investment

16. (5)

Autonomous investment

5 x 2 = 10
17. Define Multiplier.

18. Define Accelerator

19. When Y = 120, C = 120, calculate APC.

20. List out the assumption of psychological Law of Consumption.

21. What are the types of investment?

22. 5 x 3 = 15
23. State the concept of super multiplier

24. Specify the limitations of the multiplier.

25. When Y = 180, C = 170, find saving and APS.

26. Write the formula for APC, MPC, APS, MPS.

27. Draw the diagrams for Autonomous investment and induced investment.

28. 3 x 5 = 15
29. Explain Keynes psychological law of consumption f.unction with diagram.

30. Explain consumption function with the help of diagram.

31. Derive the value of the multiplier assuming the basic form of the consumption function as C = a + bY where "a" is autonomous consumption and "b" is the marginal propensity to consume. You may assume a two-sector economy.