Consumption and Investment Functions Book Back Questions

12th Standard EM

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Economics

Time : 00:45:00 Hrs
Total Marks : 30
    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. Lower interest rates are likely to :

    (a)

    Decrease in consumption

    (b)

    increase cost of borrowing

    (c)

    Encourage saving

    (d)

    increase borrowing and spending

  4. As income increases, consumption will______

    (a)

    fall

    (b)

    not change

    (c)

    fluctuate

    (d)

    increase

  5. When investment is assumed autonomous the slope of the AD schedule is determined by the______

    (a)

    marginal propensity to invest

    (b)

    disposable income

    (c)

    marginal propensity to consume

    (d)

    average propensity to consume

  6. 3 x 2 = 6
  7. Define Marginal Propensity to Save (MPS).

  8. Define Multiplier.

  9. Define Accelerator

  10. 3 x 3 = 9
  11. State the propositions of Keynes’s Psychological Law of Consumption

  12. Differentiate autonomous and induced investment.

  13. Mention the differences between accelerator and multiplier effect 

  14. 2 x 5 = 10
  15. Illustrate the working of Multiplier

  16. What are the differences between MEC and MEI.

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