An increase in the marginal propensity to consume will:

(a)

Lead to consumption function becoming steeper

(b)

Shift the consumption function upwards

(c)

Shift the consumption function downwards

(d)

Shift savings function upwards

Lower interest rates are likely to :

(a)

Decrease in consumption

(b)

increase cost of borrowing

(c)

Encourage saving

(d)

increase borrowing and spending

As income increases, consumption will______

(a)

fall

(b)

not change

(c)

fluctuate

(d)

increase

According to Keynes, investment is a function of the MEC and _________

(a)

Demand

(b)

Supply

(c)

Income

(d)

Rate of interest

The marginal propensity save _________________

(a)

ΔC/ΔY

(b)

ΔS/ΔY

(c)

ΔP/ΔQ

(d)

C/Y*ΔP/ΔQ

The expected rate of profit technically means __________

(a)

Marginal efficiency of capital

(b)

Aggregate Demand

(c)

The principle of effective demand

(d)

Consumption function

The concept of multiplier was first developed by ______________ in terms of employment.

(a)

R.F.Khan

(b)

J.M Keynes

(c)

H.F.Khan

(d)

M.J.Keynes

"The consumption expenditure depends not only on his current income but also past income and standard of living" Who said this?

(a)

J.M.Keynes

(b)

R.F.Khan

(c)

J.R Hicks

(d)

Duesenberry

When MPC + MPS = 1, which one of the following is wrong?

(a)

MPS = MPC

(b)

MPC + MPC > 1

(c)

MPS = 1 - MPC

(d)

MPC = 1 - MPS

Assertion: When income increases, consumption expenditure also increases but by a smaller amount.
Reason: As income increases, our wants are satisfied side by side, so that the need to spend more on consumer goods diminishes.

(a)

Both (A) and (R) are true and (R) is the correct explanation of (A)

(b)

Both (A) and (R) are true, but (R) is not the correct explanation of (A)

(c)

(A) is true, but (R) is false

(d)

(A) is false, but (R) is true

Who is the proponent of the following statement? “The community with more equal distribution of income tends to have high propensity to consume.”

(a)

Keynes

(b)

V.K.R.V. Rao

(c)

Hicks

(d)

Say

What is relevant in the context of MEC?
I. The prospective yield from a capital asset.
II. The supply price of a capital asset.

(a)

I only relevant

(b)

II only relevant

(c)

Both I and II are relevant

(d)

Both are irrelevant

Which one of the following factor that is not taken into consideration while making any investment decision

(a)

The cost of the capital asset

(b)

The expected rate of return from during its lifetime

(c)

The Marginal propensity to save

(d)

The market rate of interest

The systematic development of the simple accelerator model was made by ______

(a)

J.M.Clar

(b)

J.M.Keynes

(c)

R.F. Khan

(d)

Learner

When MPS = 0.2, MPC will be

(a)

0.8

(b)

0.2

(c)

1.2

(d)

20

According to Keynes the most important determinant of consumption

(a)

Rate of interest

(b)

Saving

(c)

Income

(d)

Investment

Which of the following is not correct:

(a)

MPC declines as income increase

(b)

MPC is positive but less than one

(c)

MPS is always positive

(d)

All the above

The marginal propensity to save is defined as:

(a)

1-ΔC/ΔY

(b)

S/Y

(c)

Y/S

(d)

Y/ΔS

Assertion: The multiplier refers to the change in national income resulting from change in investment.
Reason: The value of multiplier itself depends on consumption function or marginal propensity to consume.

(a)

Both A and R are true and R is the correct explanation of A

(b)

Both A and R are true but R is not the correct explanation of A

(c)

A is true but R is false

(d)

A is false but R is true

Assertion: The marginal efficiency of capital is also affected by waves of optimism and pessimism in the business cycle.
Reason: If businessmen are optimistic about future, the MEC will be likely to be high. During periods of pessimism the MEC is under estimated and so will be low.

(a)

Both A and R are true and R is the correct explanation of A

(b)

Both A and R are true but R is not the correct explanation of A

(c)

A is true but R is false

(d)

A is false but R is true