Economics MCQs

Page No. 273

Assuming there is no government or foreign sector, if the MPC is 8 the multiplier is ?


a5


b8


c2


d1.25


View Answer 5

In macroeconomics, equilibrium is defined as that point at which ?


aaggregate output equals consumption minus investment


bsaving equals consumption


cPlanned aggregate expenditure equals aggregate output


d planned aggregate expenditure equals consumption



The proportion of an increase in national income paid in tax is ?


a the fiscal stance


bhe tax multiplier


cthe marginal tax propensity


dthe average tax propensity



The marginal propensity to save (MPS) is ?


a the average amount of income that is saved


b the fraction of a change in income that is saved


c the ratio of saving to income


d the ratio of income to saving



Disposable income is the part of households income left after the deduction of ?


aincome tax and social security payments


btaxes and the addition of benefits


cincome tax


d contractual payments such as pensions and mortgages



In the equation C = a + bY, which describes the aggregate consumption function ‘b’ stands for ?


aThe marginal propensity to consume.


bThe amount of income when consumption is zero


cThe average consumption level


dThe amount of consumption when income is zero



The total quantity of goods and services produced (or supplied) in an economy in a given period is ?


aaggregate investment


baggregate expenditure


c aggregate demand


d aggregate output


View Answer aggregate output

An outward shift in the demand for money other things being equals should lead to ?


aA lower interest rate but the same quantity of money


b A higher interest rate but the same quantity of money


cA higher quantity of money but lower interest rates


d A higher quantity of money but the same interest rate



To reduce the supply of money the government could ?


aReduce interest rates


bBuy back government bonds


cSell government bonds


dEncourage banks to lend



According to the quantity theory of money an increase in the money supply is most likely to lead to inflation if ?


aThe velocity of circulation decrease


bThe number of transaction decrease


cThere is deflation


dThe velocity of circulation and the number of transactions is constant



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