Economics MCQs

Page No. 273

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


a5

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b8

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c2

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d1.25

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View Answer 5

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


aaggregate output equals consumption minus investment

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bsaving equals consumption

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cPlanned aggregate expenditure equals aggregate output

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d planned aggregate expenditure equals consumption

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


a the fiscal stance

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bhe tax multiplier

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cthe marginal tax propensity

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dthe average tax propensity

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The marginal propensity to save (MPS) is ?


a the average amount of income that is saved

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b the fraction of a change in income that is saved

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c the ratio of saving to income

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d the ratio of income to saving

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


aincome tax and social security payments

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btaxes and the addition of benefits

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cincome tax

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d contractual payments such as pensions and mortgages

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


aThe marginal propensity to consume.

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bThe amount of income when consumption is zero

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cThe average consumption level

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dThe amount of consumption when income is zero

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


aaggregate investment

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baggregate expenditure

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c aggregate demand

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d aggregate output

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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

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b A higher interest rate but the same quantity of money

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cA higher quantity of money but lower interest rates

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d A higher quantity of money but the same interest rate

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To reduce the supply of money the government could ?


aReduce interest rates

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bBuy back government bonds

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cSell government bonds

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dEncourage banks to lend

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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

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bThe number of transaction decrease

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cThere is deflation

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dThe velocity of circulation and the number of transactions is constant

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