Economics MCQs

Page No. 279

If injections are less than withdrawals at the full-employment level of national income, there is ?


a an inflationary gap


bhysteresis


cA deflationary gap


dhyperinflation


View Answer A deflationary gap

Assume there is no government or foreign setor, If the MPC is 75 a Rs20 million decrease in planned investment will cause aggregate output to decrease by ?


a Rs80 million


b Rs20 million


c Rs 15 million


dRs26.67 million


View Answer Rs80 million

Assuming there is no government or foreign sector, if the multiplier is 2.5 the MPC is ?


a4


b 25


c6


d 2.5


View Answer 6

The ratio of change in the equilibrium level of output to a change in some autonomous variable is the ?


aautomatic stabiliser


b multiplier


celasticity coefficient


dmarginal propensity of the autonomous variable


View Answer multiplier

The marginal propensity to withdraw is ?


a1/investment multiplier


b1-(1/injections multiplier


c MPS + MPT + MPM


d the proportion of national income that is withdraw from the circular flow of income


View Answer MPS + MPT + MPM

As the MPS increases the multiplier will ?


adecrease


b remain constant


c increase


d either increase or decrease depending on the size of the change in investment


View Answer decreasedecrease

Keynes suggested that decisions to consume and save were based on ?


aprevious decisions


babsolute income


crelative income


dpermanent income


View Answer absolute income

The fraction of change in income that is consumed or spend is called ?


athe marginal propensity of expenditure


bthe marginal propensity to save


c the average propensity to consume


dthe marginal propensity to consume



A variable whose value is determined by the model of which it is a part is termed ?


a exogenous


bconstant


cendogenous


d independent


View Answer endogenous

Open Market Operations occur when the government ?


aReduces the interest rate


bBuys and sells bonds and securities


cIncreases taxation


d Increase the exchange rate


View Answer Increases taxation

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