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

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bhysteresis

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cA deflationary gap

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dhyperinflation

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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

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b Rs20 million

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c Rs 15 million

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dRs26.67 million

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View Answer Rs80 million

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


a4

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b 25

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c6

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d 2.5

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View Answer 6

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


aautomatic stabiliser

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b multiplier

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celasticity coefficient

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dmarginal propensity of the autonomous variable

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View Answer multiplier

The marginal propensity to withdraw is ?


a1/investment multiplier

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b1-(1/injections multiplier

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c MPS + MPT + MPM

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

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View Answer MPS + MPT + MPM

As the MPS increases the multiplier will ?


adecrease

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b remain constant

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c increase

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

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View Answer decreasedecrease

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


aprevious decisions

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babsolute income

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crelative income

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dpermanent income

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View Answer absolute income

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


athe marginal propensity of expenditure

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bthe marginal propensity to save

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c the average propensity to consume

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dthe marginal propensity to consume

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


a exogenous

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bconstant

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cendogenous

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d independent

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View Answer endogenous

Open Market Operations occur when the government ?


aReduces the interest rate

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bBuys and sells bonds and securities

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cIncreases taxation

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d Increase the exchange rate

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View Answer Increases taxation

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