Chapter 4: Consumption and Investment FunctionsMarch 11, 2024 Maven Leave a Comment Welcome to the Chapter 4: Consumption and Investment Functions Quiz! This quiz is based on the book back questions. Name Email 1. Lower interest rates are likely to : Decrease in consumption Increase cost of borrowing Encourage saving Increase borrowing and spending None 2. If the Keynesian consumption function is C=10+0.8 Y then, and disposable income is ₹100, what is the average propensity to consume? ₹ 0.8 ₹ 800 ₹ 810 ₹0.9 None 3. An increase in the marginal propensity to consume will: Lead to consumption function becoming steeper Shift the consumption function upwards Shift the consumption function downwards Shift savings function upwards None 4. If the Keynesian consumption function is C=10+0.8Y then, when disposable income is Rs 100, what is the marginal propensity to consume? ₹ 0.8 ₹ 800 ₹ 810 ₹ 0.81 None 5. The average propensity to consume is measured by C/Y CxY Y/C C+Y None 6. As increase in consumption at any given level of income is likely to lead Higher aggregate demand An increase in exports A fall in taxation revenue A decrease in import spending None 7. The relationship between total spending on consumption and the total income is the ___________________ Consumption function Savings function Investment function aggregate demand function None 8. If the Keynesian consumption function is C=10+0.8 Y then, if disposable income is Rs 1000, what is amount of total consumption? ₹ 0.8 ₹ 800 ₹ 810 ₹ 0.81 None 9. The MPC is equal to : Total spending / total consumption Total consumption/total income Change in consumption /change in income None of the above. None 10. As national income increases The APC falls and gets nearer in value to the MPC. The APC increases and diverges in value from the MPC. The APC stays constant The APC always approaches infinity. None 11. As income increases, consumption will _________ fall not change fluctuate increase None 12. In an open economy import _________the value of the multiplier Reduces increase does not change changes None 13. The sum of the MPC and MPS is _______ 1 2 0.1 1.1 None 14. The term MEC was introduced by Adam Smith J.M. Keynes Ricardo Malthus None 15. According to Keynes, investment is a function of the MEC and _____ Demand Supply Income Rate of interest None 16. The term super multiplier was first used by J.R.Hicks R.G.D. Allen Kahn Keynes None 17. When investment is assumed autonomous the slope of the AD schedule is determined by the _____ marginal propensity to invest disposable income marginal propensity to consume average propensity to consume None 18. The multiplier tells us how much __________ changes after a shift in _____ Consumption , income investment, output savings, investment output, aggregate demand None 19. The multiplier is calculated as 1/(1-MPC) 1/MPS 1/MPC a and b None 20. It the MPC is 0.5, the multiplier is ____________ 2 1/2 0.2 20 None Time's upRelated Posts:Chapter 2 : Functions Of ManagementChapter 2. Consumption AnalysisChapter 4: Cost and Revenue AnalysisChapter 5: Market Structure and Pricing
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