CBSE Class 12 Economics Determination of Income and Employment MCQs Set 03

Question: When MPS value is 0.25, the value of investment multiplier will be?
a) 2
b) 4
c) 5
d) 1.33

Answer: b

Question: If saving function of an economy is S = -50 + 0.25 Y, then the value of MPC is——-
a) 0.25
b) 0.75
c) 1.25
d) -0.25

Answer: b

Question: Maximum value of investment multiplier is————- when the value of MPC———–
a) Ten, zero
b) infinity, one
c) infinity, zero
d) none of them

Answer: b

Question: In an economy investment increase by 100 Crores, and MPC is 0.57, then National income will increase by———-
a) 250
b) 400
c) 570
d) 500

Answer: b

Question: If consumption expenditure is equal to the national income, then APS will be?
a) 1
b) 0
c) -1
d) infinity

Answer: b

Question: Which of the following values may be negative?
a) MPC
b) MPS
c) APS
d) APC

Answer: c

Question: When MPC is increasing in the economy, the rate of investment multiplier will———
a) Rise
b) Fall
c) Either rise or fall
d) Neither rise nor fall

Answer: a

Question: The ratio of change in saving and change in Income is———————-
a) APC
b) APS
c) MPC
d) MPS

Answer: d

Question: If the value of APC is greater than one, APS will be?
a) Negative
b) Zero
c) Greater than one
d) None

Answer: a

Question: Multiplier is —————— related to the MPS.
a) Negatively
b) Directly
c) Not
d) Rarely

Answer: a

Question: Which monetary measure may be adopted to correct Deficient Demand?
a) Reduction in Bank Rate
b) Buying Securities in Open Market
c) Reducing Cash Reserve Ratio
d) All the above

Answer: d

Question: If saving function of an economy is S = -50 + 0.25 Y, then the value of MPC is——-
a) 0.25
b) 1.25
c) -0.25
d) 0.75

Answer: d

Question: When MPC is increasing in the economy, the rate of investment multiplier will———
a) Rise
b) Fall
c) Either rise or fall
d) Neither rise nor fall

Answer: a

Question: Maximum value of investment multiplier is————- when the value of MPC———–
a) Ten, zero
b) infinity, one
c) infinity, zero
d) none of them

Answer: b

Question: On which concept does classical viewpoint depend?
a) Say’s Law of Market
b) Perfect Flexibility of Wage Rate
c) Perfect Flexibility of Interest Rate
d) All of these

Answer: d

Question: If consumption expenditure is equal to the national income, then APS will be?
a) 1
b) 0
c) -1
d) infinity

Answer: b

Question: ‘The theory of employment multiplier’ was propounded by:
a) Keynes
b) Kahn
c) Hansen
d) Marshall

Answer: b

Question: AD curve is a:
a) Horizontal straight line parallel to the X-axis
b) Positively sloped curve
c) Negatively sloped curve
d) Vertical straight line parallel to the Y-axis

Answer: b

Question: The ratio of change in saving and change in Income is———————-
a) MPC
b) APC
c) MPS
d) APS

Answer: c

Question: Multiplier is —————— related to the MPS.
a) Negatively
b) Directly
c) Not
d) Rarely

Answer: a

Question: Which factor affects Keynesian Multiplier?
a) Marginal Propensity to Save
b) Marginal Propensity to Consume
c) Both (a) and (b)
d) None of the above

Answer: c

Question: When MPS value is 0.25, the value of investment multiplier will be?
a) 1.33
b) 2
c) 5
d) 4

Answer: d

Question: Which of these is a component of Aggregate Demand?
a) Private consumption expenditure
b) Investment expenditure
c) Savings
d) All of these

Answer: a, b

Question: Which of the following statements about APC is incorrect:
a) APC can be greater and smaller than 1
b) APC can be equal to 1
c) APC can be zero
d) APC falls with increase in income

Answer: c

Question: The value of _ can never be negative, while ___ can have a value equal to one.
a) MPS, APC
b) MPC, APS
c) APC, APS
d) APS, APC

Answer: a

Question: If the value of APC is greater than one, APS will be?
a) Negative
b) Zero
c) Greater than one
d) None

Answer: a

Question: In an economy, investment increases by 100 Crores, and MPC is 0.57, then National income will increase by———-
a) 500
b) 250
c) 570
d) 400

Answer: d

Question: Which of the following is a Real Investment?
a) Purchasing of a Share
b) Purchasing of Old Factory
c) Construction of Buildings
d) Opening Deposit Account in the Bank

Answer: c

Question: Which of the following values may be negative?
a) MPC
b) MPS
c) APS
d) APC

Answer: c

Question: If the value of Average Propensity to Consume (APC) is 0.8 and National Income is ₹4,000 crore, the value of savings will be _ .
a) ₹100 crores
b) ₹200 crores
c) ₹800 crores
d) ₹500 crores

Answer: c

Question: The classical theory is based on the assumption of:
a) Say’s the law of market
b) Flexibility in wage rates
c) Flexibility in interest rate
d) All of the above

Answer: d

Question: In Keynesian economics, the state of Deficit Demand is called as:
a) Full Employment Equilibrium
b) Under Full Employment Equilibrium
c) Both (a) and (b)
d) None of the above

Answer: b

Question: At the break-even point:
a) Consumption curve lies below the 45 degree line
b) Consumption curve intersects 45 degree line
c) Consumption curve lies above the 45 degree line
d) None of these

Answer: b

Question: The value of Keynesian Investment Multiplier depends on:
a) Marginal Propensity to Consume
b) Marginal Productivity of Capital
c) Income Level
d) Investment Level

Answer: a

Question: According to the saving-investment viewpoint, income employment equilibrium will be determined at a point where:
a) S > I
b) S = I
c) I > S
d) None of these

Answer: b

Question: Which one is the reason for appearing Deficit Demand condition?
a) Fall in the money supply in the country
b) Fall in investment demand as a result of rising in bank rate
c) Fall in disposable income and consumer demand due to increase in taxes
d) All the above

Answer: d

Question: the saving Function: S = -100 + 0.6Y, the value of autonomous consumption will be:
a) 0.6
b) -100
c) 0.4
d) 100

Answer: b

Question: Which of the following is correct?
a) MPC + APC = 1
b) MPC + APS = 1
c) MPC + MPS = 1
d) MPC – MPS = 1

Answer: c

Question: Which of the following is true about AD in a two sector economy:
a) AD = Consumption + Investment
b) AD curve starts from some point above the origin
c) AD curve has a positive slope
d) All of these

Answer: d

Read the following statement given below and choose the correct alternative

Question: Assertion (A)- The demand curve is a positively sloped straight line
Reason ( R)- Aggregate demand is Sum of investment and consumption
a) Both assertion and reason are true. Reason is the correct explanation of assertion
b) Both assertion and reason are true. Reason is not the correct explanation of assertion
c) Assertion is true but reason is not
d) Reason is true but Assertion is not

Answer: b

Question: Assertion (A): Consumption curve makes an intercept on the Y-axis, some point above the origin.
Reason (R): People need certain basic goods and services to sustain themselves, even if income is zero.
Alternatives:
a) Both Assertion and Reason are true and Reason (R) is the correct explanation of Assertion (A)
b) Both Assertion and Reason are true and Reason (R) is not the correct explanation of Assertion (A)
c) Assertion (A) is True but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True

Answer: a

Question: Assertion (A): Excess demand does not lead to any increase in the level of output.
Reason (R): Excess demand gives rise to an inflationary gap.
Alternatives:
a) Both Assertion and Reason are true and Reason (R) is the correct explanation of Assertion (A)
b) Both Assertion and Reason are true and Reason (R) is not the correct explanation of Assertion (A)
c) Assertion (A) is True but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True

Answer: b

Question: Assertion (A): There is a positive relationship between saving and income.
Reason (R): Savings are positive even at zero level of National Income.
Alternatives:
a) Both Assertion and Reason are true and Reason (R) is the correct explanation of Assertion (A)
b) Both Assertion and Reason are true and Reason (R) is not the correct explanation of Assertion (A)
c) Assertion (A) is True but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True

Answer: c