CBSE Questions for Class 12 Commerce Economics Determination Of Income And Employment Quiz 4 - MCQExams.com

When aggregate demand is greater than aggregate supply, inventories _____.
  • Fall
  • Rise
  • Do not change
  • First fall, then rise
__________ refers to a situation when AD is equal to AS beyond the full employment level.
  • Full Employment Equilibrium
  • Over Full Employment Equilibrium
  • Underemployment Equilibrium
  • None of these
The maximum value of multiplier is when the value of MPC is _________.
  • Infinity, zero
  • Infinity, one
  • One, infinity
  • None of these
 In determination of Equilibrium Level of Income by AD-AS approach, AD curve is represented by ____________.
  • (C + S) curve
  • (C + I) curve
  • (S + I) curve
  • (C +Y) curve
 If MPC =1, the value of multiplier is _____.
  • 0
  • 1
  • Between 0 and 1
  • Infinity
If MPC = 0, the value of multiplier is __________.
  • 0
  • 1
  • Between 0 and 1
  • Infinity
 If the marginal propensity of consume is greater than marginal propensity to save, the value of the multiplier will be (Choose the correct alternative): 
  • greater than 2
  • less than 2
  • equal to 2
  • equal to 5
The consumption function depends on _______________.
  • interest
  • savings
  • wealth
  • income
According to Keynes, consumption function is only affected by objective factors.
  • True
  • False
If MPC $$=0$$, the value of multiplier is (Choose the correct alternative)
  • $$0$$
  • $$1$$
  • Between $$0$$ and $$1$$
  • Infinity
Some of the motives that affect a persons consumption decision are ________________.
  • Motive of Precaution
  • Motive of Improvement
  • Motive of Independence
  • All of the above
If income in terms of wage rate ______________, consumption expenditure _____________.
  • increases, decreases
  • increases, increases
  • decreases, increases
  • decreases, decreases
If LRR is 20%, then money multiplier would be:
  • 5
  • 2
  • 0.2
  • 0.5
Which of the following statement is incorrect?
  • MPC can be more than 1
  • MPC of poor is more than MPC of rich
  • MPC falls with increase in income
  • MPC= Change in consumption/ Change in Income
Money multiplier = ?
  • 1/Cash Reserve Ratio
  • 1/Bank Rate
  • 1/Legal Reserve Ratio
  • 1/Reverse Repo Rate
________________________ consumption refers to minimum level of consumption required for the survival i.e, consumption at zero level national income.
  • Autonomous consumption
  • Induced Consumption
  • Both A and B
  • None
Planned AD is short of its full employment level in a situation of _____.
  • Excess demand
  • Deficient demand
  • Inflationary gap
  • None of these
If MPC = 0, the value of the multiplier will be _____.
  • 0
  • 1
  • Infinity
  • None of these
Minimum level of consumption refers to _____
  • Dependent consumption
  • Independent consumption
  • Autonomous consumption
  • Both B and C
Deficient demand leads to _____.
  • Deflationary gap
  • Excess capacity
  • Low level of employment
  • All of these
Propensity to save is the _____.
  • Additional income that is not be saved
  • Ratio of saving to income
  • Level of saving at which saving and consumption are equal
  • Tendency of the consumer towards higher saving
Desired saving during an accounting year is called _____.
  • Ex-ante savings
  • Ex-post savings
  • Actual savings
  • None of these
In an economy, the population spends Rs 500 crore on absolute necessities needed to sustain themselves. The current income is Rs 2500 crore and MPC is 0.What is the level of saving?
  • Rs 1750 crore
  • Rs 750 crore
  • Rs 1250 crore
  • Rs 2250 crore
In order to correct the situation of excess demand _____.
  • Cost of credit is raised
  • Borrowing from RBI is reduced
  • Taxes are increased
  • All of the above
Suppose in a hypothetical economy, the income rises from 5,000 crores to 6,000 crores. As a result, the consumption expenditure rises from 4,000 crores to 4,600 crores. Marginal propensity to consume in such a case would be _____.
  • 0.8
  • 0.4
  • 0.2
  • 0.6
In an economy, the population spends Rs 700 crore on absolute necessities needed to sustain themselves. The current income is Rs 3500 crore and MPC is 0.What is the level of saving?
  • Zero
  • Rs 30 Crore
  • Rs 700 crore
  • Rs 350 crore
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