Mcq’s on Multipliers

1.The French economist Jean-Baptiste Say transformed the equality of total output and total
spending into a law that can be expressed as follows:

a. Unemployment is not possible in the short run.

b. Demand and supply are never equal.

c. Supply creates its own demand.✔

d. Demand creates its own supply.

2. The classical economists argued that the production of goods and services (supply) generates an
equal amount of total income and, in turn, total spen-ding. This theory is called:

a. Keynes' General Theory.

b. Say's Law.✔

c. The "animal spirits" theory.

d. The law of autonomous consumption.

3. Which of the following statements is true about Say's law?

a.It states that supply creates its own demand.✔

b.It states that demand creates its own supply.

c.It states that total output will always exceed total spending.

d.It states that consumption spending is the most volatile component of aggregate expenditures.

4. The school of thought that emphasizes the natural tendency for an economy to move toward
equilibrium full employment without inflation is known as the:

a. Keynesian school.

b. Supply- side school.

c.Rational expectations school.

d.Classical school.✔
5. According to Keynes, what is the most important determinant of households' spending on
goods and services?

a. The price level.

b. The interest rate.

c. Autonomous consumption.

d. Disposable income.✔

6. The consumption function shows the relationship between consumer expen-ditures and:

a. The interest rate.

b. The tax rate.

c. Savings.

d. Disposable income.✔

8. Which of the following statements is true concerning the consumption function?

a.It slopes upward.

b.Its slope equals the MPC.

c.It represents the direct (positive) relationship between consumption spending and the level of
real disposable income.

d.If the consumption function lies above the 45-degree line then saving is positive.

e.All of the above.✔

9. The consumption function shows the relationship between consumption and:

a. Interest rates.

b. Saving.

c. Price level changes.

d. Disposable income.✔

10. At the point where the disposable income line intersects the consumption function, saving:

a. equals consumption.

b. equals disposable income.

c. is less than zero.

d. is equal to zero.✔
11. Autonomous consumption is consumption that:

a. varies directly with disposable income.

b. varies inversely with disposable income.

c. is independent of the level of disposable income.✔

d. is constant at first and then varies with disposable income.

12. Autonomous consumption is equal to the level of consumption associated with:

a. unstable disposable income.

b. positive disposable income.

c. zero disposable income.✔

d. negative disposable income.

13. Given the consumption function C = 100 billion + 0.75 (300 billion), autonomous consumption
is equal to:

a. 100 billion.✔

b. 225 billion.

c. 300 billion.

d.None

14. That part of disposal income not spent on consumption is defined as:

a. transitory disposable income.

b. permanent disposable income.

c. disposal income.

d. None✔

15. If disposal income is 400 billion, autonomous consumption is 60 billion, and MPC is 0.8,what is
the level of saving?

a. 20 billion.✔

b. 210 billion.

c. 380 billion.

d. None

16. The marginal propensity to consume (MPC) is computed as the change in:
a. consumption divided by the change in savings.

b. consumption divided by the change in disposable personal income.✔

c. consumption divided by the change in GDP.

d.None of the above.

17. The marginal propensity to consume (MPC) is the slope of the:

a. GDP curve.

b. disposable income curve.

c. consumption function.✔

d. autonomous consumption curve.

18. The slope of the consumption function is called the:

a. autonomous consumption rate.

b. marginal consumption rate.

c. average propensity to consume.

d. marginal propensity to consume.✔

19. The change in consumption divided by a change in disposable income is defined as:

a. the marginal propensity to consume.✔

b. autonomous consumption.

c. the consumption function.

d. Keynes' absolute disposable income hypothesis.

e. transitory consumption.

20. The marginal propensity to consume is:

a.the change in disposable income divided by the change in consumption.

b.consumption spending divided by disposable income.✔

c. disposable income divided by consumption spending.

d.None

21. The marginal propensity to consume measures the ratio of the:

a. average amount of our disposable income that we spend.

b. average amount of our savings that we spend.

c. change in consumer spending to a change in money holdings.

d.None✔

22. The marginal propensity to save (MPS) is computed as the change in:

a. savings divided by the change in saving.

b. savings divided by the change in disposable personal income.✔

c. saving divided by the change in GDP.

d. None of the above.

23. If your disposable personal income increases from 30,000 to 40,000 and your savings increases
from 2,000 to 4,000, your marginal propensity to save (MPS) is:

a. 0.2.✔

b. 0.4.

c. 0.5.

d. 0.8.

24. The marginal propensity to save is:

a. the change in saving induced by a change in consumption.

b. dS)/ dY✔

c. 1 - MPC / MPC.

d.None

25.Which is right according to this figure?

a.AD>AS

b.AD<AS✔

C.AD=AS

d.None

26.Expected revenues from the use of the capital assets plus variable cost is called :-

1.Prospective Income

2.supply price

3.prospective yield ✔

4.None

27. Expected revenues from the use of the capital assets minus variable cost is called :-

1.Prospective Income ✔

2.supply price

3.prospective yield

4.None

28. Y=C+I is :-

1.A equation

2.A identification ✔

3.A formula

4.A function

29. Real National Income /Population =?

1.Personal income

2.per capta income

3.per capta real income ✔

4.None

30.Which is one of them meaning of disposal income ?

1.Natinal income

2.remaining income by subtracting depreciation

3.remaing income after paid direct IT and less distributed profit

4.remaing income after paid direct IT and less undistributed profit✔

31.Multiplier in an OPEN ECONOMY

A. 1/1-MPC+MPI✔

B. 1/1+MPC+MPI

C. 1/1-MPC-MPI

D. 1/1+MPC-MPI

32. If MPC is equal to 1, the multiplier would have been equal to

A. Zero

B. One

C. None

D. Infinity✔

33.If the government expenditure increases by an amount equal to the taxation, there would be

A. Leakage in the multiplier process

B. No leakage in the multiplier process ✔

C. None of above

D. Both of above

34.In the Paul Sweezy Model of Oligopoly in the Kinked Demand Curve, the point of kink
represents

(A) Quantity Rigidity

(B) Price Rigidity✔

(C) Both the Price and Quantity Rigidity

(D) Only Price Rigidity

35.Which one is not correct?

1.Emplyeement Multiplier,Rf Kahn (1931)

2.I^2 Multiplier,JN Keyns (1936)✔

3.Compound Multiplier , Lange (1943)

4.Super Multiplier, Hicks(1950)

36.Which one is wrong ?

A.Imperfect Competition ,John Robinson (1933)

B.Edgeworth Oligopoly Model,Powl
Neumann(1881)✔
C.Monopolistic Competition ,Chamberlin (1933)
D.Cournot Doupoly Model,Cournot (1938)

37.For the Cournet model in terms of reaction curves, which is the additional assumption :
A. The entry of firms is blocked
B. The number of buyers is large
C. The cost of production is assumed to be ZERO
D. A duopoly firm itself reacts to the output moves of it's rival firm

38. Which economist's Theory of duopoly is the oldest determinate solution to the duopoly
problem
A. Bertland
B. Stackelberg
C. Cournot✔
D. Edgeworth

39.According to Cournot's duopoly model each firm will produce

A. 1/2 of the total
B. 1/4 of the total
C. 2/3 of the total
D. 1/3 of the total✔

40.In Cournot's duopoly model if there are 12 firms in the market then total output will be?
A. 12/13✔
B. 11/12
C. 1/2
D. 13/14

41.Game theory related with :-

A.PM Sweezy (1939)
B.John Robinson(1933)
C.Neumann and Morgenstern(1944) in Consumer Behaviour
D.Neumann and Morgenstern(1944) in Market Behavior✔

42.In the cournot model, two producers produced at

A. Equal cost
B. Zero cost ✔
C. Different cost
D. None of above

43.Duopoly model is
A. Collusive ✔
B. Non collusive
C. Both
D. None

44.In duopoly model both sellers are

A. completely independent and no agreement exists bw them.
B. Completely dependent and agreement exists bw them
C. Completely independent but agreement exists bw them✔
D. Completely dependent but no agreement exists bw them

45.Which is not duopoly model

A. Chamberlin
B. Robinson
C. Bertland
D. None✔

46.Which is known as economic Growth plus change?

1.Disributional change ✔
2.Undistributional change
3.poverty constant
4. None

47.Which one is not core value of Growth ?

1.Life sustance
2.Self esteem
3.Dependent✔
4.None

48.Which index is incorrect of Life betterment

1.HDI
2.PQLI
3.LEI✔
4.None
49.What is factor of Production ?
1.Land
2.Enterpenuor
3.Capital
4.None of these✔

50.Which is Incorrect of feature of stationary state ?

1.Profit intention to Increase✔
2.wages become equal to substance level
3.No Capital accumulation
4.Profit = 0

51.Which is correct of marxian theory ?

1.The concept of reserve army ✔
2.theory of deficit value
3.its based on Statical
4.None

52.Which is related to Classical theory ?

1.Dependent trade
2.No Capital accumulation
3.Natural law✔
4.None

53.Which is incorrect of Harod-Domor model?

1.APS
2.APC✔
3.MPS
4.None

54.Which is corect About HDI?

1.Amretya sen
2.Mahboov Ul Haque
3.Both✔
4.None

55.If Money decreases from market circulation then what will be happen ?
1.Increse ROI✔
2.decrese ROI
3.well performing situation in market

4.None

56. When charged more cost on investment than Capital output ratio (COR) will be :-
1.High COR
2.Low COR✔
3.Mediam COR
4.None

57.What is Structural retrogression in Indian economy

A.jobless growth
B.Immature investment
C.Slow savings rate
D.None✔

58.Harrod growth model stress on:-

A.Government intervenation
B.Non intervention
C.Intervention only in short run
D.Intervention only in Long Run✔

59.Which is related with Under developed Economies ?

1.Shocks+✔
2.Stimulates+
3.Both
4.None

60.Which is not related to Marxian's theory ?

1.K=C/V
2.K=1+V/C
3.S/V÷C/V+1
4.None✔