Macro Economics 1 Set 3

Bachelor of Arts in Economics (BA Economics)

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This set of Macro Economics 1 Multiple Choice Questions & Answers (MCQs) focuses on Macro Economics 1 Set 3

Q1 | Employment equilibrium in the Classical theory is achievedthrough:
  • wage-price flexibility.
  • changes in aggregate demand
  • changes in aggregate supply
  • none of these.
Answer: wage-price flexibility.
Q2 | Market does not clear is a proposition of:
  • neoclassical theory.
  • keynesian economics
  • monetarism
  • rational expectations
Answer: keynesian economics
Q3 | The interest rate paid on bonds is known as:
  • call rate
  • coupon rate
  • repo rate
  • bank rate
Answer: coupon rate
Q4 | The monetary policy is completely ineffective when the LM curve is:
  • vertical .
  • horizontal.
  • upward sloping.
  • downward sloping
Answer: horizontal.
Q5 | Monetarism is associated with:
  • keynesian school
  • chicago school
  • cambridge school.
  • neo-classical school.
Answer: chicago school
Q6 | Changes in the subjective or objective factors
  • never affect consumption function
  • always cause downward shift in consumption function
  • always cause upward shift in consumption function
  • they cause upward or downward shifts in consumption function
Answer: they cause upward or downward shifts in consumption function
Q7 | Saving is a function of
  • export
  • import
  • investment
  • income
Answer: income
Q8 | Entrepreneurs will have no tendency to expand or contract output and employmentwhen
  • ad>as
  • ad
  • ad=as
  • none of the above
Answer: ad=as
Q9 | The slope of the consumption function is called
  • mpc
  • mps
  • apc
  • aps
Answer: mpc
Q10 | The concept of effective demand is associated with the nameof
  • marshall
  • keynes
  • krugman
  • say
Answer: keynes
Q11 | In a closed economy, the value of multiplier , when MPC is 0.90
  • 25
  • 90
  • 10
  • 9
Answer: 10
Q12 | Income is a ------- variable
  • flow
  • discontinuous
  • stock
  • none of the above
Answer: flow
Q13 | Ratio of consumption expenditure to any particular level ofincome
  • mps
  • aps
  • apc
  • mpc
Answer: apc
Q14 | Psychological law of consumption states that the value of MPC is lies between zero and
  • 1
  • 2
  • 3
  • 4
Answer: 1
Q15 | Net investment is also known as
  • depreciation
  • induced investment
  • autonomousinvestment
  • capital formation
Answer: capital formation
Q16 | In the saving function S = -a + (1-b)Y, the term ‘b’ denotes
  • saving
  • mpc
  • mps
  • aps
Answer: mpc
Q17 | Who propounded Psychological law of consumption
  • adam smith
  • ricardo
  • keynes
  • pigou
Answer: keynes
Q18 | When MPS = 0.2, MPC will be
  • 0.8
  • 0.2
  • 1.2
  • 20
Answer: 0.8
Q19 | In the linear consumption function C = a + bY, coefficient ‘a’ denotes
  • mpc
  • apc
  • autonomous consumption
  • induced consumption
Answer: autonomous consumption
Q20 | According to Keynes, rising aggregate income is always associated with
  • higher saving rate
  • higher import
  • lower export
  • low production
Answer: higher saving rate
Q21 | When MPC = 0.5, the value of multiplier is
  • 5
  • 0.5
  • 2
  • 4
Answer: 2
Q22 | Who postulated the law Supply creates its own demand
  • keynes
  • j b say
  • marshall
  • pigou
Answer: j b say
Q23 | Autonomousinvestment is
  • income inelastic
  • instable
  • interest elastic
  • incomeelastic
Answer: income inelastic
Q24 | MEC for a capital good was found out to be 10% and the market rate of interest is 9%,then the investment is
  • not profitable
  • profitable
  • breakeven
  • cannot say
Answer: profitable
Q25 | In the Keynesian two sector economy, AD>AS, then
  • s=i
  • s>i
  • s
  • s=0
Answer: s
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