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This set of Micro Economics 1 Multiple Choice Questions & Answers (MCQs) focuses on Micro Economics 1 Set 6
Q1 | When output exceeds spending:
- There is unsold output, and level of output will fall
- There is unsold output, and level of output will rise
- There is unsold output, and level of spending will rise
- There is no unsold output since the level of spending will rise
Q2 | When investment is negatively related to the rate of interest, equilibrium output in the goods market:
- Is unrelated to the rate of interest
- Is inversely related to the rate of interest
- Is positively related to the rate of interest
- Falls as the rate of interest decreases
Q3 | Simultaneous equilibrium in the money (LM) and goods (IS) market exists:
- At an unlimited number of output levels and rates of interest
- At only one output level and rate of interest
- At an unlimited number of output levels and only one rate of interest
- At only one output level and an unlimited number of rates of interest
Q4 | In which of the following situations will an increase in the money supply have no effect upon output?
- LM is steeply sloped and IS is steeply sloped
- LM is vertical and IS is steeply sloped
- LM is steeply sloped and IS is vertical
- LM is relatively flat as is IS
Q5 | Policy Neutrality is the main proposition of:
- Supply Side Economics.
- Keynesian Economics
- Monetarism
- Rational expectations hypothesis
Q6 | Who invented the General Equilibrium analysis?
- L. Walras.
- W. Leontief
- J.M.Keynes.
- None of these.
Q7 | Employment equilibrium in the Classical theory is achieved through:
- Wage-Price flexibility.
- Changes in aggregate demand
- Changes in aggregate supply
- None of these.
Q8 | Market does not clear is a proposition of:
- Neoclassical theory.
- Keynesian Economics
- Monetarism
- Rational expectations
Q9 | The interest rate paid on bonds is known as:
- Call rate
- Coupon rate
- Repo rate
- Bank rate
Q10 | The monetary policy is completely ineffective when the LM curve is:
- Vertical .
- Horizontal.
- Upward sloping.
- Downward sloping
Q11 | 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
Q12 | Saving is a function of
- Export
- Import
- Investment
- Income
Q13 | Entrepreneurs will have no tendency to expand or contract output and employment when
- AD>AS
- AD
- AD=AS
- None of the above
Q14 | The slope of the consumption function is called
- MPC
- MPS
- APC
- APS
Q15 | The concept of effective demand is associated with the name of
- Marshall
- Keynes
- Krugman
- Say
Q16 | In a closed economy, the value of multiplier , when MPC is 0.90
- 25
- 90
- 10
- 9
Q17 | Income is a ------- variable
- Flow
- Discontinuous
- Stock
- None of the above
Q18 | Ratio of consumption expenditure to any particular level of income
- MPS
- APS
- APC
- MPC
Q19 | Psychological law of consumption states that the value of MPC is lies between zero and
- 1
- 2
- 3
- 4
Q20 | Net investment is also known as
- Depreciation
- Induced investment
- Autonomous investment
- Capital formation
Q21 | In the saving function S = -a + (1-b)Y, the term ‘b’ denotes
- Saving
- MPC
- MPS
- APS
Q22 | Who propounded Psychological law of consumption
- Adam Smith
- Ricardo
- Keynes
- Pigou
Q23 | When MPS = 0.2, MPC will be
- 0.8
- 0.2
- 1.2
- 20
Q24 | In the linear consumption function C = a + bY, coefficient ‘a’ denotes
- MPC
- APC
- Autonomous consumption
- Induced consumption
Q25 | According to Keynes, rising aggregate income is always associated with
- Higher saving rate
- Higher import
- Lower export
- Low production