Micro Economics 1 Set 7

Bachelor of Arts in Economics (BA Economics)

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This set of Micro Economics 1 Multiple Choice Questions & Answers (MCQs) focuses on Micro Economics 1 Set 7

Q1 | When MPC = 0.5, the value of multiplier is
  • 5
  • 0.5
  • 2
  • 4
Answer: 2
Q2 | Who postulated the law Supply creates its own demand
  • Keynes
  • J B say
  • Marshall
  • Pigou
Answer: J B say
Q3 | Autonomous investment is
  • Income inelastic
  • Instable
  • Interest elastic
  • Income elastic
Answer: Income inelastic
Q4 | 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
Q5 | In the Keynesian two sector economy, AD>AS, then
  • S=I
  • S>I
  • S
  • S=0
Answer: S
Q6 | Value of MPC is
  • >1
  • <1
  • 0≤ MPC ≥1
Answer: 0≤ MPC ≥1
Q7 | Schedule that expresses relationship between rate of interest and corresponding amount of investment
  • MEI
  • MEC
  • Effective Demand
  • Aggregate Demand
Answer: MEI
Q8 | Net investment is
  • Value of gross minus subsidies
  • Investment after providing for depreciation
  • Value of gross output before providing for subsidies
  • None of the above
Answer: Investment after providing for depreciation
Q9 | MEC is directly related to
  • Prospective yield
  • Supply price
  • Rate of interest
  • All of the above
Answer: Prospective yield
Q10 | According to Keynes the most important determinant of consumption
  • Rate of interest
  • Saving
  • Income
  • Investment
Answer: Income
Q11 | In the Keynesian two sector economy, AD
  • S=I
  • S>I
  • S
  • S=0
Answer: S>I
Q12 | In the equation C = 60 + 0.6 Y, MPC is
  • 60
  • 0.6
  • 1
Answer: 0.6
Q13 | Keynes assumed the presence of --------- economy for the fundamental law of consumption
  • Capitalistic
  • Socialistic
  • Planned
  • None of the above
Answer: Capitalistic
Q14 | According to Keynes the most important determinant of investment
  • MEC
  • Effective demand
  • Aggregate demand
  • Rate of interest
Answer: MEC
Q15 | When disposable income rises from Rs 500 to Rs 600 and consumption expenditure changes from Rs 470 to Rs 560, MPC will be equal to
  • 900
  • 100
  • 0.9
  • 1
Answer: 0.9
Q16 | In a two sector economy, aggregate demand is equal to
  • C+I
  • C+S
  • S+I
  • All of the above
Answer: C+I
Q17 | In Keynesian terminology, investment means:
  • Financial investment
  • Real investment
  • Induced investment
  • None of the above
Answer: Real investment
Q18 | Rate of change in savings to change in income:
  • APS
  • APC
  • MPS
  • MPC
Answer: MPS
Q19 | Keynesian economics is also known as:
  • Supply side economics
  • Monetary economics
  • Rational expectations
  • Depression economics
Answer: Depression economics
Q20 | Which of the following can cause shifts in consumption function:
  • Psychological attitude
  • Social practices
  • Business motives
  • Changes in price level
Answer: Changes in price level
Q21 | APC is determined by the following equation:
  • C/Y
  • S/Y
  • ∆C/∆Y
  • ∆S/∆Y
Answer: C/Y
Q22 | In the Keynesian two sector model, when AD = AS, then:
  • S
  • S>I
  • S=I
  • I=0
Answer: S=I
Q23 | Which of the following is not correct:
  • MPC declines as income increases
  • MPC is positive but less than one
  • MPS is always positive
  • All the above
Answer: MPS is always positive
Q24 | According to Keynes, saving is:
  • Private virtue but not social virtue
  • Private and social virtue
  • Is neither private virtue nor social virtue
  • Is either social virtue or private virtue
Answer: Private virtue but not social virtue
Q25 | MEC is inversely related to:
  • Prospective yield
  • Supply price
  • Investment
  • Rate of interest
Answer: Prospective yield
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