Table of Contents
NCERT MCQ ON National Income Determination and Multiplier:
Question1 : Which of the following indicates AD in an open economy?
- a) Private (household) Consumption Expenditure
- b) Household Investment Expenditure
- c) Government expenditure + private consumption expenditure
- d) Household consumption expenditure+ investment expenditure + government expenditure + net exports
Answer : Household consumption expenditure+ investment expenditure + government expenditure + net exports
Question2 : Consumption function is a functional relationship between:
- a) Income and saving
- b) Price and consumption
- c) Income and consumption
- d) Income, consumption and saving
Answer : Income and consumption
Question3 : Propensity to consume means:
- a) Tendency of the consumer towards higher consumption
- b) Ratio of consumption to income
- c) Level of income at which consumption expenditure is equal to income
- d) Additional income to be spent on consumption
Answer : Ratio of consumption to income
Question 4: Average propensity to consume (APC) equal to :
- a)
- b)
- c)
- d)
Answer :
Question 5: MPC being equal to 0.5, what will be , if income increases by Rs.100?
- a) Rs. 60
- b) Rs. 50
- c) Rs. 40
- d) Rs. 70
Answer : Rs. 50
Question 6: Propensity to save means:
- a) Ratio of saving to income
- b) level of income at which saving is equal to income
- c) Additional income that is not to be saved
- d) None of these
Answer : Ratio of saving to income
Question7 : If MPS is 0.6,what will be ∆S when income increases by Rs.100 ?
- a) Rs. 60
- b) Rs. 50
- c) Rs. 40
- d) Rs.70
Answer : Rs. 60
Question 8: Average propensity (APS) is equal to:
- a)
- b)
- c)
- d)
Answer :
Question 9: Which of the following is correct ?
- a) MPC÷MPS=1
- b) 1-MPC=MPS
- c) 1-MPS= MPC
- d) All of these
Answer : All of these
Question10 : If MPC is 40 per cent, MPS will be
- a) 70 percent
- b) 60 percent
- c) 50 percent
- d) 40 percent
Answer : 60 percent
Question 11: Since As= C+S and AD=C+I the equilibrium will be established where C+S= C+I, or where:
- a) S=I
- b) S>I
- c) S<I
- d) All the above
Answer : S=I
Question12 : Equilibrium level of income/ output and employment is viewed from which of the following approaches ?
- a) AS=AD approach
- b) S=I approach
- c) Both (a) and (b)
- d) None of these
Answer : Both (a) and (b)
Question13 : On account of injections and withdrawals, equilibrium level of income undergoes :
- a) A shift
- b) No shift
- c) A dispersal
- d) No change
Answer : A shift
Question 14: According to Keynes, equality (equilibrium) between AD and AS can take place in a situation
- a) Less than full employment
- b) Full employment
- c) Beyond full employment
- d) All of these
Answer : All of these
Question 15: If MPC = 0.9, than value of multiplier will be:
- a) 6
- b) 9
- c) 10
- d) 12
Answer : 10
Question16 : Multiplier=
- a) ∆Y/∆S
- b) ∆Y/∆I
- c) ∆I/∆Y
- d) ∆Y/∆C
Answer : ∆Y/∆I
Question17 : Multiplier is estimated as:
- a) 1/MPC
- b) 1/1-MPC
- c) 1/1+MPC
- d) 1/1+MPS
Answer : 1/1-MPC
Question18 : If MPS =1/4, the value of multiplier will be :
- a) 4
- b) 2
- c) 8
- d) 6
Answer : 4
Question 19: If MPC = 0, the multiplier will be:
- a) 1
- b) 0
- c) 2
- d) X
Answer : 1
Question20 : If an investment of Rs. 10 crore results in an increase in income by Rs 50 crore, then the multiplier will be:
- a) 5
- b) 4
- c) 2
- d) None of these
Answer : 5
Question 21: Deficient demand leads to :
- a) Deflationary Gap
- b) Inflationary Gap
- c) Both and (a) and (b)
- d) None of these
Answer : Deflationary Gap
Question 22: Deflationary gap is measured as :
- a) ADF + ADU
- b) ADF÷ ADU
- c) ADF – ADU
- d) None of these
Answer : ADF– ADU
Question 23: Which of the following does not lead to fall in AD ?
- a) Fall in private consumption expenditure
- b) Fall in export
- c) Fall in Import
- d) Fall in Government Expenditure
Answer : Fall in Import
Question24 : Deficient or excess demand can be corrected through
- a) Fiscal Policy
- b) Monetary Policy
- c) Both (a) and (b)
- d) None of these
Answer : Both (a) and (b)
Question25 : With a view to correcting deflationary gap or deficient demand, which of the following fiscal policy measures should be adopted ?
- a) Reduction in taxes
- b) Increase in public expenditure
- c) Reduction in public debt
- d) All of these
Answer : All of these
Question26 : Which of the following leads to increase in AD ?
- a) Fall in imports
- b) Increase in investment expenditure
- c) Increase in government expenditure
- d) All of these
Answer : All of these
Question27 : Of the following, what are the quantitative measures of monetary policy ?
- a) Repo rate
- b) Open market operations
- c) SLR
- d) All of these
Answer : All of these
Question28 : A tax the burden of which can be shifted on to others, is called :
- a) Indirect Tax
- b) Direct Tax
- c) Ad Valorem
- d) Specific Tax
Answer : Indirect Tax
Question29 : The difference between fiscal and interest payment is called :
- a) Revenue Deficit
- b) Primary Deficit
- c) Bbudget Deficit
- d) Capital Deficit
Answer : Primary Deficit
Question30 : If the value exports exceeds the value of visible imports, the current account deficit will be:
- a) Positive
- b) Negative
- c) Positive or Negative
- d) None of these
Answer : Positive or Negative
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