Mock Test – Determination of Income and Employment

1. Statement 1: Aggregate demand is the sum total of consumption and investment expenditures.

Statement 2: Total consumption consists of an autonomous component and an induced component.

2. If MPC is 40 per cent, MPS will be:

3. What is the value of investment multiplier, when marginal Prospensity to Consume (MPC) is 0.1?

4. APC is obtained by:

5. If Marginal Propensity to Consume is greater than Marginal Propensity to Save, the value of multiplier will be:

6. As Marginal Propensity to Save (MPS) increases, the value of investment multiplier

7. Full employment implies absence of:

8. Aggregate demand can be increased by:

9. Out of the following which value can be greater than one?

10. Suppose, following data is presented for an imaginary economy:

Sr. No.	Items	Amount (  in crores)
(i) (ii) (iii)	National Income Marginal Propensity to Save Investment Expenditure	5,000 0.2 800

The value of Autonomous Consumption will be __________ .

11. Suppose in a hypothetical economy, the income rises from ` 5,000 crores to ` 6,000 crores. As a result, the consumption expenditure rises from ` 4,000 to ` 4,600 crores. Marginal Propensity to Consume in such a case would be __________.

12. Assertion (A): Consumption and investment are the two components of aggregate demand in a closed economy.

13. The value of aggregate supply is equals to:

14. If in an economy, investment multiplier is 4 and Autonomous Consumption is ` 30 crore, the relevant consumption function would be

15. Identify the correct pair from the following Column I and Column II and choose the correct alternative:

16. The impact of ‘Excess Demand’ under Keynesian theory of income and employment, in an economy are:

17. When MPS = 0, then K is:

18. The Central Bank issues appeals to the Commercial Banks through:

19. In a situation of ‘Inflationary gap’ at the full employment level of income:

20. According to which economist national income can be determined even below the full employment level:

21. Average Propensity to Consume (APC) is equal to:

22. Which of the following are the components of aggregate demand?

23. According to the Keynesian Theory, in the short period:

24. The following information is given for an imaginary country:

Sr. No.	Items	Amount ( in crores)
(i) (ii) (iii)	Investment Expenditure National Income Marginal Propensity to Consume	300 1,6000 0.8

Identify which of the following statements is correct?

25. Average Propensity to Save (APS) is equal to:

26. If MPC is given as 1, how much is MPS:

27. Assertion (A): If aggregate demand is more than aggregate supply at any given level of income, it is not equilibrium level of income.

Reason (R): Equilibrium level of income is the situation where investment is equal to savings.

28. If MPC = 1, the value of multiplier is: (Choose the correct alternative)

29. The following information is given for an imaginary country

Sr.No.	Items	Amount (in crores)
(i) (ii) (iii)	National Income Marginal Propensity to Consume Autonomous Consumption	10,000 0.9 100

Identify which of the following statements is correct?

30. Assertion (A): Sum of APC and APS is equal to one.