Question 1

The marginal propensity to save is defined as:&#10;A)1-?C/?Y&#10;B)S/Y&#10;C)Y/S&#10;D)Y/?S

Accepted Answer

The marginal propensity to save (MPS) is defined as the change in saving (?S) divided by the change in income (?Y), which is represented by the formula 1 - (?C/?Y). This is because the marginal propensity to consume (MPC) is ?C/?Y, and since MPS + MPC = 1, MPS = 1 - MPC.

Question 2

-------------is associated with the theory of multiplier:&#10;A)Adam Smith&#10;B)Malthus&#10;C)Malthus.&#10;D)Keynes

Accepted Answer

The theory of the multiplier, which explains how an initial change in spending can lead to a larger change in national income, is associated with John Maynard Keynes.

Question 3

The MPC has a value:&#10;A)Greater than one but less than two&#10;B)Less than one but greater than zero&#10;C)Greater than two&#10;D)None of these

Accepted Answer

The Marginal Propensity to Consume (MPC) is defined as the proportion of an increase in income that gets spent on consumption. It is a value between 0 and 1 because it represents the fraction of additional income that is spent, rather than saved.

Question 4

Which of the following is not a stock variable:&#10;A)Vapital&#10;B)Wealth&#10;C)Money supply&#10;D)Saving

Accepted Answer

Saving is a flow variable, not a stock variable. It represents the amount of income not spent over a period of time, whereas stock variables (like capital, wealth, and money supply) are measured at a specific point in time.

Question 5

An official reduction in the value of home currency in terms of foreign currency is known as:&#10;A)Revaluation&#10;B)Devaluation&#10;C)Depreciation&#10;D)Appreciation

Accepted Answer

Devaluation is the correct term for an official reduction in the value of a country's currency relative to foreign currencies. This is a decision made by the country's government or monetary authority to lower the currency's value.

Question 6

The value of investment multiplier depends on:&#10;A)APC&#10;B)APS&#10;C)MPC&#10;D)MPS

Accepted Answer

The answer of The value of investment multiplier depends on:&#10;A)APC&#10;B)APS&#10;C)MPC&#10;D)MPS...

Question 7

Wage cut as a solution of unemployment in classical theory is suggested by:&#10;A)J&#10;B)Say B. A.C. Pigou&#10;C)Keynes&#10;D)Marshall

Accepted Answer

Classical theory, particularly as articulated by economists like A.C. Pigou, suggests that wage cuts can help reduce unemployment. This is based on the idea that lower wages would make it cheaper for businesses to hire more workers, thus reducing unemployment levels. Keynesian economics, on the other hand, often argues against wage cuts as a solution to unemployment, emphasizing instead the role of aggregate demand.

Question 8

The word macro was first used in Economics by:&#10;A)Keynes&#10;B)Ragner Frisch&#10;C)J.R. Hicks&#10;D)J.B. Say

Accepted Answer

Ragner Frisch, a Norwegian economist and a co-recipient of the first Nobel Memorial Prize in Economic Sciences in 1969, is credited with first using the term "macro" in economics. He played a significant role in establishing the foundations of modern macroeconomic analysis.

Question 9

Personal Disposable income is:&#10;A)Always equal to personal income&#10;B)Always more than personal income&#10;C)Equal to personal income minus direct taxes&#10;D)Equal to personal income minus indirect taxes

Accepted Answer

Personal disposable income is the amount of money that households have available for spending and saving after income taxes have been accounted for. It is calculated by subtracting direct taxes from personal income.

Question 10

When the method of Statics is called upon to study a changing process, it is referred to as the method of:&#10;A)Statics&#10;B)Dynamics&#10;C)Comparative statics&#10;D)None of these

Accepted Answer

Dynamics is the study of changing processes.

Question 11

Leakages are the factors which:&#10;A)Keep the power of multiplier stable&#10;B)Increase the power of multiplier&#10;C)Reduce the power of multiplier&#10;D)Reduce the power multiplier to zero.

Accepted Answer

The answer of Leakages are the factors which:&#10;A)Keep the power...

Question 12

The phenomenon of increase in money wages that leads to increases in unemployment is shown by:&#10;A)Speculative demand curve&#10;B)Phillip's curve&#10;C)Aggregate supply&#10;D)Income consumption curve

Accepted Answer

The answer of The phenomenon of increase in money wages...

Question 13

Which of the following is Keynesian saving function?&#10;A)S = f(i)&#10;B)S = f(P)&#10;C)S = f (Y)&#10;D)S = f (W)

Accepted Answer

The answer of Which of the following is Keynesian saving...

Question 14

Usually an IS curve is a -------line.&#10;A)Vertical&#10;B)Downward Slopping&#10;C)Horizontal&#10;D)Upward slopping

Accepted Answer

The answer of Usually an IS curve is a -------line.&#10;A)Vertical&#10;B)Downward...

Question 15

When consumption and income are equal, saving is ------------&#10;A)Negative&#10;B)Positive&#10;C)Zero&#10;D)Increasing

Accepted Answer

The answer of When consumption and income are equal, saving...

Question 16

When of the following is correct:&#10;A)1/MPS = value of the multiplier&#10;B)1/MPS = Accelerator co-efficient&#10;C)1/MPS = MEC&#10;D)None of these

Accepted Answer

The answer of When of the following is correct:&#10;A)1/MPS =...

Question 17

&#34;Treatise on money' is a book written by:&#10;A)Pigou&#10;B)Marshall&#10;C)Robertson&#10;D)Keynes

Accepted Answer

The answer of &#34;Treatise on money' is a book written...

Question 18

Value of money:&#10;A)Is inversely related to the price level&#10;B)Is directly related to the price level&#10;C)Is independent of the price level&#10;D)None of these

Accepted Answer

The answer of Value of money:&#10;A)Is inversely related to the...

Question 19

The major primary function of money in modern Economics is to serve as:&#10;A)A store of value&#10;B)A medium of exchange&#10;C)A transfer of value&#10;D)A standard fordeferred payments

Accepted Answer

The answer of The major primary function of money in...

Question 20

1- C/Y is defined as:&#10;A)Average propensity to consume&#10;B)Marginal propensity co consume&#10;C)Average propensity to save&#10;D)Marginal propensity to save

Accepted Answer

The answer of 1- C/Y is defined as:&#10;A)Average propensity to...

Question 21

Say's Law of market says:&#10;A)Demand creates supply&#10;B)Supply creates demand&#10;C)Income generates demand&#10;D)Savings create demand in the market.

Accepted Answer

The answer of Say's Law of market says:&#10;A)Demand creates supply&#10;B)Supply...

Question 22

The curve showing the possibilities of production of desired good is known as:&#10;A)Indifference curve&#10;B)Production possibility curve&#10;C)Revealed preference curve&#10;D)None of these

Accepted Answer

The answer of The curve showing the possibilities of production...

Question 23

Which one of the following definition of Economics is associated with the name of Lionel Robbins?&#10;A)Welfare definition&#10;B)Scarcity definition&#10;C)Growth definition&#10;D)Wealth definition

Accepted Answer

The answer of Which one of the following definition of...

Deck 11: Macroeconomics and Economic Theories