Question 1

Keynesian aggregate supply curve is:
A)Perfectly elastic
B)Perfectly inelastic
C)Unitary elastic
D)Parabola

Accepted Answer

Keynesian aggregate supply curve is perfectly elastic in the short run.

Question 2

If marginal propensity to consume is 0.8, the value of multiplier will be:
A)1
B)2.5
C)5
D)2

Accepted Answer

The multiplier is calculated as 1/(1-MPC). If MPC is 0.8, the multiplier is 1/(1-0.8) = 5.

Question 3

In a horizontal straight line demand curve, the price elasticity of demand is:
A)Unity
B)Infinity
C)Zero
D)Less than one

Accepted Answer

In a horizontal straight line demand curve, the price elasticity of demand is infinity because even a tiny change in price leads to an infinitely large change in quantity demanded, indicating perfectly elastic demand.

Question 4

A simplified representation of a real situation is called:
A)Theory
B)Hypotheses
C)Evidence
D)Economic Model

Accepted Answer

An economic model is a simplified representation of a real situation used to analyze economic decisions, outcomes, or to make predictions. It abstracts from the complexities of the real world to focus on specific relationships or aspects of the economy.

Question 5

Returns to scale examines the production function in the:
A)Short-term
B)Medium term
C)Long term
D)Quinquinial

Accepted Answer

Returns to scale refer to the change in output as all inputs change by the same proportion in the long term, where all factors of production are variable.

Quiz 3: Macroeconomics, Production Functions and Keynesian Theory of Economics

Keynesian aggregate supply curve is:

If marginal propensity to consume is 0.8, the value of multiplier will be:

In a horizontal straight line demand curve, the price elasticity of demand is:

A simplified representation of a real situation is called:

Returns to scale examines the production function in the: