Consumption and Investment Additional Practice Test

12th Standard Economics — Consumption and Investment Functions: Additional Online Practice Test

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Who first systematically developed the simple accelerator model in the year 1917?

A.J.M. Clark B.J.M. Keynes C.R.F. Kahn D.J.R. Hicks

In the linear consumption function equation C = a + bY, what does the intercept term 'a' represent?

A.Marginal propensity to consume B.Autonomous consumption C.Induced saving D.Average propensity to save

Which of the following is categorized as a subjective factor influencing the consumption function according to Keynes?

A.Windfall gains B.The motive of calculation C.Consumer credit D.Price level

Who is credited with first developing the concept of the multiplier in terms of employment?

A.J.M. Keynes B.R.F. Kahn C.J.R. Hicks D.J.M. Clark

If the marginal propensity to consume (MPC) is 0.8, what will be the value of the investment multiplier (K)?

A.2 B.4 C.5 D.10

What type of investment is independent of changes in national income and is primarily driven by social welfare considerations?

A.Induced investment B.Private investment C.Autonomous investment D.Financial investment

In the investment function, what is the typical relationship between the rate of interest and the level of investment?

A.Direct and positive B.Functional and inverse C.Constant and linear D.Unrelated and random

Which concept specifically measures the rate of return on just those units of capital over and above the existing capital stock?

A.Marginal Efficiency of Capital (MEC) B.Marginal Propensity to Save (MPS) C.Marginal Efficiency of Investment (MEI) D.Accelerator coefficient

According to Duesenberry's hypothesis, the tendency of lower-income families to mimic the consumption patterns of higher-income families is known as the:

A.Veblen effect B.Demonstration effect C.Leverage effect D.Multiplier effect

Q10

Which economist mathematically combined the multiplier and accelerator principles to formulate the concept of the 'Super Multiplier'?

A.J.R. Hicks B.J.M. Keynes C.Paul Samuelson D.R.F. Kahn

Q11

When a portion of additional income is utilized to pay off past debts, how does this affect the multiplier's operation?

A.It increases the multiplier's value. B.It reduces the multiplier's value. C.It has no impact on the multiplier. D.It makes the multiplier infinite.

Q12

Which of the following equations accurately reflects the relationship between the marginal propensity to consume (MPC) and the marginal propensity to save (MPS)?

A.MPC - MPS = 1 B.MPC + MPS = 1 C.MPC / MPS = 1 D.MPC * MPS = 1

Q13

Under which condition does Keynes's Psychological Law of Consumption hold good?

A.During periods of hyperinflation B.Under active government regulation of enterprise C.Under normal, peaceful economic conditions D.In a completely planned socialist economy

Q14

Which of the following is classified as a long-run factor that influences the Marginal Efficiency of Capital (MEC)?

A.Current rate of investment in a particular industry B.Rate of growth of the population C.Short-term consumer demand changes D.Liquid assets held by entrepreneurs

Q15

What is the term used to describe the combined, compounding effect of both the multiplier and the accelerator on income propagation?

A.Demonstration effect B.Leverage effect C.Pigou effect D.Substitution effect

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About this Consumption and Investment Functions test

This free online practice test covers Consumption and Investment Functions from the 12th Standard Economics (Samacheer Kalvi) syllabus. Choose the number of questions and an optional time limit, then answer and submit — everything is checked in your browser, with the correct answers and a worked explanation shown at the end. For the full solutions to every question in this set, see the solved MCQs page.

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