Consumption and Investment Functions Book Back Practice Test

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

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The average propensity to consume is measured by

A.C/Y B.CxY C.Y/C D.C+Y

An increase in the marginal propensity to consume will:

A.Lead to consumption function becoming steeper B.Shift the consumption function upwards C.Shift the consumption function downwards D.Shift savings function upwards

If the Keynesian consumption function is C=10+0.8 Y then, if disposable income is Rs 1000, what is amount of total consumption?

A.₹ 0.8 B.₹ 800 C.₹ 810 D.₹ 0.81

If the Keynesian consumption function is C=10+0.8Y then, when disposable income is Rs 100, what is the marginal propensity to consume?

A.₹ 0.8 B.₹ 800 C.₹ 810 D.₹ 0.81

If the Keynesian consumption function is C=10+0.8 Y then, and disposable income is ₹100, what is the average propensity to consume?

A.₹ 0.8 B.₹ 800 C.₹ 810 D.₹0.9

As national income increases

A.The APC falls and gets nearer in value to the MPC. B.The APC increases and diverges in value from the MPC. C.The APC stays constant D.The APC always approaches infinity.

As increase in consumption at any given level of income is likely to lead

A.Higher aggregate demand B.An increase in exports C.A fall in taxation revenue D.A decrease in import spending

Lower interest rates are likely to :

A.Decrease in consumption B.increase cost of borrowing C.Encourage saving D.increase borrowing and spending

The MPC is equal to :

A.Total spending / total consumption B.Total consumption/total income C.Change in consumption /change in income D.none of the above.

Q10

The relationship between total spending on consumption and the total income is the ___________________

A.Consumption function B.Savings function C.Investment function D.aggregate demand function

Q11

The sum of the MPC and MPS is _______

A.1 B.2 C.0.1 D.1.1

Q12

As income increases, consumption will _________

A.fall B.not change C.fluctuate D.increase

Q13

When investment is assumed autonomous the slope of the AD schedule is determined by the _____

A.marginal propensity to invest B.disposable income C.marginal propensity to consume D.average propensity to consume

Q14

The multiplier tells us how much __________ changes after a shift in _____

A.Consumption , income B.investment, output C.savings, investment D.output, aggregate demand

Q15

The multiplier is calculated as

A.1/(1-MPC) B.1/MPS C.1/MPC D.a and b

Q16

If the MPC is 0.5, the multiplier is ____________

A.2 B.1/2 C.0.2 D.20

Q17

In an open economy import _________ the value of the multiplier

A.Reduces B.increase C.does not change D.changes

Q18

According to Keynes, investment is a function of the MEC and _____

A.Demand B.Supply C.Income D.Rate of interest

Q19

The term super multiplier was first used by

A.J.R. Hicks B.R.G.D. Allen C.Kahn D.Keynes

Q20

The term MEC was introduced by

A.Adam Smith B.J.M. Keynes C.Ricardo D.Malthus

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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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