Consumption and Investment Functions One Mark Online Test

Consumption and Investment Functions One Mark Online Test (12th Standard Economics)

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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

Q21

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

Q22

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

Q23

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

Q24

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

Q25

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

Q26

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

Q27

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

Q28

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

Q29

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

Q30

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

Q31

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.

Q32

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

Q33

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

Q34

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

Q35

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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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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