Question:

The sum of marginal propensity to consume plus marginal propensity to save mustequal to:

A.

0

B.

1

C.

100

D.

1000

Answer» b. 1

Question:

The simplest ISLM model consists of:

A.

two markets

B.

three markets

C.

four markets

D.

five markets

Answer» a. two markets

Question:

A substantial increase in the rate of interest can cause:

A.

increase in savings

B.

reduce propensity to consume

C.

all the above

D.

none of the above

Answer» c. all the above

Question:

APC is determined by the following equation:

A.

c/y

B.

s/y

C.

∆c/∆y

D.

∆s/∆y

Answer» a. c/y

Question:

In the saving function S = -a + (1-b)Y, the term ‘b’ denotes

A.

saving

B.

mpc

C.

mps

D.

aps

Answer» b. mpc

Question:

In the Cambridge equation of M = kPR, the value of kis:

A.

m/v

B.

1/v

C.

v in fisher’s equation

D.

none of these

Answer» b. 1/v

Question:

In classical system which of the following keeps the economy at full employment:

A.

level of saving

B.

increase in money supply

C.

adjustment in investment

D.

adjustment in money wages

Answer» d. adjustment in money wages

Question:

Economic Laws are:

A.

statement of tendencies

B.

exact and predictable

C.

definite

D.

none

Answer» a. statement of tendencies

Question:

When investment is negatively related to the rate of interest, equilibrium output in thegoods market:

A.

is unrelated to the rate of interest

B.

is inversely related to the rate of interest

C.

is positively related to the rate of interest

D.

falls as the rate of interest decreases

Answer» b. is inversely related to the rate of interest