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 M O D E L Q U E S T I O N S Part-A Multiple Choice Questions - - Consumption and Investment Functions . 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. .
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 . The sum of the MPC and MPS is a) b) c) . d) . .
As income increases, consumption will a)fall b) not change c) fluctuate d) increase . 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 . The multiplier tells us how much changes after a shift in a) Consumption , income b) investment, output c) savings, investment d) output, aggregate demand . The multiplier is calculated as a) /( -MPC) b) /MPS c) /MPC d) a and b .
It the MPC is . , the multiplier is a) b) / c) . d) . In an open economy import the value of the multiplier a) Reduces b) increase c) does not change d) changes .
According to Keynes, investment is a function of the MEC and a) Demand b) Supply c) Income d) Rate of interest - - Consumption and Investment Functions . The term super multiplier was first used by a) J.R.Hicks b) R.G.D. Allen c) Kahn d) Keynes . The term MEC was introduced by a) Adam Smith b) J.M.
Keynes c) Ricardo d) Malthus Answers Part-B Answer the following questions in one or two sentences. .