Deck 4: Keynesian Economics and Related Concepts

Question 1

Value of MPC is

A)>1
B)<1
C)0
D)0? mpc ?1

Answer 1

0? mpc ?1

Question 2

Schedule that expressesrelationship between rate of interest and corresponding amount of investment

A)mei
B)mec
C)effective demand
D)aggregate demand

Answer 2

mei

Question 3

MEC is directly related to

A)prospective yield
B)supply price
C)rate of interest
D)all of the above

Answer 3

prospective yield

Question 4

According to Keynes the most important determinant ofconsumption

A)rate of interest
B)saving
C)income
D)investment

Question 5

In the Keynesian two sector economy, AD

A)s=i
B)s>i
C)sD)s=0

Question 6

In the equation C = 60 + 0.6 Y, MPCis

A)60
B)0.6
C)0
D)1

Question 7

According to Keynes the most important determinant ofinvestment

A)mec
B)effective demand
C)aggregate demand
D)rate of interest

Question 8

When disposable income risesfrom Rs 500 to Rs 600 and consumption expenditure changes from Rs 470 to Rs 560, MPC will be equalto

A)900
B)100
C)0.9
D)1

Question 9

In a two sector economy, aggregate demand is equalto

A)c+i
B)c+s
C)s+i
D)all of the above

Question 10

In Keynesian terminology, investment means:

A)financial investment
B)real investment
C)induced investment
D)none of the above

Question 11

Rate of change in savings to change in income:

A)aps
B)apc
C)mps
D)mpc

Question 12

Keynesian economics is also known as:

A)supply side economics
B)monetary economics
C)rational expectations
D)depression economics

Question 13

Which of the following can cause shifts in consumption function:

A)psychological attitude
B)social practices
C)business motives
D)changes in price level

Question 14

APC is determined by the following equation:

A)c/y
B)s/y
C)?c/?y
D)?s/?y

Question 15

In the Keynesian two sector model, when AD = AS, then:

A)sB)s>i
C)s=i
D)i=0

Question 16

Which of the following is not correct:

A)mpc declines as income increases
B)mpc is positive but less than one
C)mps is always positive
D)all the above

Question 17

According to Keynes, saving is:

A)private virtue but not social virtue
B)private and social virtue
C)is neither private virtue nor social virtue
D)is either social virtue or private virtue

Question 18

MEC isinversely related to:

A)prospective yield
B)supply price
C)investment
D)rate of interest

Question 19

Keynes considered subjective and objective factors:

A)important determinants of consumption
B)unimportant determinants of consumption
C)determinants of investment
D)determinants of business's willingness to pay

Question 20

Keynesian economics is:

A)macro
B)micro
C)both
D)none

Question 21

The MEC increases when:

A)capitalstock increases
B)capitalstock decreases
C)capital remains constant
D)none of the above