Q 1 – What is the shape of the Keynesian Aggregate Supply before the level of full employment is attained?
(A) Perfectly inelastic
(B) Perfectly elastic
(C) Unitary elastic
(D) More elastic
Ans. (B) Perfectly elastic
Q 2 – According to classical economists, real wage rate is ______ to the Marginal Productivity of Labour.
(A) Equal
(B) More
(C) Less
(D) None of these
Ans. (A) Equal
Q 3 – What is the cause of Keynesian perfectly elastic Aggregate Supply curve?
(A) Wage price rigidity
(B) Constant Marginal Product of Labour
(C) Both of these
(D) None of these
Ans. (C) Both of these
Q 4 – According to classical economists, there always exists ______ equilibrium in the economy.
(A) Full employment
(B) Underemployment
(C) Over full employment
(D) None of these
Ans. (A) Full employment
Q 5 – What will be APC when APS = 0?
(A) One
(B) Zero
(C) Two
(D) Infinite
Ans. (A) One
Q 6 – If the income is ₹ 400 crores and consumption is ₹ 250 crores, what will be the APC?6
(A) 0.67
(B) 0.63
(C) 0.60
(D) 0.58
Ans. (B) 0.63
Q 7 – What is a fiscal measure of correcting deficient demand?
(A) Increase in public expenditure and decrease in taxes
(B) Decrease in public debt
(C) Deficit financing
(D) All of these
Ans. (D) All of these
Q 8 – Which is the measure of correcting excess demand?
(A) Deficit financing
(B) Reduction in taxes
(C) Increase in public expenditure
(D) Increase in public debt
Ans. (D) Increase in public debt
Q 9 – Suppose in a hypothetical economy, the income rises from ₹ 5,000 crores to ₹ 6,000 crores. As a result, the consumption expenditure rises from ₹ 4,000 crores to ₹ 4,600 crores. Marginal propensity to consume in such a case would be ______
(A) 0.8
(B) 0.4
(C) 0.2
(D) 0.6
Ans. (D) 0.6
Q 10 – On the basis of government law, the compulsory payment made by the public is known as _________
(A) Expenditure
(B) Investment
(C) Tax
(D) Subsidy
Ans. (C) Tax
Q 11 – Which among is the direct tax?
(A) Income tax
(B) Gift and Corporation tax
(C) Wealth tax
(D) All of these
Ans. (D) All of these
Q 12 – If MPC = 1, the value of the multiplier is:
(A) 0
(B) 1
(C) Between 0 and 1
(D) Infinity
Ans. (D) Infinity
Q 13 – Aggregate demand can be increased by:
(A) increasing bank rate
(B) selling govt, securities by RBI
(C) increasing cash reserve ratio
(D) none of these
Ans. (D) None of these
Q 14 – If the marginal propensity to consume is greater than the marginal propensity to save, the value of the multiplier will be
(A) greater than 2
(B) less than 2
(C) equal to 2
(D) equal to 5
Ans. (A) greater than 2
Q 15 – Supply creates its own Demand. Who gave this law?
(a) J.B.Say
(b) J.S.Mill
(c) Keynes
(d) Ricardo
Ans. (a) J.B.Say
Q 16 – Who is the author of the book ‘General Theory of Employment, Interest, and Money’?
(a) A.C. Pigou
(b) Malthus
(c) J.M. Keynes
(d) Marshall
Ans. (c) J.M. Keynes
Q 17 – Which of the following is true for the Classical Theory of Employment?
(a) State of full employment in the economy
(b) No possibility of over-or under-production in the economy
(c) Both (a) and (b)
(d) None of the above
Ans. (c) Both (a) and (b)
Q 18 – On which factor Keynesian Theory of Employment depends?
(a) Effective Demand
(b) Supply
(c) Production Efficiency
(d) None of the above
Ans. (a) Effective Demand
Q 19 – Which is the determining factor for investment?
(a) Marginal Efficiency of Capital
(b) Interest Rate
(c) Both (a) and (b)
(d) None of these
Ans. (c) Both (a) and (b)
Q 20 – According to Keynes, investment implies:
(a) Financial Investment
(b) Real Investment
(c) Both (a) and (b)
(d) None of the above
Ans. (b) Real Investment
Q 21 – With the increase in investment, MEC:
(a) Rises
(b) Falls
(c) Remains Constant
(d) None of these
Ans. (b) Falls
Q 22 – Which of the following is a Read Investment?
(a) Purchasing of a Share
(b) Purchasing of Old Factory
(c) Construction of Buildings
(d) Opening Deposit Account in the Bank
Ans. (c) Construction of Buildings
Q 23 – Which or is true?
(a) MPC + MPS = 0Chapter 4 Determination of Income and Employment
(b) MPC + MPS < 1
(c) MPC + MPS = 1
(d) MPC + MPS > 1
Ans. (c) MPC + MPS = 1
Q 24 – The main component of aggregate demand is:
(a) Individual consumption
(b) Public consumption
(c) Investment
(d) All the above
Ans. (d) All the above
Q 25 – Who is the writer of the book, “Trained Economic Politique”?
(a) Pigour
(b) J.B. Say
(c) Keynes
(d) Ricardo
Ans. (a) Pigour
Q 26 – IF MPC = 0.5, then Multiplier (k) will be:
(a) 1/4
(b) = 0
(c) 1
(d) 2
Ans. (d) 2
Q 27 – On which concept does classical viewpoint depend?
(a) Say’s Law of Market
(b) perfect Flexibility of Wage Rate
(c) Perfect Flexibility of Interest Rate
(d) All of these
Ans. (d) All of these
Q 28 – “Wage cut maintains full employment in the economy.” Who put forward this view?
(a) Pigou
(b) Keynes
(c) Marshall
(d) None of the above
Ans. (a) Pigou
Q 29 – Which one of the following is the determining factor of Equilibrium Income is the Keynesian Viewpoint?
(a) Aggregate Demand
(b) Aggregate Supply
(c) Both (a) and (b)
(d) None of the above
Ans. (c) Both (a) and (b)
Q 30 – In Keynesian viewpoint, the equilibrium level of income and employment in the economy will be established where:
(a) AD > AS
(b) AS > AD
(c) AD = AS
(d) None of theseAns. (c) AD = AS