12th Grade > Economics - 2
INCOME DETERMINATION MCQs
Total Questions : 30
| Page 2 of 3 pages
Answer: Option A. -> 100
:
A
Autonomous consumption is the consumption which does not depend on income. In the given equation, when Y is zero, C = 100. Autonomous consumption is 100.
:
A
Autonomous consumption is the consumption which does not depend on income. In the given equation, when Y is zero, C = 100. Autonomous consumption is 100.
Answer: Option C. -> Income will increase by Rs 400 crore
:
C
Income will increase by Rs 400 crore.
:
C
Income will increase by Rs 400 crore.
Answer: Option A. -> Rs 500
:
A
We know,
M (multiplier) =ΔYΔI
We also know that, K=11−MPC
Substituting the value of MPC, K=11−0.5=10.5=2
We know, K=ΔYΔI and ΔY=1,000
Thus, 1,000ΔI=2
∴ ΔI=1,0002=500
Additional investment by the government = Rs 500.
:
A
We know,
M (multiplier) =ΔYΔI
We also know that, K=11−MPC
Substituting the value of MPC, K=11−0.5=10.5=2
We know, K=ΔYΔI and ΔY=1,000
Thus, 1,000ΔI=2
∴ ΔI=1,0002=500
Additional investment by the government = Rs 500.
Answer: Option C. -> 10
:
C
Multiplier = 11−MPC
= 11−0.9
= 10
:
C
Multiplier = 11−MPC
= 11−0.9
= 10
Answer: Option B. -> False
:
B
False. In response to increase in AD, output increases only till full employment equilibrium is struck in the economy.
:
B
False. In response to increase in AD, output increases only till full employment equilibrium is struck in the economy.
Answer: Option A. -> Consumption = 1,350
Yes
:
A
We know that,
C=¯C+MPC(Y)
When Y = 2,000, C=100+0.5(2,000)
=100+1,000
=1,100
We also know that,
Y = C + S
Or, S = Y - C
= 2,000 - 1,100 = 900
∴ Consumption = 1,100
Saving = 900
When Y = 2,500
C = 100 + 0.5(2,500)
= 100 + 1,250 = 1,350
Change in C = 1,350 - 1,100 = 250
Change in Y= 2,500 - 2,000 = 500
Yes, income is greater than the increase in consumption when Y increases from 2,000 to 2,500.
:
A
We know that,
C=¯C+MPC(Y)
When Y = 2,000, C=100+0.5(2,000)
=100+1,000
=1,100
We also know that,
Y = C + S
Or, S = Y - C
= 2,000 - 1,100 = 900
∴ Consumption = 1,100
Saving = 900
When Y = 2,500
C = 100 + 0.5(2,500)
= 100 + 1,250 = 1,350
Change in C = 1,350 - 1,100 = 250
Change in Y= 2,500 - 2,000 = 500
Yes, income is greater than the increase in consumption when Y increases from 2,000 to 2,500.
Answer: Option D. -> ∞
:
D
Multiplier = 11−MPC
If entire additional income is converted into additional consumption, MPC = 1.
Therefore, the value of multiplier will be infinity.
:
D
Multiplier = 11−MPC
If entire additional income is converted into additional consumption, MPC = 1.
Therefore, the value of multiplier will be infinity.
Answer: Option B. -> 4,600
:
B
Given, C = 100 + 0.75Y
OR, C = 100 + 0.75(6,000)
=100+75100×6,000
= 100 + 4,500 = 4,600.
:
B
Given, C = 100 + 0.75Y
OR, C = 100 + 0.75(6,000)
=100+75100×6,000
= 100 + 4,500 = 4,600.
Answer: Option B. -> 11−MPC
:
B
Multiplier=11−MPC
:
B
Multiplier=11−MPC
Answer: Option A. -> (i) Rs 4,000 crore
(ii) Rs 3,000 crore
:
A
(i) 75 per cent of the increase in income is spent on consumption.
∴ MPC=ΔCΔY=75100=0.75
Multiplier (M)=11−MPC=11−0.75=10.25=4
We know, M=ΔYΔI
⇒ ΔY=M×ΔI
ΔY=4×1,000=4,000
(ii) Increase in consumption expenditure (ΔC)=MPC.ΔY
=0.75×4,000 (∵MPC=ΔCΔY), so that ΔC=MPC.ΔY)
=75100×4,000=3,000
(i) Total increase in income = Rs 4,000 crore.
(ii) Total increase in consumption expenditure = Rs 3,000 crore.
:
A
(i) 75 per cent of the increase in income is spent on consumption.
∴ MPC=ΔCΔY=75100=0.75
Multiplier (M)=11−MPC=11−0.75=10.25=4
We know, M=ΔYΔI
⇒ ΔY=M×ΔI
ΔY=4×1,000=4,000
(ii) Increase in consumption expenditure (ΔC)=MPC.ΔY
=0.75×4,000 (∵MPC=ΔCΔY), so that ΔC=MPC.ΔY)
=75100×4,000=3,000
(i) Total increase in income = Rs 4,000 crore.
(ii) Total increase in consumption expenditure = Rs 3,000 crore.
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