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101.

Multiplier ist he ratio of increase in income to a given increase inA. supplyB. demandC. investmentD. capital stock

Answer» Correct Answer - C
Discussion
102.

From the following data about an economy, calculate (a) equilibrium level of national income and (b) total consumption expenditure at equilibrium level of national income. (i) C =200 +0.5Y (ii) Investment expenditure is 1500

Answer» Correct Answer - 24001900
Discussion
103.

If MPS=0.30, Autonomous Consumptions=50crores and Investment=100crores, then Equilibrium Income willA. 500croresB. 150croresC. 300croresD. 45crores

Answer» Correct Answer - a
Discussion
104.

At higher level of MPC, the value of multiplier isA. highB. lowC. does not changeD. all of these

Answer» Correct Answer - A
Discussion
105.

There is an inverse relationship between the value of marginal propensity to save and investment multiplier. Or Size of investment multiplier is given by the inverse of marginal propensity to save

Answer» Investment multiplier (k) is inversely related to marginal propensity to save (MPS) as `k=(1)/(MPS)`
Discussion
106.

In determinaiton of Equilibrium Level of economy by AD -AS approach. AD curve is represented by:A. (C+S) curveB. (C+I)curveC. (S+I)curveD. (C+Y)curve

Answer» Correct Answer - b
Discussion
107.

Calculate the value of multiplier, if MPC is (i) 0.60, (ii) 0.50

Answer» Correct Answer - (i)2.5 (ii)2
Discussion
108.

If the marginal propensity of consume is greater than marginal propensity to save, the value of the multiplier will be (choose the correct alternative).A. greater than 2B. less than 2C. equal to 2D. equal to 5

Answer» Correct Answer - a
Discussion
109.

If the value of marginal propensity to consume is 0.8. Calculate the value of multiplier.

Answer» Multiplier(K)`=(1)/(1-MPS)=(1)/(1-0.8)=5`
Discussion
110.

Calculate the value of multiplier,, if the marginal propensity to save is 0.25

Answer» Correct Answer - 4
Discussion
111.

Briefly discuss the concept of over full employment. Use diagram.

Answer» Above full-employment equilibrium is a macroeconomic term used to describe a situation in which an economy’s real gross domestic product (GDP) is in excess of its long-run potential level.
Discussion
112.

(a) Can an economy be in state of under employment equilibrium ? Use diagram. (b) Why do we say that an economy generaly functions at less than full employment level ? Is it justified?

Answer» (a) Refer to section 8.2.3 of chapter 8.
(b) It is justified to say that an economy generally operates at less than full employment level. It is because economy is producing at this level due to deficiency of aggregate demand and not because of low level of aggregate supply. Actually supply of a commodity is perfectly price-elastic till we reach the full employment equilibrium, which means that a producer keeps increasing production and supply according to rise in demand of the people till full employment output. If aggregate demand does not reach the full employment level, under employment equilibrium is the obvious consequence.
Discussion