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Worksheets

Income Determination and Multiplier

Total questions: 25

Worksheet time: 13mins

Name
Class
Date
1.

At equilibrium level:

a)

consumption = investment

b)

saving = investment

c)

aggregate demand = saving

d)

consumption = saving

2.

If an investment of Rs. 10 crore results in an increase in income by Rs. 50 crore, then the value of multiplier will be:

a)

5

b)

4

c)

2

d)

10

3.

On account of injections and withdrawals, equilibrium level of income undergoes

a)

a shift

b)

no shift

c)

a dispersal

d)

no change

4.

If rhe value of MPC = 0.9 find the value of multiplier?

a)

5

b)

10

c)

15

d)

20

5.

If MPS = 1, calculate the value of K.

a)

1`

b)

4

c)

2

d)

3

6.

Relationship between MPC and multiplier is

a)

direct

b)

indirect

c)

proportional

d)

no relation

7.

If MPS = 1 and increase in national income = Rs. 500 crore, calculate the increase in investment.

a)

500 cr

b)

40 cr

c)

10 cr

d)

2 cr

8.

If MPC = 0.4, What will be change in saving when income increase by Rs. 100 ?

a)

Rs. 60

b)

Rs. 50

c)

Rs. 40

d)

Rs. 70

9.

Equilibrium level of income can be determined at:

a)

full employment

b)

under full employment

c)

over full employment

d)

all of these

10.

Multiplier is the ratio of change in income to a given change in

a)

supply

b)

demand

c)

investment

d)

capital stock

11.

At higher level of MPC, the value of multiplier is

a)

high

b)

low

c)

does not change

d)

all of these

12.

if MPC is greater than MPS the value of multiplier will be

a)

greater than 2

b)

less than 2

c)

equal to 2

d)

equal to 5

13.

If an increase of Rs.10000 in investment in an economy results in an increase in income of Rs. 40000, what will be MPS?

a)

0.4

b)

4

c)

0.25

d)

NONE OF THESE

14.

The maximum value of multiplier is ___________ when the value of MPC is ______ .

a)

infinity, zero

b)

infinity, one

c)

one, infinity

d)

none of these

15.

when planned saving is less than planned investment, it indicate a situation when:

a)

AD < AS

b)

AD = AS

c)

AD > AS

d)

NONE OF THESE

16.

If MPC = MPS, THEN VALUE OF MULTIPLIER IS:

a)

Infinity

b)

1

c)

2

d)

equal to MPC

17.

If MPC = 0.6, THE INVESTMENT MULTIPLIER WILL BE:

a)

1.67

b)

2.5

c)

6

d)

4

18.

when the economy decides to save the whole of its additional income, then the value of investment multiplier will be:

a)

1

b)

inderminate

c)

0

d)

infinity

19.

if C = 20 + 0.80Y and investment expenditure is Rs. 50 cr, then equilibrium income is:

a)

00cr

b)

350 cr

c)

200 cr

d)

100 cr

20.

If MPS = 0.30, Autonomous consumption = Rs. 50 crores and investment = Rs. 100 crores, then equilibrium income will be

a)

500 cr

b)

50cr

c)

300 cr

d)

45 cr

21.

If aggregate demand exceed aggregate supply, the income rises.

a)

True

b)

False

22.

Value of investment multiplier varies between zero and infinity.

a)

True

b)

False

23.

S = -20 + 0.4Y and C = 20 + 0.6Y will yield the same investment multiplier.

a)

True

b)

False

24.

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

a)

True

b)

False

25.

According to Keynes, the equilibrium level of income is always is always determined corresponding to full employment level.

a)

True

b)

False