WorksheetsAggregate Demand & its related Concepts
Total questions: 82
Worksheet time: 1hrs 22mins
Name
Class
Date
1.
Out of the following, which can have a value more than one?
a)
MPC
b)
APC
c)
APS
d)
MPS
2.
Which of the following is not a component of Aggregate Demand in a two-sector economy?
a)
(a) Net Exports
b)
(b) Government Expenditure
c)
(c) Consumption
d)
(d) Both (a) & (b)
3.
Break-even Point is achieved when:
a)
National Income = Consumption
b)
Consumption = Savings
c)
Consumption = Investment
d)
National Income > Consumption
4.
AD curve is a
a)
Horizontal straight line parallel to the X-axis
b)
Positive sloped curve
c)
Negatively sloped curve
d)
Vertical straight line parallel to the Y-axis
5.
Aggregate Supply and ____________ are always equal.
a)
National Income
b)
Aggregate Demand
c)
Marginal Propensity to save
d)
Average Propensity to consume
6.
Consumption function is the functional relationship between ______________ and _______________.
a)
Consumption, Aggregate demand
b)
Consumption, National Income
c)
Aggregate Demand, Aggregate Supply
d)
National Income, Private Income
7.
Tick the wrong option:
a)
APC can be more than one
b)
APC can be equal to 1
c)
APC rises with increase in income
d)
APC can never be 0
8.
_________ refers to actual savings in an economy during a year.
a)
Ex-ante saving
b)
APS
c)
MPS
d)
Ex-Post saving
9.
Which of the following is not true about AD in a two sector economy?
a)
AD = Consumption + Savings
b)
AD curve starts from some point above the origin
c)
AD = Consumption + Investment
d)
AD curve has a positive slope
10.
Which of the following fact is correct about MPC?
a)
Value of MPC varies between 0 & 1
b)
MPC of poor is more than that of rich
c)
MPC falls with successive increase in income
d)
all of these
11.
Which of these is a component of Aggregate Demand?
a)
Private Consumption Expenditure
b)
Investment Expenditure
c)
Government Expenditure
d)
All of these
12.
Which of the following can have a negative value?
a)
APC
b)
MPC
c)
MPS
d)
APS
13.
AD curve starts :
a)
From the Origin
b)
Point below Origin
c)
Point above the origin
d)
none of these
14.
If Investment falls to zero, national income does not fall to zero because of :
a)
Autonomous Consumption
b)
Induced Investment
c)
Autonomous Investment
d)
Multiplier
15.
Average Propensity to consume is ______________ at point B and Average Propensity to Save is ____________ at point A.
a)
0, 1
b)
1, 0
c)
1, 1
d)
0, 0
16.
The value of ____________ can never be negative, while ________________ can have a value equal to one.
a)
APS, APC
b)
MPC, APS
c)
APC, APS
d)
MPS, APC
17.
Break-even Point in the following diagram is acieved by :
a)
Point B
b)
Point A
c)
Both (a) & (b)
d)
Neither (a) nor (b)
18.
Which of the following expression is correct?
a)
APC = Consumption ÷ National Income
b)
APC = Change in Consumption ÷ Change in national Income
c)
APC = APS - 1
d)
APC = National Income ÷ Consumption
19.
if C = 100 + 0.75 Y, then Savings Function will be expressed as:
a)
S = 100 + 0.25Y
b)
S = -100 + 0.75Y
c)
S = -100 + 0.25Y
d)
S = 75 + 0.25Y
20.
At the break even point :
a)
Consumption curve lies below the 45 ̊ line
b)
Consumption curve intersects 45 ̊ line
c)
Consumption curve lies above the 45 ̊ line
d)
None of these
21.
Marginal Propensity to Consume is :
a)
∆Y/∆C
b)
C/Y
c)
∆C / ∆Y
d)
Y / C
22.
Slope of the consumption curve in the equation C = c' + bY is denoted by :
a)
c'
b)
Y
c)
b
d)
None of these
23.
Suppose in a hypothetical economy, the income rises from Rs. 5000 crores to Rs. 6000 crores. As a result, the consumption expenditure rises from Rs. 4000 crores to Rs. 4600 crores. Marginal propensity to consume in such a case would be __________.
a)
0.8
b)
0.4
c)
0.2
d)
0.6
24.
Average Propensity to Consume can never be ______________.
a)
positive
b)
zero
c)
more than one
d)
less than one
25.
Which of the following is correct?
a)
MPC + APC = 1
b)
MPC + APS = 1
c)
MPC + MPS = 1
d)
MPC - MPS = 1
26.
Consumption Curve makes an intercept on the Y-axis. It includes that :
a)
(a) Savings is positive when income is zero
b)
(b) Consumption is positive when income is zero
c)
(c) Saving is negative when income is zero
d)
(d) Both (b) & (c)
27.
Relationship of APC & APS with National Income can be represented as :
a)
Both APC & APS fall with increase in National Income
b)
Both APC and APS rise with increase in National Income
c)
APS falls, while APC rises with increase in National Income
d)
APC falls, while APS rises with increase in National Income
28.
In the Savings Function: S = -100 + 0.6Y, the value of autonomous consumption will be
a)
0.6
b)
-100
c)
0.4
d)
100
29.
Problem of unemployment is the problem of :
a)
Voluntary Unemployment
b)
Involuntary Employment
c)
Involuntary Unemployment
d)
Voluntary Employment
30.
The level of induced consumption in an economy depends on :
a)
(a) Level of National Income
b)
(b) MPC
c)
(c) Both (a) & (b)
d)
(d) Autonomous Consumption
31.
Which of the following is true about AD in a two sector economy:
a)
AD = Consumption + Investment
b)
AD curve starts from some point above the origin
c)
AD curve has a positive slope
d)
all of these
32.
Which of the following statement is false?
a)
At break even point, the value of APC is one
b)
The value of marginal propensity to consume is always positive
c)
APC can never be greater than one
d)
Full employment implies absence of involuntary unemployment
33.
Which of the following is correct?
a)
MPC + MPS = 1
b)
MPC + MPS > 1
c)
MPC - MPS = 1
d)
MPC + MPS = 0
34.
Full employment implies absence of :
a)
Unemployment
b)
Voluntary Unemployment
c)
Involuntary Unemployment
d)
none of these
35.
When Consumption function starts from Y-axis, it indicates that :
a)
Consumption is zero when income is zero
b)
Saving is zero when income is zero
c)
Savings is negative when income is positive
d)
Consumption is positive when income is zero
36.
Which of the following is not a component of AD in a two sector economy?
a)
(a) Government Expenditure
b)
(b) Net Exports
c)
(c) Consumption Expenditure
d)
(d) Both (a) & (b)
37.
Aggregate Consumption in an economy is:
a)
Always Positive
b)
Always Negative
c)
Positive in the beginning & then negative
d)
Negative in the beginning & then positive
38.
MPC = 0 when :
a)
(a) Increase in Savings = Increase in Income
b)
(b) Entire increase in income is saved
c)
(c) Increase in consumption = Increase in Income
d)
(d) Both (a) & (b)
39.
The consumption of an economy is given as C = 40 + 0.80Y, t
a)
0.8
b)
1
c)
0.4
d)
0.2
40.
Choose the correct statement:
a)
(a) Aggregate Demand = Consumption + Investment
b)
(b) Aggregate Supply = Consumption + Savings
c)
Both (a) & (b)
d)
Neither (a) nor (b)
41.
If ΔC = 0, then ΔS will be :
a)
Equal to ΔY
b)
Greater than ΔY
c)
Less than ΔY
d)
Equal to ΔC
42.
If MPC = 0.6, what will be the change in consumption, if income increases by 100.
a)
40
b)
50
c)
60
d)
70
43.
Slope of consumption function is equal to :
a)
Consumption ÷ Income (C / Y)
b)
Change in Consumption ÷ Change in Income (ΔC / ΔY)
c)
Change in Income ÷ Change in Consumption (ΔY / ΔC)
d)
Income ÷ Consumption (Y / C)
44.
Which of the following is correct?
a)
APS = Savings ÷ Income (S / Y)
b)
MPC = 1 - MPS
c)
APC + APS = 1
d)
MPC + MPS = 1
45.
When Autonomous Consumption = 100 Crores, Marginal Propensity to Save = 0.30 & National Income is Rs. 1500 Crores, then total consumption will be:
a)
1050 Crores
b)
1150 Crores
c)
550 Crores
d)
none of these
46.
If Consumption at zero level of National Income is Rs. 50 Crores, MPC is 0.6 & National Income is 1000 crore, then value of savings will be
a)
650
b)
450
c)
350
d)
none of these
47.
If MPC is 0.7, then an increase in National Income of Rs. 1000 Crores will result in additional savings of:
a)
300
b)
700
c)
7000
d)
none of these
48.
The Consumption Function of an economy is given as C = 50 + .6Y. Which of the following statement is true or false for this economy
a)
Consumption at zero level of National Income is 50 Crores
b)
People Spend 60% of rise in income on consumption
c)
People Save 40% of rise in Income
d)
People save 60% of rise in Income
49.
Suppose in a hypothetical economy, the income rises from Rs. 500 crores to Rs. 600 crores. As a result, the consumption expenditure rises from Rs. 400 crores to Rs. 500 crores. Marginal propensity to consume in such a case would be __________.
a)
0.8
b)
0.4
c)
1
d)
0.6
50.
If the value of Average Propensity to Consume (APC) is 0.8 and National Income is Rs. 4000 crore, the value of savings will be ______________.
a)
100 crores
b)
200 crores
c)
800 crores
d)
500 crores
51.
If the value of Average Propensity to Save (APS) is 0.2 & National Income is Rs. 4000 crore, then consumption will be ____________.
a)
4000 crores
b)
3200 crores
c)
3800 crores
d)
2600 crores
52.
If Autonomous Consumption (C) is greater than xero, it indicates that the National Income of the economy will be __________________.
a)
Rising
b)
Falling
c)
Zero
d)
Constant
53.
Value of average propensity to save can never be less than zero.
a)
True
b)
False
54.
Average Propensity to Save is always greater than zero
a)
True
b)
False
55.
Average Propensity to Save can never be negative.
a)
True
b)
False
56.
Total Consumption in the economy can never be more than national income.
a)
True
b)
False
57.
When the value of average propensity to save is negative, the value of marginal propnesity to save will also be negative.
a)
True
b)
False
58.
The value of average propensity to save can never be greater than one.
a)
True
b)
False
59.
Both MPS & APS can be equal to one.
a)
True
b)
False
60.
Sum of average propensity to consume & marginal propensity to consume is always equal to 1.
a)
True
b)
False
61.
With increase in National Income, both APC & APS fall.
a)
True
b)
False
62.
Value of marginal propensity to save can never be negative.
a)
True
b)
False
63.
Value of Marginal Propensity to consume can be greater than one.
a)
True
b)
False
64.
Full employment implies absence of involuntary unemployment.
a)
True
b)
False
65.
APC can be defined as the fraction of change in income that is consumed.
a)
True
b)
False
66.
The point at which consumption curve intersect the 45 degree line, APS is zero.
a)
True
b)
False
67.
Average Propensity to consume can be greater than one.
a)
True
b)
False
68.
Slope of Consumption curve is indicated by APC.
a)
True
b)
False
69.
In case of cosntatnt MPS, saving function will be linear.
a)
True
b)
False
70.
In a two-sector economy if income is zero, consumption will also be zero.
a)
True
b)
False
71.
In a two-sector economy, if consumption is equal to income, average propensity to save will be zero.
a)
True
b)
False
72.
According to Keynesian theory of employment, Ex-Ante savings & Ex-post savings are always equal.
a)
True
b)
False
73.
In a two sector economy, if income is zero, average propensity to consume will also zero.
a)
True
b)
False
74.
Marginal Propensity to consume represents the slope of the consumption function.
a)
True
b)
False
75.
Ex-post investment means fixed capital with production units during a particular period of time.
a)
True
b)
False
76.
When Consumption function is : C = 40 + 0.6Y, consumption curve starts from the point of origin.
a)
True
b)
False
77.
Consumption depends on investment in the economy.
a)
True
b)
False
78.
When Consumption function is : C = 40 + 0.7Y, saings will be equal to -40 when Y = 0.
a)
True
b)
False
79.
Consumption can exceed income, but savings cannot.
a)
True
b)
False
80.
MPC represents the slope of the Consumption Function.
a)
True
b)
False
81.
Ex-post investment can never be more than ex-ante investment.
a)
True
b)
False
82.
Higher the level of National Income, higher is the level of autonomous consumption.
a)
True
b)
False
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