Commerce Tutorial

Nadiha, Purulia

CLASS 12 - ECONOMICS
Macro AD & AS
Time Allowed: 1 hour Maximum Marks: 50

1. The formula of investment multiplier in terms of MPC is [1]

a) b)
1 1
K = K =
1−M P C 1−AP C

c) d)
1 1
K = K =
1−M P S 1−AP S

2. The important factor influencing the propensity to consume in an economy is [1]

a) The level of income (Y) b) The level of investment

c) The level of savings d) The level of consumption

3. If MPC =0.75, then MPS will be [1]

a) 2.5 b) 1

c) 0.25 d) 25.5
4. If the income is 1000 and the consumption is 1200, APC will be [1]

a) 1.1 b) 1.2

c) 0.12 d) 1.3
5. APC can be greater than one when [1]

a) The value of consumption exceeds b) The value of consumption is equal to

the value of income the value of income

c) The value of consumption does not d) The value of consumption is less

exceed the value of income than the value of income
6. At low level of income saving is negative. [1]

a) False. b) Insufficient information

c) Can’t say d) True.

7. Increase in government expenditure would lead to increase in [1]

a) AD. b) AS.

c) Both. d) None.
8. If the initial increase in the investment is Rs 1000 and MPC=0.8, the multiplier will be [1]

a) 5 b) 6

c) 3 d) 4
9. The equation of saving function is [1]

a) S = - a + (1 - b) Y b) C = - a + by.

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 c) S = - a + (1 - b) d) S = f (Y)
10. In S = - a + (1 - b) Y, ‘a’ denotes [1]

a) Automatic consumption expenditure b) Annual consumption expenditure

c) Autonomous savings. d) Consumption expenditure

11. The equation of propensity to consume is [1]

a) S = - a + (1 - b) b) S = - a + (1 - b) Y

c) C = a + by d) C = f(Y)
12. The coefficient ‘b’ measures [1]

a) The slope of consumption b) The slope of income

c) The slope of savings d) The slope of investment

13. In c= -a + by [1]

a) ‘a’ is called extercept b) ‘a’ is called intercept

c) ‘a’ is called interval d) ‘a’ is called ultracept

14. When APS=1 [1]

a) consumption = savings b) consumption = autonomous

consumption

c) consumption = investment d) Savings= income.

15. If the initial increase in the investment is Rs 1000 and MPC=0.8, the level of savings will [1]
increase by

a) 4000 b) 1000

c) 2000 d) 3000
16. In S = - a + (1 - b) Y ‘1-b’ denotes [1]

a) Consumption b) MPS

c) MPC d) Multiplier
17. S = - a + (1 - b) Y is a [1]

a) Linear function of the level of b) Algebraic function of the level of

Savings and Consumption Savings and capital expenditure
expenditure

c) Algebraic function of the level of d) Algebraic function of the level of

Savings Savings and Investment expenditure
18. The slope of the saving function gives the [1]

a) The amount of dissavings done when b) The amount of dissavings done

there is zero level of income. when there is high level of income.

c) The amount of savings done when d) Increase in savings per unit increase
there is high level of income. in the income.
19. The maximum value of investment multiplier can be [1]

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 a) 3 b) 3.5

c) Infinity d) 2
20. In S = - a + (1 - b)Y , ‘-a’ denotes [1]

a) Negative Consumption b) Negative Investment expenditure

c) Negative savings d) Negative income

21. If MPC is less than one, it follows that [1]

a) (1-b) i.e. MPS is zero b) (1-b) i.e. MPS is positive

c) (1-b) i.e. MPS is negative d) (1-b) i.e. MPS is infinity

22. In C = a + b (Y), ‘C’ denotes [1]

a) Central expenditure b) Capital expenditure

c) Collateral expenditure d) Consumption expenditure

23. If the initial increase in the investment is Rs 1000 and MPC=0.8, there is a total increase in the [1]
income by

a) Rs. 1000 b) Rs. 5000

c) Rs. 6000 d) Rs. 500

24. The investment multiplier is the ratio of [1]

a) Change in the income to the change b) Change in the consumption to the

in the investment change in the investment

c) Change in the income to the change d) Change in the investment to the

in the consumption change in the income
25. APC can also be greater than one when [1]

a) APS will be one b) APS will be zero

c) APS will be negative d) APS will be positive

26. In C = a+ b (Y), ‘Y’ denotes [1]

a) NDP b) Disposable income

c) NNP d) GNP
27. If the initial increase in the investment is Rs 1000 and MPC=0.8, the level of consumption [1]
expenditure will increase by

a) 3000 b) 4000

c) 2000 d) 1000
28. In S = - a + (1 - b)Y ‘Y’ denotes [1]

a) Disposable income. b) NDP

c) NNP d) GNP
29. The important factor influencing the propensity to save in an economy is [1]

a) The level of savings b) The level of investment

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 c) The level of consumption d) The level of income (Y)
30. In S = - a + (1 - b) Y ‘b’ denotes [1]

a) MPS b) 1+MPC

c) 1-MPC d) MPC
31. If y=1000, c=1000, the APC+APS will be [1]

a) 1.0 b) 3

c) 4 d) 2
32. The coefficient (1-b) is also known as [1]

a) MPC b) K

c) 1-MPS d) MPS
33. The slope, ‘b’ indicates [1]

a) APC b) APS

c) MPS d) MPC
34. If y=1000, c=1000, the 1-APC=APS= [1]

a) 1 b) 0.0

c) 2 d) 3
35. The value of the multiplier is determined by the [1]

a) APS b) APC

c) MPC d) MPS
36. What does the term ceteris paribus mean? [1]

a) other things remaining equal b) with the view that

c) things are different d) in reference to

37. Can the value of APS be negative? [1]

a) False. b) Can’t say

c) Insufficient information d) True.

38. Complete the flow ΔI → ΔY → ΔC → _________ [1]

a) ΔD b) ΔC

c) ΔS d) ΔY

39. The APC can be equal to one when [1]

a) APS=2 b) APS = -1

c) APS =0 d) APS=1
40. In C = a + b (Y), ‘a’ denotes [1]

a) Consumption expenditure b) Automatic consumption expenditure

c) Autonomous consumption d) Annual consumption expenditure

expenditure

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41. Saving is an increasing function of income. It is [1]

a) Insufficient information b) Can’t say

c) True. d) FALSE
42. In C = a+ b (Y), ‘b’ denotes [1]

a) MPC b) MPS

c) 1 + MPC d) 1 - MPC
43. The savings function derived from the consumption function c=a+bY is [1]

a) S=Y+(a+bY) b) S= -a+(1-b)Y

c) S=Y-(a+b)Y d) S=Y-(a+bY)
44. The formula of investment multiplier in terms of MPS is [1]

a) ΔC
b) 1

ΔD MP S

c) d)
C C

ΔI Y

45. The Breakeven level of an economy is [1]

a) C = I b) AD = AS

c) C = Y d) C = AD
46. In S = - a + (1 - b) Y ‘S’ denotes [1]

a) Level of sales b) Level of savings

c) Level of savings and Capital d) Level of subsidies

expenditure
47. What can be the minimum value of the investment multiplier? [1]

a) 0 b) 1.0

c) 2 d) 3
48. The "planned" value of the variables like consumption, investment, output, etc, is known as: [1]

a) none of these b) ex post measures

c) ex ante measures d) ex pre measures

49. The value of APS can be negative when [1]

a) The value of consumption does not b) The value of consumption exceeds

exceed the value of income the value of income

c) The value of consumption is equal to d) The value of consumption is less

the value of income than the value of income
50. The average propensity to consume can be greater than one [1]

a) Can’t say b) True.

c) False. d) Insufficient information

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