Income Determination Test

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Income Determination Test - 11

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Weekly Quiz Competition

Question 1
1 / -0

The saving is negative at

A
Zero level of Income

B
Maximum level of Income

C
Low level of Income

D
High level of Income

Solution

S=Y-C

Putting, Y =0

We have , S=0-C

S=-C. So, at zero level of income, saving is negative
Question 2
1 / -0

If income is Rs 1000 and consumption expenditure is Rs 1200, APS will be

A
-0.2

B
-0.5

C
0.3

D
0.4

Solution

APC=C/Y=1200/1000=1.2

Now, APS=1-APC

APS=1-1.2=-0.2
Question 3
1 / -0

If APC is 0.7 then APS will be

A
0.7

B
0.3

C
1

D
0.4

Solution

Given, APC=0.7

APS=1-APC= 1-0.7= 0.3
Question 4
1 / -0

The important factor influencing the propensity to consume in an economy is

A
The level of consumption

B
The level of savings

C
The level of investment

D
The level of income (Y)

Solution

Consumption is a function of income.

C=f(Y) and APC=C/Y =f(Y)/Y.
Question 5
1 / -0

The important factor influencing the propensity to save in an economy is

A
The level of income (Y)

B
The level of consumption

C
The level of investment

D
The level of savings

Solution

Saving is a function of income.

S=f(Y).

So, APS=S/Y=f(Y)/Y.
Question 6
1 / -0

The savings function derived from the consumption function c=a+bY is

A
S=Y-(a+bY)

B
S=Y-(a+b)Y

C
S=Y+(a+bY)

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

Solution

S=-b+(1-b)Y, where 1-b implies marginal propensity to save.
Question 7
1 / -0

The slope of the saving function gives the

A
The amount of savings done when there is high level of income.

B
Increase in savings per unit increase in the income.

C
The amount of dissavings done when there is zero level of income.

D
The amount of dissavings done when there is high level of income.

Solution

Slope of saving function implies rate of change of saving with respect to income.
Question 8
1 / -0

The coefficient (1-b) is also known as

A
1-MPS

B
MPC

C
MPS

D
K

Solution

Since, b is called MPC

MPS=1-MPC=1-b.

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Re-Attempt Weekly Quiz Competition

Income Determination Test - 11

Result

Income Determination Test - 11

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SHARING IS CARING

Question 1

Zero level of Income

Maximum level of Income

Low level of Income

High level of Income

Solution

Question 2

-0.2

-0.5

0.3

0.4

Solution

Question 3

0.7

0.3

1

0.4

Solution

Question 4

The level of consumption

The level of savings

The level of investment

The level of income (Y)

Solution

Question 5

The level of income (Y)

The level of consumption

The level of investment

The level of savings

Solution

Question 6

S=Y-(a+bY)

S=Y-(a+b)Y

S=Y+(a+bY)

S= -a+(1-b)Y

Solution

Question 7

The amount of savings done when there is high level of income.

Increase in savings per unit increase in the income.

The amount of dissavings done when there is zero level of income.

The amount of dissavings done when there is high level of income.

Solution

Question 8

1-MPS

MPC

MPS

K

Solution

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