Determination of Income and Employment Test

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Determination of Income and Employment Test - 3

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Weekly Quiz Competition

Question 1
1 / -0

Can the value of APS be negative?

A
False.

B
True.

C
Insufficient information

D
Can’t say

Solution

Value of APS is negative when consumption expenditure is greater than income.For example , if income = Rs.1000, consumption = 1200.

Then, saving = - 200. (negative saving)

APS = - 200/1000= - 0.2
Question 2
1 / -0

APC can be greater than one when

A
The value of consumption is equal to the value of income

B
The value of consumption exceeds the value of income

C
The value of consumption is less than the value of income

D
The value of consumption does not exceed the value of income

Solution

APC=C/Y

APC>1 when C>Y.
Question 3
1 / -0

In C = a + b (Y), ‘C’ denotes

A
Consumption expenditure

B
Central expenditure

C
Collateral expenditure

D
Capital expenditure

Solution

It is a linear consumption function where 'C' represents consumption expenditure.
Question 4
1 / -0

The law of Psychological consumption states

A
Consumption changes in the opposite direction as income

B
Consumption changes in the same direction as investment

C
Consumption changes in the same direction as income but APC remains less than unity.

D
Consumption does not change in the same direction as income

Solution

People save a part of their income after having consumed a part of it. As per the law, all income is not consumed rather a part is saved.
Question 5
1 / -0

Saving is an increasing function of income. It is

A
FALSE

B
Insufficient information

C
True

D
Can’t say

Solution

We call f(x) an increasing function of x, as x increases , f(x) also increases.

We know that saving is a function of income.So, as income increases saving also increases.

Thus, saving is an increasing function of income.
Question 6
1 / -0

APS=

A
C/S

B
S/D

C
S/Y

D
None of these

Solution

APS is defined as ratio of income that is saved out of total income.
Question 7
1 / -0

C= a+b(Y)

A
Algebraic function of the level of capital expenditure

B
Algebraic function of the level of Investment expenditure

C
Algebraic function of the level of Consumption expenditure

D
Linear function of the level of Consumption expenditure

Solution

Consumption has two parts :induced consumption and autonomous consumption.In the function, a implies autonomous consumption and bY implies induced consumption.
Question 8
1 / -0

MPS = 1 + MPC. It is

A
True

B
False

C
Depends on their values

D
None of these

Solution

Because, both MPC and MPS are less than 1.

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Re-Attempt Weekly Quiz Competition

Determination of Income and Employment Test - 3

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Determination of Income and Employment Test - 3

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Question 1

False.

True.

Insufficient information

Can’t say

Solution

Question 2

The value of consumption is equal to the value of income

The value of consumption exceeds the value of income

The value of consumption is less than the value of income

The value of consumption does not exceed the value of income

Solution

Question 3

Consumption expenditure

Central expenditure

Collateral expenditure

Capital expenditure

Solution

Question 4

Consumption changes in the opposite direction as income

Consumption changes in the same direction as investment

Consumption changes in the same direction as income but APC remains less than unity.

Consumption does not change in the same direction as income

Solution

Question 5

FALSE

Insufficient information

True

Can’t say

Solution

Question 6

C/S

S/D

S/Y

None of these

Solution

Question 7

Algebraic function of the level of capital expenditure

Algebraic function of the level of Investment expenditure

Algebraic function of the level of Consumption expenditure

Linear function of the level of Consumption expenditure

Solution

Question 8

True

False

Depends on their values

None of these

Solution

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