.22.objective.

Question 1 If the marginal propensity to consume domestic products is 0.9 the size of the multiplier is: a) 10 b) 1 c) 9 d) 0.1 Question 2 An increase in the marginal propensity to consume will: a) Increase the size of the multiplier b) Increase the marginal propensity to save c) Decrease national income d) Reduce injections into the economy Question 3 If the Keynesian consumption function is C = 10 + 0.8 Yd then when disposable income is Rs.1000, what is total consumption? a) 0.8 b) 800 c) 810 d) 0.81 Question 4 If the Keynesian consumption function is C = 10 + 0.8 Yd then when disposable income is Rs.1000, what is the marginal propensity to consume? a) 0.8 b) 800 c) 810 d) 0.81 Question 5 If the Keynesian consumption function is C = 10 + 0.8 Yd then when disposable income is Rs.1000, what is the average propensity to consume? a) 0.8 b) 800 c) 810 d) 0.81 Question 6 As income increases: a) The average propensity to consume gets nearer in value to the marginal propensity to consume b) The average propensity to consume diverges in value from the marginal propensity to consume c) The average propensity to consume falls d) The average propensity to consume always approaches 0 Question 7 An increase in consumption at any given level of income is likely to lead to: a) Higher aggregate demand b) An increase in exports c) A fall in taxation revenue d) A decrease in import spending Question 8 Lower interest rates are likely to: a) Decrease consumption b) Increase cost of borrowing c) Encourage saving d) Increase borrowing and spending Question 9 Friedman's theory of consumption focuses on: a) Past income b) Current income c) Disposable income d) Permanent income Question 10 The marginal propensity to consume is equal to: a) Total spending / total consumption b) Total consumption / total income c) Change in consumption / change in income d) Change in consumption / change in savings.