.23.objective.

Question 1 An increase in investment is most likely to be caused by: a) Lower interest rates b) Lower national income c) A decrease in the marginal propensity to consume d) An increase in withdrawals Question 2 An outward shift in the Marginal Efficiency of Capital should: a) Decrease consumption b) Increase aggregate demand c) Reduce aggregate supply d) Slow economic growth Question 3 An increase in interest rates: a) Is likely to reduce savings b) Is likely to reduce the external value of the currency c) Leads to a shift in the MEC schedule d) Leads to a movement along the MEC schedule Question 4 The accelerator assumes: a) The marginal propensity to consumeis constant b) The economy is at full employment c) There is a constant relationship between net investment and the rate ofchange of output d) The multiplier is constant Question 5 Investment depends mainly on: a) Past levels of income b) Future expected profits c) Present national income levels d) Historic data Question 6 A profit maximizing firm will invest up tothe level of investment where: a) The cost of borrowing equals the marginal efficiency of capital b) The cost of borrowing is greater than the marginal efficiency of capital c) The cost of borrowing is less than themarginal efficiency of capital d) The cost of borrowing equals the marginal propensity to consume Question 7 Investment is: a) An injection that increases aggregatedemand b) A withdrawal that increases aggregate demand c) An injection that decreases aggregatedemand d) A withdrawal that decreases aggregate demand Question 8 Investment is an unstable element of aggregate demand because is dependsheavily on: a) Government policy b) Expectations c) National income d) Historic trends Question 9 If an increase in investment leads to a bigger increase in national income this is called the: a) Accelerator b) Aggregate demand c) Monetarism d) Multiplier Question 10 The difference between gross investment and net investment is: a) Depreciation b) Acceleration c) Deceleration d) Capital investment