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Practice Quiz-3 With Answers

1. The dominant school of economic thought until the mid-1930s was classical economics. 2. The passage contains a 15 question practice quiz on economic concepts such as the marginal propensity to consume, Keynesian income determination models, and equilibrium income. 3. The questions cover topics including investment, consumption, the multiplier effect, productivity, and the determinants of standards of living.

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279 views5 pages

Practice Quiz-3 With Answers

1. The dominant school of economic thought until the mid-1930s was classical economics. 2. The passage contains a 15 question practice quiz on economic concepts such as the marginal propensity to consume, Keynesian income determination models, and equilibrium income. 3. The questions cover topics including investment, consumption, the multiplier effect, productivity, and the determinants of standards of living.

Uploaded by

vik05345
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Quiz: PRACTICE QUIZ - III

(2014-16)
Quiz Menu
QNo

Question

The dominant school of economic thought until midway through the Great Depression of the 1930
0 I do not want to answer this Question
1
(19187)

1 classical.
2 Keynesian.
3 monetarism.
4 supply-side.
5 rational expectations.
Correct Answer: 1
The marginal propensity to consume measures the ratio of the:
0 I do not want to answer this Question

2
(19209)

1 average amount of our disposable income that we spend.


2 average amount of our savings that we spend.
3 change in consumer spending to a change in money holdings
4 change in consumer spending to a change in interest rates.
5 change in consumer spending to a change in disposable income.
Correct Answer: 5

In a Keynesian model of income determination, when intended spending is greater than actual outp
adjustment to a new macro-economic equilibrium is based on changes in
3
(19301)

0 I do not want to answer this Question


1 Autonomous consumption
2 Unplanned inventories
3 Government spending

4 Net exports
5 All of the above
Correct Answer: 2
If there is no government or foreign sector and planned investment equals planned saving, then
0 I do not want to answer this Question
4
(19302)

1 Actual output is equal to planned spending on consumption and investment


2 Consumption plus investment equals income
3 The quantity of output produced is equal to aggregate demand
4 There are no unplanned inventory changes
5 All of the above
Correct Answer: 5

Assume a model with no government or foreign sector. If actual output is $13.1 trillion while aggr
$13.2 trillion, we know that
0 I do not want to answer this Question
5
(19303)

1 The magnitude of unintended inventory adjustments is - $100 billion


2 The magnitude of unintended inventory adjustments is + $100 billion
3 The magnitude of unintended inventory adjustments is + $10 billion
4 The actual income level is above its equilibrium
5 There currently is an excess supply of goods and services
Correct Answer: 1

Assume a simple model without any government. If an increase in autonomous investment of 40 le


increase in consumption of 160, then the marginal propensity to save is
6
(19304)

0 I do not want to answer this Question


1 0.10
2 0.20
3 0.25
4 0.40

5 0.80
Correct Answer: 2

In a model with no government or foreign sector, if autonomous consumption is Co = 80, investme


the marginal propensity to save is s = 0.25, equilibrium income is
0 I do not want to answer this Question
7
(19305)

1 150
2 200
3 225
4 600
5 750
Correct Answer: 4

In a simple model with no government or foreign sector, a decline in investment of $10 billion wil
billion decline in the equilibrium level of income if
0 I do not want to answer this Question
8
(19306)

1 The mps is 0.2


2 The mpc is 0.5
3 The ratio of total consumption to total income is 0.8
4 Changes in consumption divided by changes in income equal 0.2
5 Changes in saving divided by changes in income equal 0.8
Correct Answer: 1

9
(19307)

If autonomous investment increases by 100 and government purchases decrease by 100, which of t
true?
0 I do not want to answer this Question
1 Income will increase by 100
2 Income will increase by 200
3 Income will increase by the multiplier times 100
4 Income will decrease by the multiplier times 100

5 Income will not change


Correct Answer: 5

Assume a model with no government, where consumption is the only component of aggregate dem
consumption function is of the form C = 400 + (0.9)Y, what is the equilibrium level of consumptio
0 I do not want to answer this Question
10
(19308)

1 400
2 1.000
3 1,600
4 3,600
5 4,000
Correct Answer: 5

Assume a model of the expenditure sector with no government or foreign sector. If the savings fun
as S = - 300 + (0.1)Y and autonomous investment increases by 200, by how much will consumptio
0 I do not want to answer this Question
11
(19309)

1 180
2 200
3 1,800
4 2,000
5 2,100
Correct Answer: 3

12
(21612)

Both Tom and Jerry work eight hours a day. Tom can produce six baskets of goods per hour while
four baskets of the same goods per hour. It follows that Tom's
0 I do not want to answer this Question
1 productivity is greater than Jerry's
2 output is greater thatn Jerry's
3 standard of living is higher than Jerry's
4 All of the above are correct

5 None of the above is correct


Correct Answer: 4

In one day Alpha Cabinet Company made 40 cabinets with 320 hours of labour. What was their pr
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13
(21616)

1 1/8 cabinet per hour


2 8 hours per cabinet
3 40 cabinets
4 None of the option is correct.
Correct Answer: 1
Which of the following is a determinant of productivity?
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14
(21618)

1 human capital per worker


2 physical capital per worker
3 natural resources per worker
4 All of the above are correct
5 None of the above is correct
Correct Answer: 4
The key determinant of a person's standard of living in a country is
0 I do not want to answer this Question

15
(21621)

1 the amunt of goods and services produced from each hour of a worker's time.
2 the total amount of goods and services produced within the country.
3 the total amount of its physical capital.
4 its growth rate of real GDP.
5 none of the above.
Correct Answer: 1

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