Case Study-1
The size of multiplier depends upon the marginal propensity to consume of the community. The multiplier is the reciprocal of one minus marginal propensity to consume. However, we can express multiplier in a simpler form. As we know that saving is equal to income minus consumption, one minus marginal propensity to consume will be equal to marginal propensity to save, that is, 1- MPC = MPS. Therefore, multiplier is equal to 1/ 1- MPC =1/MPC.
Q.1. The size of multiplier depends on
(A) MPC
(B) MEC
(C) APC
(D) APS
Q.2. Formula for Multiplier =
(A) 1/1-MPC
(B) MPS/5
(C) 1-MPC
(D) MPS-1
Q.3. Savings is equal to :
(A) S= Y-C
(B) Y=C-S
(C) C= Y+ S
(D) 1& 2 both
Q.4. Marginal Propensity to Save is equal to:
(A) 1-MPC
(B) MPC
(C) APC
(D) APS
Q.5. in Keynes Theory aggregate supply curve is
(A) Rising Upwards
(B) Horizontal
(C) Vertical
(D) falling Downward
Case Study-2
British economist John Maynard Keynes is the father of modern macroeconomics, developing his own school of economic thought. Keynes's early-1900s economic theories had a huge impact on economic theory and the economic policies of global governments. Keynesian economics argues that the driving force of an economy is aggregate demand-the total spending for goods and services by the private sector and government. In the Keynesian economic model, total spending determines all economic outcomes, from production to employment rate. In Keynesian economics, demand is crucial-and often erratic. Keynes explained that the prosperity of whole economies could decline even if their capacity to produce was undiminished, because decline is influenced by demand.
Q.1. According to keynes the driving force of the economy is
(A) AD
(B) AS
(C) Investment
(D) Income
(E) Profits
Q.2. Who is the father of Modern Macroeconomics?
(A) Adam Smith
(B) David Ricardo
(C) J M Keynes
(D) Alfred Marshall
Q.3. In keynesian economics, what is crucial:
(A) Demand
(B) Supply
(C) Prices
(D) Investment
(E) Consumption
Q.4. The propensity of economy would ________________ when the capacity to produce is undiminished.
(A) Decline
(B) Constant
(C) unchanged
(D) NONE
Q.5. In keynes theory, __________ determines all economic outcomes.
(A) Total consumption
(B) Total spending
(C) Total Output
(D) Total investment
Case Study-3
Macro-economics is traditionally broken down into macro-economic theory and macro-economic policy. Macro-economic theory involves the construction and use of models of the whole, 'macro', economy. Economists build such models so that they can explain the structure of an economy, and the role and significance of the parts that make up this structure. Macro-economic models also help the economists understand how the separate components of the macro-economy are related.
Q.1. Macroeconomics is broken down into:
(A) Macroeconomic theory and macroeconomic policy
(B) Microeconomic theory and policy
(C) Macroeconomic theory and micro policy
(D) Econometrics theory
Q.2. Macroeconomic theory involves the construction of :
(A) Micro models
(B) Macro models
(C) Econometric models
(D) Growth models
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