Income Determination CBSE Questions & Answers

Income Determination

This is Economics Class 12 Income Determination CBSE Questions & Answers. There are 15 questions in this test with each question having around four answer choices.

Questions & Answers

1
If MPC is less than one, it follows that
  • A
    (1-b) i.e. MPS is positive
    Correct
  • B
    (1-b) i.e. MPS is negative
  • C
    (1-b) i.e. MPS is zero
  • D
    (1-b) i.e. MPS is infinity
2
Saving is an increasing function of income. It is
  • A
    Can’t say
  • B
    1
    Correct
  • C
    Insufficient information
  • D
    FALSE
3
Can the value of APS be negative?
  • A
    Can’t say
  • B
    FALSE
  • C
    Insufficient information
  • D
    1
    Correct
4
The value of APS can be negative when
  • A
    The value of consumption is less than the value of income
  • B
    The value of consumption does not exceed the value of income
  • C
    The value of consumption exceeds the value of income
    Correct
  • D
    The value of consumption is equal to the value of income
5
At low level of income saving is negative.
  • A
    Can’t say
  • B
    FALSE
  • C
    1
    Correct
  • D
    Insufficient information
6
The average propensity to consume can be greater than one
  • A
    FALSE
  • B
    1
    Correct
  • C
    Insufficient information
  • D
    Can’t say
7
APC can be greater than one when
  • A
    The value of consumption is less than the value of income
  • B
    The value of consumption exceeds the value of income
    Correct
  • C
    The value of consumption does not exceed the value of income
  • D
    The value of consumption is equal to the value of income
8
APC can also be greater than one when
  • A
    APS will be zero
  • B
    APS will be positive
  • C
    APS will be one
  • D
    APS will be negative
    Correct
9
The investment multiplier is the ratio of
  • A
    Change in the income to the change in the consumption
  • B
    Change in the consumption to the change in the investment
  • C
    Change in the income to the change in the investment
    Correct
  • D
    Change in the investment to the change in the income
10
What can be the minimum value of the investment multiplier?
  • A
    3
  • B
    1.0
    Correct
  • C
    2
  • D
    0
11
The value of the multiplier is determined by the
  • A
    MPS
  • B
    APC
  • C
    MPC.
    Correct
  • D
    APS
12
Complete the flow \(\Delta {\text{I}} \to \Delta {\text{Y}} \to \Delta {\text{C}} \to \) ____________
  • A
    \(\Delta \)D
  • B
    \(\Delta \)Y
    Correct
  • C
    \(\Delta \)C
  • D
    \(\Delta \)S
13
If MPC =0.75, then MPS will be
  • A
    25.5
  • B
    1
  • C
    2.5
  • D
    0.25
    Correct
14
The formula of investment multiplier in terms of MPC is
  • A
    K=\(\frac{1}{{1 - APC}}\)
  • B
    K=\(\frac{1}{{1 - MPC}}\)
    Correct
  • C
    K=\(\frac{1}{{1 - MPS}}\)
  • D
    K=\(\frac{1}{{1 - APS}}\)
15
The formula of investment multiplier in terms of MPS is
  • A
    K=\(\frac{1}{{1 - APC}}\)
  • B
    K=\(\frac{1}{{1 - APS}}\)
  • C
    K= \(\frac{1}{{MPS}}\)
    Correct
  • D
    K=\(\frac{1}{{1 - MPS}}\)