What is the key concept of the multiplier theory?

The relationship between income and investment.

The relationship between consumption and savings.

The relationship between inflation and unemployment.

The relationship between government spending and taxes.

What does the term "marginal propensity to consume" (MPC) refer to?

The increase in investment due to a change in income.

The increase in savings due to a change in consumption.

The increase in consumption due to a change in income.

The increase in income due to a change in savings.

Which formula represents the size of the multiplier?

Size of multiplier or k = 1/1 - MPC

Size of multiplier or k = 1/1 - MPS

Size of multiplier or k = ?Y/?I

Size of multiplier or k = ?I/?Y

What happens to the value of the multiplier when the marginal propensity to consume increases?

The multiplier value increases.

The multiplier value decreases.

The multiplier value remains the same.

The multiplier value becomes negative.

What are the two limiting cases of the multiplier value?

High and low multiplier values.

Positive and negative multiplier values.

Infinite and zero multiplier values.

Government and private sector multiplier values.

What is the significance of excess capacity in consumer goods industries for the multiplier effect?

Excess capacity reduces the value of the multiplier.

Excess capacity increases the value of the multiplier.

Excess capacity has no impact on the multiplier.

Excess capacity makes the multiplier irrelevant.

How does the multiplier work in terms of real output?

The multiplier only works in terms of money income.

The multiplier has no impact on real output.

The multiplier works in terms of both money income and real output.

The multiplier only works in terms of savings.

Concepts of Multiplier Free MCQ Practice Test with Solutions

	Macro Economics 59 videos\|61 docs\|29 tests

	Macro Economics 59 videos\|61 docs\|29 tests

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