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# Test: Income Determination - 2

## 20 Questions MCQ Test Economics Class 12 | Test: Income Determination - 2

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This mock test of Test: Income Determination - 2 for UPSC helps you for every UPSC entrance exam. This contains 20 Multiple Choice Questions for UPSC Test: Income Determination - 2 (mcq) to study with solutions a complete question bank. The solved questions answers in this Test: Income Determination - 2 quiz give you a good mix of easy questions and tough questions. UPSC students definitely take this Test: Income Determination - 2 exercise for a better result in the exam. You can find other Test: Income Determination - 2 extra questions, long questions & short questions for UPSC on EduRev as well by searching above.
QUESTION: 1

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QUESTION: 2

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QUESTION: 3

### The level of equilibrium income is determined by

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QUESTION: 4

The level of equilibrium income is also determined by

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QUESTION: 5

Multiplier tells us what will be the

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QUESTION: 6

Autonomous consumption is assumed to be at

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QUESTION: 7

APC= 1-APS. It is

Solution:

APC + APS = 1 because income is either used for consumption or for saving.

QUESTION: 8

APS= 1+APC. It is

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QUESTION: 9

MPC+MPS should always be equal to

Solution:

Mathematically, in a closed economy, MPS + MPC = 1

QUESTION: 10

MPS = 1- MPC. It is

Solution:

Since MPS is measured as ratio of change in savings to change in income, its value lies between 0 and 1. Also, marginal propensity to save is opposite of marginal propensity to consume. Mathematically, in a closed economy, MPS + MPC = 1, since an increase in one unit of income will be either consumed or saved.

QUESTION: 11

The saving is negative at

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QUESTION: 12

The value of APS can be negative when

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Between APS and MPS, the value of APS can be negative when consumption expenditure becomes higher than income.

QUESTION: 13

The coefficient (1-b) measures the

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QUESTION: 14

If income is Rs 1000 and consumption expenditure is Rs 200, APS will be

Solution:

The ratio of total saving to total income is called APS.
APS =  800/1000
= 0.8

QUESTION: 15

If APC is 0.7 then APS will be

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QUESTION: 16

The important factor influencing the propensity to consume in an economy is

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QUESTION: 17

The important factor influencing the propensity to save in an economy is

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QUESTION: 18

The savings function derived from the consumption function c=-a+by is

Solution:

The correct option is B.

The Consumption function is a+bY and not -a+bY

We know, Y=C+S

S= Y - C

S=Y-(a+bY)

S=Y-a-bY

S= -a+Y-bY

S= -a+(1-b)Y

QUESTION: 19

The slope of the saving function gives the

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QUESTION: 20

The coefficient (1-b) is also known as

Solution: