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B Com Exam  >  B Com Test  >  Macro Economics  >  Test: Concepts of Multiplier - B Com MCQ

Concepts of Multiplier - Free MCQ Practice Test with solutions, B Com Macro


MCQ Practice Test & Solutions: Test: Concepts of Multiplier (10 Questions)

You can prepare effectively for B Com Macro Economics with this dedicated MCQ Practice Test (available with solutions) on the important topic of "Test: Concepts of Multiplier". These 10 questions have been designed by the experts with the latest curriculum of B Com 2026, to help you master the concept.

Test Highlights:

  • - Format: Multiple Choice Questions (MCQ)
  • - Duration: 10 minutes
  • - Number of Questions: 10

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Test: Concepts of Multiplier - Question 1
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Which type of multiplier is associated with an increase in total income as a result of an initial increase in investment?

Detailed Solution: Question 1

The type of multiplier associated with an increase in total income due to an initial increase in investment is the Income Multiplier.

Test: Concepts of Multiplier - Question 2
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What is the key concept of the multiplier theory?

Detailed Solution: Question 2

The key concept of the multiplier theory is that an initial increase in investment leads to a larger increase in total income through successive rounds of consumption and spending.

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Test: Concepts of Multiplier - Question 3
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Who first developed the concept of multiplier theory?

Detailed Solution: Question 3

The concept of multiplier theory was first developed by F.A. Kahn in the early 1930s. Keynes later refined this concept in his economic theory.

Test: Concepts of Multiplier - Question 4
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What does the term "marginal propensity to consume" (MPC) refer to?

Detailed Solution: Question 4

The marginal propensity to consume (MPC) refers to the increase in consumption that occurs due to a change in income.

Test: Concepts of Multiplier - Question 5
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Which formula represents the size of the multiplier?

Detailed Solution: Question 5

The size of the multiplier can be represented by the formula: Size of multiplier or k = 1/1 - MPS.

Test: Concepts of Multiplier - Question 6
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What happens to the value of the multiplier when the marginal propensity to consume increases?

Detailed Solution: Question 6

When the marginal propensity to consume increases, the value of the multiplier also increases, leading to a larger impact on total income.

Test: Concepts of Multiplier - Question 7
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What are the two limiting cases of the multiplier value?

Detailed Solution: Question 7

The two limiting cases of the multiplier value are when the marginal propensity to consume is equal to one (resulting in an infinite multiplier) and when it is equal to zero (resulting in a multiplier of one).

Test: Concepts of Multiplier - Question 8
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In an open economy, what factor can reduce the value of the multiplier?

Detailed Solution: Question 8

In an open economy, an increase in imports (decreased exports) can act as a leakage from the multiplier process and reduce the value of the multiplier.

Test: Concepts of Multiplier - Question 9
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What is the significance of excess capacity in consumer goods industries for the multiplier effect?

Detailed Solution: Question 9

Excess capacity in consumer goods industries allows for an increase in production to meet rising demand, thereby increasing the value of the multiplier effect.

Test: Concepts of Multiplier - Question 10
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How does the multiplier work in terms of real output?

Detailed Solution: Question 10

The multiplier works not only in terms of money income but also in terms of real output, as increased demand for goods leads to an increase in their production, contributing to higher real output.

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About this B Com Practice Test

This test contains 10 MCQs on Concepts of Multiplier with detailed solutions for each question. It is part of the Macro Economics course on EduRev, designed to align with the current B Com syllabus. Each solution explains not just the correct answer but also gives you an understanding of the topic — not just to attempt the question but also help you prepare for the exam with practice.

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