Explore Exams
Login Signup
Sign in Open App
B Com Exam  >  B Com Test  >  Macro Economics  >  Test: The Keynesian Consumption Function - 1 - B Com MCQ

The Keynesian Consumption Function - 1 - Free MCQ Practice Test with solutions,


MCQ Practice Test & Solutions: Test: The Keynesian Consumption Function - 1 (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: The Keynesian Consumption Function - 1". 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

Sign up on EduRev for free to attempt this test and track your preparation progress.

Test: The Keynesian Consumption Function - 1 - Question 1
Save

What is the meaning of marginal propensity to consume (MPC)?

Detailed Solution: Question 1

The marginal propensity to consume (MPC) measures the change in consumption resulting from a change in disposable income. It signifies how much of an increase in income is spent on consumption.

Test: The Keynesian Consumption Function - 1 - Question 2
Save

Which of the following is true regarding the consumption function?

Detailed Solution: Question 2

The consumption function describes the relationship between the amount of consumption and the level of income. It shows how changes in income lead to changes in consumption. Keynes introduced this concept to explain how consumption changes with varying income levels.

Clear all your doubts with EduRev
Test: The Keynesian Consumption Function - 1 - Question 3
Save

What happens to average propensity to consume (APC) as income increases?

Detailed Solution: Question 3

In many cases, as income increases, the average propensity to consume (APC) tends to decrease. This means that as people earn more, they tend to save a larger proportion of their income.

Test: The Keynesian Consumption Function - 1 - Question 4
Save

What relationship exists between average propensity to consume (APC) and average propensity to save (APS)?

Detailed Solution: Question 4

The sum of average propensity to consume (APC) and average propensity to save (APS) is always equal to 1. This is because disposable income can either be consumed or saved. Therefore, APC + APS = 1.

Test: The Keynesian Consumption Function - 1 - Question 5
Save

In the context of the consumption function, what does the term "average propensity to consume" (APC) refer to?

Detailed Solution: Question 5

Average propensity to consume (APC) represents the proportion of income that is consumed. It is calculated as consumption divided by disposable income. As income increases, APC may change, influencing consumption patterns.

Test: The Keynesian Consumption Function - 1 - Question 6
Save

What does the marginal propensity to save (MPS) indicate?

Detailed Solution: Question 6

The marginal propensity to save (MPS) indicates how much additional saving is induced by an increase in disposable income. It quantifies the change in savings associated with a change in income.

Test: The Keynesian Consumption Function - 1 - Question 7
Save

In a non-linear consumption function, how does marginal propensity to consume (MPC) change with an increase in income?

Detailed Solution: Question 7

In a non-linear consumption function, as income increases, the marginal propensity to consume (MPC) tends to decrease. This means that the change in consumption for a given change in income becomes smaller as income rises.

Test: The Keynesian Consumption Function - 1 - Question 8
Save

What is the primary reason consumption increases less than income in a community?

Detailed Solution: Question 8

Consumption increases less than income because a portion of the additional income earned by a community is saved rather than spent. This tendency to save is what leads to the gap between income and consumption.

Test: The Keynesian Consumption Function - 1 - Question 9
Save

What does the consumption function curve show when it coincides with the 45? line?

Detailed Solution: Question 9

When the consumption function curve coincides with the 45? line, it indicates that consumption is equal to income at every level of income. This scenario implies that every additional unit of income is fully consumed.

Test: The Keynesian Consumption Function - 1 - Question 10
Save

In a non-linear consumption function, what happens to average propensity to save (APS) as income increases?

Detailed Solution: Question 10

In a non-linear consumption function, as income increases, the average propensity to save (APS) tends to increase. This means that as income rises, a larger proportion of income is saved rather than consumed.

59 videos|89 docs|29 tests
Join Course
Information about Test: The Keynesian Consumption Function - 1 Page
In this test you can find the Exam questions for Test: The Keynesian Consumption Function - 1 solved & explained in the simplest way possible. Besides giving Questions and answers for Test: The Keynesian Consumption Function - 1, EduRev gives you an ample number of Online tests for practice
59 videos|89 docs|29 tests
Join Course
Download as PDF

About this B Com Practice Test

This test contains 10 MCQs on The Keynesian Consumption Function - 1 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.

Explore more B Com Study Resources

If you found this The Keynesian Consumption Function - 1 MCQ Test helpful, you can further enhance your B Com preparation with in-depth courses on EduRev, for all the subjects and topics available in Macro Economics course. The course offers:
  • Video Lectures: covering all the topics of Macro Economics
  • Notes for Revision: offering revision notes, important questions, summaries, flashcards, cheatsheets & more for B Com preparation
  • MCQ Test: variety of questions as per the pattern of B Com exam
Signup to see your scores go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup