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B Com Exam  >  B Com Test  >  Macro Economics  >  Test: The Investment Function- 1 - B Com MCQ

The Investment Function- 1 - Free MCQ Practice Test with solutions, B Com


MCQ Practice Test & Solutions: Test: The Investment 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 Investment 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

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Test: The Investment Function- 1 - Question 1
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What is autonomous investment in an economy?

Detailed Solution: Question 1

Autonomous investment refers to investment that is independent of the level of income or the rate of interest. It remains constant regardless of changes in economic variables.

Test: The Investment Function- 1 - Question 2
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Which of the following is a characteristic of induced investment?

Detailed Solution: Question 2

Induced investment is dependent on the level of income, and it increases as national income rises. This type of investment responds to changes in economic conditions.

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Test: The Investment Function- 1 - Question 3
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What is the relationship between autonomous investment and income?

Detailed Solution: Question 3

Autonomous investment is income-neutral, meaning it is not affected by changes in the level of income. It remains constant regardless of income fluctuations.

Test: The Investment Function- 1 - Question 4
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What determines induced investment in the economy?

Detailed Solution: Question 4

Induced investment is determined by the marginal efficiency of capital (expected profitability of investment projects) and the rate of interest. These factors influence investment decisions in response to changes in economic conditions.

Test: The Investment Function- 1 - Question 5
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What is the main basis of the Keynesian theory of income determination?

Detailed Solution: Question 5

The main basis of the Keynesian theory of income determination is the aggregate demand function. Keynes focused on the relationship between aggregate demand and employment levels in the short run.

Test: The Investment Function- 1 - Question 6
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What is the principle of effective demand?

Detailed Solution: Question 6

The principle of effective demand states that cost must not exceed receipt in economic activities. This principle underlines the relationship between aggregate demand and supply, determining the level of employment and income.

Test: The Investment Function- 1 - Question 7
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Which of the following components contributes to aggregate demand?

Detailed Solution: Question 7

Government purchases contribute to aggregate demand, along with consumption, investment, and net exports (exports minus imports).

Test: The Investment Function- 1 - Question 8
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What is the relationship between consumption and income in the consumption function?

Detailed Solution: Question 8

In the consumption function, consumption increases as income increases. This is the basic relationship indicating how individuals' spending behavior changes with their income levels.

Test: The Investment Function- 1 - Question 9
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What is the multiplier effect in economics?

Detailed Solution: Question 9

The multiplier effect refers to the phenomenon where an initial change in spending (usually investment) leads to a larger change in income and output. It magnifies the impact of changes in aggregate demand on the economy.

Test: The Investment Function- 1 - Question 10
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What is the equilibrium level of output in an economy?

Detailed Solution: Question 10

The equilibrium level of output is the point where planned spending equals planned output. It's the level at which the economy's resources are fully utilized, and there's no tendency for output to change.

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About this B Com Practice Test

This test contains 10 MCQs on The Investment 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.

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