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B Com Exam  >  B Com Test  >  Macro Economics  >  Test: The Investment Function- 2 - B Com MCQ

The Investment Function- 2 - Free MCQ Practice Test with solutions, B Com


MCQ Practice Test & Solutions: Test: The Investment Function- 2 (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- 2". 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- 2 - Question 1
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What does the aggregate demand-aggregate supply (AD-AS) approach focus on to determine the equilibrium level of income?

Detailed Solution: Question 1

The AD-AS approach focuses on the equilibrium level of income where aggregate demand (C + I) equals aggregate supply.

Test: The Investment Function- 2 - Question 2
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In the saving-investment approach, when is an economy in equilibrium?

Detailed Solution: Question 2

The saving-investment approach states that an economy is in equilibrium when planned saving equals planned investment.

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Test: The Investment Function- 2 - Question 3
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What happens to the equilibrium level of income when there's an increase in taxes?

Detailed Solution: Question 3

An increase in taxes reduces disposable income, leading to a decrease in consumption and aggregate demand, causing the equilibrium level of income to decline.

Test: The Investment Function- 2 - Question 4
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What does the tax multiplier (KT) represent?

Detailed Solution: Question 4

The tax multiplier (KT) represents the change in income resulting from a change in taxes. KT = ?Y/?T.

Test: The Investment Function- 2 - Question 5
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What is the primary effect of an increase in taxes on the consumption function and aggregate demand?

Detailed Solution: Question 5

An increase in taxes leads to a downward shift in the consumption function, reducing aggregate demand.

Test: The Investment Function- 2 - Question 6
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How does the tax multiplier (KT) compare to the government spending multiplier (KG)?

Detailed Solution: Question 6

The tax multiplier (KT) is smaller in absolute value compared to the government spending multiplier (KG).

Test: The Investment Function- 2 - Question 7
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In the AD-AS approach, what does the aggregate supply curve represent?

Detailed Solution: Question 7

The aggregate supply curve represents the total output and income in the economy.

Test: The Investment Function- 2 - Question 8
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What does the saving curve depict in the saving-investment approach?

Detailed Solution: Question 8

The saving curve in the saving-investment approach represents planned saving at various levels of income.

Test: The Investment Function- 2 - Question 9
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What is the main objective of using the tax multiplier (KT)?

Detailed Solution: Question 9

The tax multiplier (KT) is used to quantify the effect of changes in taxes on the national income.

Test: The Investment Function- 2 - Question 10
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What is the equilibrium condition in the saving-investment approach?

Detailed Solution: Question 10

In the saving-investment approach, the equilibrium condition is achieved when planned saving equals planned investment, i.e., S = I.

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About this B Com Practice Test

This test contains 10 MCQs on The Investment Function- 2 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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