Tamil Nadu Board of Secondary EducationHSC Arts Class 12th

# Tamil Nadu Board Samacheer Kalvi solutions for Class 12th Economics Answers Guide chapter 4 - Consumption and Investment Functions [Latest edition]

## Chapter 4: Consumption and Investment Functions

Model Questions - Part AModel Questions - Part BModel Questions - Part CModel Questions - Part D
Model Questions - Part A [Pages 72 - 74]

### Tamil Nadu Board Samacheer Kalvi solutions for Class 12th Economics Answers Guide Chapter 4 Consumption and Investment FunctionsModel Questions - Part A [Pages 72 - 74]

#### Multiple Choice Questions

Model Questions - Part A | Q 1. | Page 72

The average propensity to consume is measured by ______.

• C/Y

• C×Y

• Y/C

• C+Y

Model Questions - Part A | Q 2. | Page 72

An increase in the marginal propensity to consume will:

• Lead to consumption function becoming steeper

• Shift the consumption function upwards

• Shift the consumption function downwards

• Shift savings function upwards

Model Questions - Part A | Q 3. | Page 72

If the Keynesian consumption function is C=10+0.8 Y then, if the disposable income is Rs 1000, what is the amount of total consumption?

• ₹ 0.8

• ₹ 800

• ₹ 810

• ₹ 0.81

Model Questions - Part A | Q 4. | Page 72

If the Keynesian consumption function is C=10+0.8Y then, when disposable income is Rs 100, what is the marginal propensity to consume?

• ₹ 0.8

• ₹ 800

• ₹ 810

• ₹ 0.81

Model Questions - Part A | Q 5. | Page 72

If the Keynesian consumption function is C=10+0.8 Y then, and disposable income is ₹100, what is the average propensity to consume?

• ₹ 0.8

• ₹ 800

• ₹ 810

• ₹ 0.9

Model Questions - Part A | Q 6. | Page 72

As national income increases______.

• The APC falls and gets nearer in value to the MPC.

• The APC increases and diverges in value from the MPC.

• The APC stays constant

• The APC always approaches infinity

Model Questions - Part A | Q 7. | Page 72

An increase in consumption at any given level of income is likely to lead to ______.

• Higher aggregate demand

• An increase in exports

• A fall in taxation revenue

• A decrease in import spending

Model Questions - Part A | Q 8. | Page 72

Lower interest rates are likely to :

• Decrease in consumption

• increase cost of borrowing

• Encourage saving

• increase borrowing and spending

Model Questions - Part A | Q 9. | Page 73

The MPC is equal to :

• Total spending / total consumption

• Total consumption/total income

• Change in consumption /change in income

• none of the above.

Model Questions - Part A | Q 10. | Page 73

The relationship between total spending on consumption and the total income is the _______.

• Consumption function

• Savings function

• Investment function

• aggregate demand function

Model Questions - Part A | Q 11. | Page 73

The sum of the MPC and MPS is _______.

• 1

• 2

• 0.1

• 1.1

Model Questions - Part A | Q 12. | Page 73

As income increases, consumption will _________.

• fall

• not change

• fluctuate

• increase

Model Questions - Part A | Q 13. | Page 73

When investment is assumed autonomous the slope of the AD schedule is determined by the _____.

• marginal propensity to invest

• disposable income

• marginal propensity to consume

• average propensity to consume

Model Questions - Part A | Q 14. | Page 73

The multiplier tells us how much _______changes after a shift in _____.

• Consumption, income

• investment, output

• savings, investment

• output, aggregate demand

Model Questions - Part A | Q 15. | Page 73

The multiplier is calculated as______.

• 1/(1-MPC)

• 1/MPS

• 1/MPC

• a and b

Model Questions - Part A | Q 16. | Page 73

It the MPC is 0.5, the multiplier is _________.

• 2

• 1/2

• 0.2

• 20

Model Questions - Part A | Q 17. | Page 73

In an open economy import _________ the value of the multiplier.

• Reduces

• increase

• does not change

• changes

Model Questions - Part A | Q 18. | Page 73

According to Keynes, investment is a function of the MEC and _____.

• Demand

• Supply

• Income

• Rate of interest

Model Questions - Part A | Q 19. | Page 74

The term super multiplier was first used by ______.

• J.R.Hicks

• R.G.D. Allen

• Kahn

• Keynes

Model Questions - Part A | Q 20. | Page 74

The term MEC was introduced by______.

• J.M. Keynes

• Ricardo

• Malthus

Model Questions - Part B [Page 74]

### Tamil Nadu Board Samacheer Kalvi solutions for Class 12th Economics Answers Guide Chapter 4 Consumption and Investment FunctionsModel Questions - Part B [Page 74]

#### Answer the following questions in one or two sentences

Model Questions - Part B | Q 21. | Page 74

What is consumption function?

Model Questions - Part B | Q 22. | Page 74

What do you mean by propensity to consume?

Model Questions - Part B | Q 23. | Page 74

Define average propensity to consume (APC).

Model Questions - Part B | Q 24. | Page 74

Define marginal propensity to consume (MPC).

Model Questions - Part B | Q 25. | Page 74

What do you mean by a propensity to save?

Model Questions - Part B | Q 26. | Page 74

Define average propensity to save (APS).

Model Questions - Part B | Q 27. | Page 74

Define Marginal Propensity to Save (MPS).

Model Questions - Part B | Q 28. | Page 74

Define Multiplier.

Model Questions - Part B | Q 29. | Page 74

Define Accelerator.

Model Questions - Part C [Pages 74 - 75]

### Tamil Nadu Board Samacheer Kalvi solutions for Class 12th Economics Answers Guide Chapter 4 Consumption and Investment FunctionsModel Questions - Part C [Pages 74 - 75]

#### Answer the following questions in one paragraph

Model Questions - Part C | Q 30. | Page 74

State the propositions of Keynes’s Psychological Law of Consumption.

Model Questions - Part C | Q 31. | Page 74

Differentiate autonomous and induced investment.

Model Questions - Part C | Q 32. | Page 74

Explain any three subjective and objective factors influencing the consumption function.

Model Questions - Part C | Q 33. | Page 74

Mention the differences between accelerator and multiplier effect.

Model Questions - Part C | Q 34. | Page 75

State the concept of the super multiplier.

Model Questions - Part C | Q 35. | Page 75

Specify the limitations of the multiplier.

Model Questions - Part D [Pages 35 - 75]

### Tamil Nadu Board Samacheer Kalvi solutions for Class 12th Economics Answers Guide Chapter 4 Consumption and Investment FunctionsModel Questions - Part D [Pages 35 - 75]

#### Answer the following questions in a page

Model Questions - Part D | Q 36. | Page 75

Explain Keynes's psychological law of consumption function with a diagram.

Model Questions - Part D | Q 37. | Page 75

Briefly explain the subjective and objective factors of consumption function?

Model Questions - Part D | Q 38. | Page 75

Illustrate the working of Multiplier.

Model Questions - Part D | Q 39. | Page 35

Explain the operation of the Accelerator.

Model Questions - Part D | Q 40. | Page 75

What are the differences between MEC and MEI.

## Chapter 4: Consumption and Investment Functions

Model Questions - Part AModel Questions - Part BModel Questions - Part CModel Questions - Part D

## Tamil Nadu Board Samacheer Kalvi solutions for Class 12th Economics Answers Guide chapter 4 - Consumption and Investment Functions

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Concepts covered in Class 12th Economics Answers Guide chapter 4 Consumption and Investment Functions are Introduction to Consumption and Investment Functions, Consumption Function, Investment Function, Multiplier, The Accelerator Principle, Super Multiplier: (K and β Interaction).

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