CUET Economics Chapter-National Income Determination and Multiplier

  • Board
    CBSE
  • Textbook
    NCERT
  • Class
    Class 12
  • Subject
    Economics
  • Chapter
    CUET Economics Chapter-National Income Determination and Multiplier
  • Chapter Name
    National Income Determination and Multiplier
  • Category
    CUET (Common University Entrance Test) UG

Important MCQ Questions on CUET Economics Chapter-National Income Determination and Multiplier with Detailed explanation

HT having an expert teacher of Economics prepared Important MCQ Questions on CUET Economics Chapter-National Income Determination and Multiplier with Detailed explanations. All the Chapters in the syllabus of CUET Economics are covered with coverage of the entire syllabus. This page is prepared for Chapter-National Income Determination and Multiplier and covers all important topics of the competitive exam CUET for domain subject test. Check out the chapter-wise CUET Economics MCQ questions. 

MCQ Questions for CUET Economics Chapter-National Income Determination and Multiplier Set-1

Macroeconomic Economics - MCQ on Income Determination

Class XII

Q.01. A shift in aggregate supply is most likely to

a) reduce the general price level and the national income.

b) reduce the general price level and increase the national income.

c) increase the general price level and reduce national income.

d) increase the general price level and the national income.

Answer:

b

Explanation: A shift in aggregate supply is likely to reduce the general price level and increase national income.

Q.02. Aggregate demand will increase, when

a) consumption falls.

b) investment falls.

c) exports fall.

d) imports fall.

Answer:

d

Explanation: Aggregate demand will increase, when imports fall.

Q.03. Aggregate demand is increased by

a) increased saving.

b) increasing import spending.

c) increased taxation revenue.

d) increased investment.

Answer:

d

Explanation: An increase in investment increases aggregate demand.

Q.04. An increase in aggregate demand if aggregate supply is totally inelastic, will have the affect of

a) increasing price but not output.

b) increasing output but not price.

c) increasing output and price both.

d) decreasing output and price.

Answer:

a

Explanation: An increase in aggregate demand if aggregate supply is totally inelastic increases prices but will not effect change in output.

Q.05. Increased levels of consumption will shift the

) aggregate supply to the right.

b) aggregate supply to the left.

c) aggregate demand to the right.

d) aggregate demand to the left.

Answer:

c

Explanation: Increased levels of consumption will increase aggregate demand and shift this to the right.

Q.06. Aggregate demand is decreased by

a) increased consumption.

b) increasing export revenue.

c) increased taxation revenue.

d) increased investment.

Answer:

c

Explanation: An increase in taxation revenue increases withdrawals and reduces aggregate demand.

Q.07. Improved training of employees would

a) shift aggregate supply to the right.

b) shift aggregate supply to the left.

c) shift aggregate demand to the right.

d) shift aggregate demand to the left.

Answer:

a

Explanation: Improved training of employees would increases productivity and hence the aggregate supply through increased efficiency in production.

Q.08. Increased unemployment benefits and less motivation to work would

a) shift aggregate supply to the right.

b) shift aggregate supply to the left.

c) shift aggregate demand to the right.

d) shift aggregate demand to the left.

Answer:

b

Explanation: Increased unemployment benefits and less motivation to work, leads to less people working and reduced aggregate supply.

Q.09. Increased levels of spending on imports will shift

a) aggregate supply to the right.

b) aggregate supply to the left.

c) aggregate demand to the right.

d) aggregate demand to the left.

Answer:

d

Explanation: Increased levels of spending on imports, leads to less spending domestically and reduces domestic demand.

Q.10. An increase in aggregate demand will have most effects on prices provided

the a) aggregate supply is price inelastic.

b) aggregate supply is price elastic.

c) aggregate supply has unitary price elasticity.

d) aggregate demand is price inelastic.

Answer:

a

Explanation: An increase in aggregate demand will affect prices if, aggregate supply is price inelastic.

MCQ Questions for CUET Economics Chapter-National Income Determination and Multiplier Set-2

Q.11. The accelerator assumes

a) the marginal propensity to consume is constant.

b) the economy is at full employment.

c) there is a constant relationship between net investment and the rate of change of output.

d) the multiplier is constant.

Answer:

c

Explanation: The accelerator assumes a constant relationship between net investment and the rate of change of output.

Q.12. An outward shift in the marginal efficiency of capital is expected to

a) decrease consumption.

b) increase aggregate demand.

c) reduce aggregate supply.

d) slow economic growth.

Answer:

b

Explanation: If, the MEC shifts outwards, then investment should increases because the expected returns are higher; this should push up aggregate demand.

Q.13. An increase in interest rates is likely to

a) reduce savings.

b) reduce the external value of the currency.

c) lead a shift in the MEC schedule.

d) lead a movement along the MEC schedule.

Answer:

d

Explanation: An increase in interest rates is likely to lead a movement along the MEC schedule.

Q.14. If an increase in investment leads to a larger increase in national income, this is called the

a) accelerator.

b) aggregate demand.

c) monetarism.

d) multiplier.

Answer:

d

Explanation: If, an increase in investment leads to a larger increase in national income, this is known as the multiplier.

Q.15. Investment depends mainly on

a) past levels of income.

b) expected future profits.

c) present national income levels.

d) statistical trends.

Answer:

b

Explanation: Investment depends heavily on expectations of future returns.

Q.16. A profit-maximizing firm will invest up to the level of investment, where

a) the cost of borrowing equals marginal efficiency of capital.

b) the cost of borrowing is greater than the marginal efficiency of capital.

c) the cost of borrowing is less than the marginal efficiency of capital.

d) the cost of borrowing equals the marginal propensity to consume.

Answer:

a

Explanation: A firm will invest, if the expected return on investment is greater than the cost of borrowing; investment will continue till the rate of return equals the costs of borrowing.

Q.17. Investment is

) an injection that increases aggregate demand.

b) a withdrawal that increases aggregate demand.

c) an injection that decreases aggregate demand.

d) a withdrawal that decreases aggregate demand.

Answer:

a

Explanation: Investment is an injection designed to increase aggregate demand.

Q.18. Investment is an unstable element of aggregate demand because it depends heavily on

) government policy.

b) expectations.

c) national income.

d) statistical trends.

Answer:

b

Explanation: Investment is comparably unstable because it depends heavily on expectations.

Q.19. The difference between gross investment and net investment is

a) depreciation.

b) acceleration.

c) deceleration.

d) capital investment.

Answer:

a

Explanation: The difference between gross and net investment is depreciation.

Q.20. An increase in investment is most likely to be caused by

a) lower interest rates.

b) lower national income.

c) a decrease in the marginal propensity to consume.

d) an increase in withdrawals.

Answer:

a

Explanation: A lower interest rate makes it cheaper to borrow and is likely to increase investment.