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Chapters
2: National Income
3: Theories of Employment and Income
▶ 4: Consumption and Investment Functions
5: Monetary Economics
6: Banking
7: International Economics
8: International Economic Organisations
9: Fiscal Economics
10: Environmental Economics
11: Economics of Development and Planning
12: Introduction to Statistical Methods and Econometrics
![Samacheer Kalvi solutions for Economics [English] Class 12 TN Board chapter 4 - Consumption and Investment Functions - Shaalaa.com](/images/economics-english-class-12-tn-board_6:5f2b1b2038084cf381bfa42c826a928c.jpg "Samacheer Kalvi solutions for Economics [English] Class 12 TN Board chapter 4 - Consumption and Investment Functions")
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Solutions for Chapter 4: Consumption and Investment Functions
Below listed, you can find solutions for Chapter 4 of Tamil Nadu Board of Secondary Education Samacheer Kalvi for Economics [English] Class 12 TN Board.
Samacheer Kalvi solutions for Economics [English] Class 12 TN Board 4 Consumption and Investment Functions Model Questions [Pages 72 - 75]
Part A - Multiple Choice Questions
The average propensity to consume is measured by ______.
C/Y
C×Y
Y/C
C+Y
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
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
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
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
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
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
Lower interest rates are likely to :
Decrease in consumption
increase cost of borrowing
Encourage saving
increase borrowing and spending
The MPC is equal to :
Total spending / total consumption
Total consumption/total income
Change in consumption /change in income
none of the above.
The relationship between total spending on consumption and the total income is the _______.
Consumption function
Savings function
Investment function
aggregate demand function
The sum of the MPC and MPS is _______.
1
2
0.1
1.1
As income increases, consumption will _________.
fall
not change
fluctuate
increase
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
The multiplier tells us how much _______changes after a shift in _____.
Consumption, income
investment, output
savings, investment
output, aggregate demand
The multiplier is calculated as______.
1/(1-MPC)
1/MPS
1/MPC
a and b
It the MPC is 0.5, the multiplier is _________.
2
1/2
0.2
20
In an open economy import _________ the value of the multiplier.
Reduces
increase
does not change
changes
According to Keynes, investment is a function of the MEC and _____.
Demand
Supply
Income
Rate of interest
The term super multiplier was first used by ______.
J.R.Hicks
R.G.D. Allen
Kahn
Keynes
The term MEC was introduced by______.
Adam Smith
J.M. Keynes
Ricardo
Malthus
Part B - Answer the following questions in one or two sentences
What is consumption function?
What do you mean by propensity to consume?
Define average propensity to consume (APC).
Define marginal propensity to consume (MPC).
What do you mean by a propensity to save?
Define average propensity to save (APS).
Define Marginal Propensity to Save (MPS).
Define Multiplier.
Define Accelerator.
Part C - Answer the following questions in one paragraph
State the propositions of Keynes’s Psychological Law of Consumption.
Differentiate autonomous and induced investment.
Explain any three subjective and objective factors influencing the consumption function.
Mention the differences between accelerator and multiplier effect.
State the concept of the super multiplier.
Specify the limitations of the multiplier.
Part D - Answer the following questions in a page
Explain Keynes's psychological law of consumption function with a diagram.
Briefly explain the subjective and objective factors of consumption function?
Illustrate the working of Multiplier.
Explain the operation of the Accelerator.
What are the differences between MEC and MEI.
Solutions for 4: Consumption and Investment Functions
Samacheer Kalvi solutions for Economics [English] Class 12 TN Board chapter 4 - Consumption and Investment Functions
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Concepts covered in Economics [English] Class 12 TN Board 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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