According to Keynes, the consumption function primarily relates consumption to:

1. According to Keynes, the consumption function primarily relates consumption to:

A) Interest rate
B) Income
C) Price level
D) Money supplyFollow the Unique Study Centre channel on WhatsApp: https://whatsapp.com/channel/0029Vb6e3LCA2pLEYnNqUC1H

2. The Keynesian consumption function is generally expressed as:
A) C = a + bY
B) C = a − bY
C) C = b/Y
D) C = Y − C

3. In the equation C = a + bY, ‘a’ represents:
A) Marginal propensity to consume
B) Average propensity to consume
C) Autonomous consumption
D) Induced investment

4. According to Keynes, the marginal propensity to consume (MPC) is:
A) Greater than 1
B) Equal to 1 always
C) Between 0 and 1
D) Less than 0

5. The slope of the Keynesian consumption function is equal to:
A) APC
B) MPC
C) MPS
D) APS

6. If income increases by ₹1,000 and consumption increases by ₹800, the MPC is:
A) 0.2
B) 0.5
C) 0.8
D) 1.25

7. According to Keynes’s psychological law of consumption, as income increases:
A) Consumption increases more than proportionately
B) Consumption increases less than proportionately
C) Consumption remains constant
D) Consumption decreases

8. When income is zero, consumption can still be positive because of:
A) Induced investment
B) Autonomous consumption
C) Marginal propensity to save
D) Multiplier effect

9. If MPC = 0.75, the corresponding MPS is:
A) 0.15
B) 0.20
C) 0.25
D) 0.75

10. As income rises, Keynesian theory suggests that the average propensity to consume (APC) generally:
A) Rises continuously
B) Falls
C) Remains exactly constant
D) Becomes zero immediately

Answer Key

1. B

2. A

3. C

4. C

5. B

6. C

7. B

8. B

9. C

10. B