To explain the simple theory of income determination, Keynes used
Consumption and Investment
Aggregate demand and aggregate supply
Production and Expenditure
All the above
Keynes assumed the situation of
Full employment
Under employment
Involuntary unemployment
Marginal unemployment
Unemployment
Disguised unemployment
Under-employment
In the equation C = a + bY, which describes the aggregate consumption function, 'b' stands for?
The marginal propensity to consume
The amount of income when consumption is zero
The amount of consumption when income is zero
The average consumption level
The Marginal Propensity to Consume
ΔS/ΔY
C/y . ΔP/ΔQ
ΔP/ΔQ
ΔC/ΔY
The percentage of income that is consumed
The percentage of income that is not saved
One minus the fraction of total disposable income that is saved
The aggregate demand curve is downward sloping because
A lower price level, holding the nominal quantity of money constant, leads to a larger quantity of money in real terms causes the interest rate to fall, and stimulates planned investment spending
A lower price level, holding the nominal quantity of money constant leads t a larger quantity of money in real terms, causes the interest rate to fall, and stimulates planned investment spending
A higher price level, holding the nominal quantity of money constant
A higher price level holding the nominal quantity of money change
The aggregate demand curve shift to the left when
The price level increases
Taxes are increased
All of the above
The accelerator theory of investment says that induced investment is determined by:
The rate of change of national income
The level of aggregate demand
Expectations
As the MPS increases, the multiplier will:
Decrease
Increase
Either increase or decrease depending on the size of the change in investment
Remain constant
