The part of income after tax that is not consumed is defined as
Wages and salaries
Saving
Capital investment
Nondurable goods expenditure
Correct answer is B
The part of income after tax that is not consumed is defined as saving. This is because when income is earned, it is either used for consumption or saved. Therefore, if it is not consumed, it is saved. Capital investment, wages and salaries, and nondurable goods expenditure are all forms of consumption, not saving.
The real money supply divided by the real GDP
The money supply multiplied by the price level
The money supply divided by the price level
The ratio of real GDP to the real money supply
Correct answer is D
Velocity of money is the total amount of money in circulation in an economy. It is calculated as Velocity of money = GDP/Money Supply
The short run can be defined as the period of time during which
All inputs are fixed
At least one of the firm's input is fixed
At least two inputs are fixed
All inputs are variable
Correct answer is B
A short run period is a period of time in which some input factors are fixed and some are variable. In the short run, it is impossible for the producer to vary the quantity of some inputs.
The marginal propensity to consume is
Options A, B and C
ΔC/ΔY
The slope of the consumption function
Coefficient c in the equation C = C + cYd
Correct answer is A
The marginal propensity to consume is the ratio of change in consumption to change in income. It is mathematically represented as: MPC = ∆C/∆Y and also the consumption function is represented as C = a +bYd ( C = C + cYd) where the b(c) is the MPC which ranges between 0 and 1. The slope of the consumption function is b or MPC.
Which of the following is an example of free good?
Free education
Water in the ocean
Dinner you did not pay for
Your rented apartment
Correct answer is B
Free goods are goods whether consumer goods or productive inputs, which are useful but not scarce i.e. they are in sufficiently abundant supply that all agents can have as much of them as they wish at zero social opportunity cost e.g. air, water, by -product etc.