.. a good explanations on each question please

9. The consumption function shows the relationship between consumption and: Interest rates. Saving. Price level changes. Disposable income 10. At the point where the disposable income line intersects the consumption function, saving: equals consumption. b. equals disposable income. C. is less than zero. is equal to zero. 1. Autonomous consumption is consumption that: a. varies directly with disposable income. b. varies inversely with disposable income. c. is independent of the level of disposable income. d. is constant at first and then varies with disposable income. 12. Autonomous consumption is equal to the level of consumption associated with: unstable disposable income. positive disposable income. zero disposable income. negative disposable income. 65 |Page 13. Given the consumption function C = $100 billion + 0.75 ($300 billion), autonomous consumption is equal to: $100 billion. b. $225 billion. C. $300 billion. d. $325 billion. $400 billion. 14. That part of disposal income not spent on consumption is defined as: a. transitory disposable income. b. permanent disposable income. C. disposal income. autonomous consumption. e. saving. 15. If disposal income is $400 billion, autonomous consumption is $60 billion, and MPC is 0.8, what is the level of saving? a. $20 billion. b. $210 billion. c. $380 billion. d. $590 billion. c. $780 billion. 16. The marginal propensity to consume (MPC) is computed as the change in: a. consumption divided by the change in savings. b. consumption divided by the change in disposable personal income. c. consumption divided by the change in GDP. d. None of the above. 17. The marginal propensity to consume (MPC) is the slope of the: a GDP curve. b. disposable income curve. C. consumption function. d autonomous consumption curve. 18. The slope of the consumption function is called the: autonomous consumption rate. b. marginal consumption rate. average propensity to consume O C.23. If your disposable personal income increases from $30,090 to $40,000 and your savings increases from $2,000 to $4,000, your marginal propensity to save (MPS) is: a. 0.2. b. 0.4. C. 0.5. d. 0.8. 1.0. 24. The marginal propensity to save is: a the change in saving induced by a change in consumption. b. (change in S) / (change in Y). c. 1 - MPC / MPC. d. (change in Y - bY) / (change in Y). c. 1 - MPC. 25. If the marginal propensity to consume = 0.75, then: a. the marginal propensity to save = 0.75. 67 | Page b. the marginal propensity to save = 1.33. . the marginal propensity to save = 0,20. the marginal propensity to save = 0.25. e. since the marginal propensity to save and the marginal propensity to consume are unrelated, we cannot determine the marginal propensity to save from the information given. Diagram- 1 Consumption function 26. As shown in Diagram 1, autonomous consumption is: a. 0. b, $2 trillion, c. $4 trillion. d. $6 trillion. c. S8 trillion. Diagram- 2 Disposable income and consumption data Disposable Marginal Marginal income Consumption Saving propensity to propensity to save consume (MPC) (MPS) $100 100 175 200 250 300 325 400 400 500 175 600 550 Note: All amounts are in billions of dollars per year. 27. As shown in Diagram- 2, if disposable income is $100 billion, saving is: a. $100 billion. b. $75 billion. c. -$75 billion. d. -$175 billion. 68 | Page O O C.1. A situation when a person is able and willing to take up a job and gets employed, it is called- a. Employment b. Full Employment c. Under Employment d. Unemployment. 2. A situation when people are engaged in jobs but they do not get these jobs according to their capabilities, efficiency and qualifications, it is called- a. Employment b. Full Employment c. Under Employment d. Unemployment. 3. A situation when the workers are willing to work under any conditions and at any wage rate but they fail to get employment, it is called- a. Voluntary Unemployment b. Involuntary Unemployment c. Cyclical Unemployment d. Frictional Unemployment 4. A temporary unemployment which exists during the period of the transfer of labor from one occupation to another is called- a. Voluntary Unemployment b. Involuntary Unemployment c. Cyclical Unemployment d. Frictional Unemployment 5. When more workers are engaged in a work than actually required to work, it is called- a. Voluntary Unemployment b. Involuntary Unemployment c. Disguised Unemployment d. Frictional Unemployment 6. Who developed the Classical Theory of Income and Employment? a. J. B. Say b. J. S. Mill c. Ricardo d. All of the above. 7. "The supply creates its own demand". This is the famous law of-... a. Market (Say's Law of Market) b. Demand c. Supply d. None of the above. 8. The book General Theory of Employment, Interest and Money was written by--.. a. J. N. Keynes b. J. M. Keynes c. Ricardo d. None of the above. 43 | Page 9. Keynesian theory of employment is based on the concept of--..- a. Aggregate Demand b. Aggregate Supply c. Aggregate Demand and Supply both d. None. 10. The investment which is undertaken independently of the level of income is known as--.- a. Autonomous Investment b. Induced Investment c. Public Investment d. Private Investment 1 1. The components of aggregate demand is/ are--...- a. Household consumption expenditure b. Govt final conspt. expenditure c. Pvt and public invt expenditure d. All 12. Determination equilibrium of an economy can be studied by--- a. Equality of AD and AS b. Equality of saving and investment1. The market value of all final goods and services produced within domestic territory of the country during a year is known as----.-- a. GDPMP b. GDPFC C. GNPMP d. GNPFC 2. The money value of all final goods and services produced in the domestic territory of a country during a year plus Net factor income from abroad is called- a. GDPMP b. GDPFC c. GNPMP d. GNPFC 3. The difference between the income received from abroad for rendering factor services by the normal residents of the country to the rest of the world and income paid for the factor services rendered by nonresidents in the domestic territory of a country is known as-- a. Net Factor Income from Abroad b. Capital Consumption Allowances c. Depreciation d. None of these. 4. The difference between indirect tax and subsidy is known as--....- a. Net Factor Income from Abroad b. Capital Consumption Allowances c. Depreciation d. Net Indirect Tax. 22 | Page 5. Net National Product at Factor Cost (NNPpc) is also known as-- a. Net Factor Income from Abroad b. National Income c. National cost d. Net Indirect Tax. 6. That part of personal income which is actually available to households for consumption and saving is called- a. National Disposable Income b. Personal Disposable Income c. Personal Income d. None. 7. Real and nominal income is calculated respectively at- a. Current price and Constant Price b. Constant price and Current price c. Current price and Current price d. Constant price and Constant price. 8. GDP Deflator is equal to- Real GDP a. Nominal GDP -x 100 b. -x 100 Real GDP Nominal GDP Nominal GNP C. -x 100 d. Nominal NDP -x 100 Real GNP Real NDP 9. Sum of all kinds of income received by the individuals from all sources is called- a. Personal Income b. Private Income c. Personal Disposable Income d. None 10. GNPMP is equal to a. GDPMP + NFIA b. GDPMP - NFIA c. GDPMP - D d. NoneWrite T for True and F for False against each of the following statements: 1. The Classical theory of Income and Employment states that full employment is a normal feature of a capitalist economy. 2. The classical theory of employment rules out the possibility of unemployment in a free market economy. 3. According to classical economists the economy would never be in a full employment equilibrium. 4. Keynesian theory of employment is based on the concept of effective demand. 5. Effective demand means the level of income where aggregate demand and aggregate supply are equal. 6. Classical economists used the approach of aggregate demand and aggregate supply for the determination of full employment equilibrium. 7. Induced investment is expenditure both on fixed assets and on the stocks that are required if the economy is to be able to produce a bigger output as aggregate demand rises. 44 | Page 8. AD =C+I+G+ (X-M) 9. Equilibrium level of income is determined where aggregate demand curve cuts aggregate supply. 10. The level of income will be in equilibrium when aggregate demand is greater than aggregate supply.Write T for True and F for False against each of the following statements: 1. The term microeconomics and macroeconomics were first given by Ragner Frisch in 1933. 2. Prof. J.M. Keynes is known as father of modern macroeconomics. 3. Macroeconomics became popular after great depression of 1929- 33. 4. Prof. J. N. Keynes wrote the book General Theory of Employment, Interest and Money in 1936. 5. Price is the main determinant of macroeconomics. 6. Income is the main determinant of microeconomics. 7. Partial equilibrium analysis is used in macroeconomics. 8. General equilibrium analysis is applied in microeconomics. 9. Milton Friedman is monetarist. 10. Classical economists and monetarists emphasize that active role should be played by the government to control business cycles and achieve economic stability. 1 1. Keynesians believe in free- market economy. 12. Friedman and other monetarists as well as supporters of rational expectations theory are opposed to the active role by the government. 13. Microeconomics and macroeconomics are independent to each other.Multiple Choice Questions: 1. Investment means the purchase of- A. Old machines, old buildings and other capital goods B. New machines, new buildings and other capital goods that add to the existing stocks of capital. C. Both D. None of the above. 2. Net investment is equal to- A. Gross investment plus replacement or depreciation: B. Gross investment less replacement or depreciation; C. Gross investment multiply by replacement or depreciation; D. None of the above. 3. Which is/are the determinant/s of private investment- A. Prospective income from the capital asset; B. Supply price of the capital asset: C. The rate of interest; D. All of the above. 4. Expected revenues from the use of the capital asset minus variable cost is called- A. Prospective income B. Supply price C. Prospective yield D. None of the above. 5. The future return on the asset is called- A. Prospective income B. Supply price C. Prospective yield D. None of the above. 6. After r years, at a rate of interest of r per cent, the present value will be- A. A= P (1+ryt A B. P =- (1+r) A C. P= (1 -r ) D. P= ( 1 +r) A 7. What will be the future value of SR 100 at 5 % rate of interest after 2 years? A. SR 1 10.00: 111 | Page B. SR 1 10.25; C. SR 90.00; D. None of the above. 8. What is the present value of SR 100 at 5 % rate of interest in two year? A. SR 110.00: B. SR 1 10.25: C. SR 90.70; D. SR 90.00. 9. The rate of discount (r) which equalizes the present value of the prospective yield of an asset with its supply price is known as- A. Prospective income B. Supply price C. Prospective yield D. Marginal Efficiency of Capital (MEC). 10. With increase in investment, MEC- A. Increases; B. Decreases; C. Constant; D. All of the above 11. The change in income due to change in investment is known as- A. Consumption: B. Multiplier, C. Accelerator: D. IS curve O C.12. Higher the value of MPC, A. Lower will be the value of multiplier; B. Higher will be the value of multiplier; C. No effect will be on multiplier: D. All is possible. 13. Higher the value of MPS, A. Lower will be the value of multiplier; B. Higher will be the value of multiplier, C. No effect will be on multiplier; D. All is possible. 14. If the marginal propensity to consume is 0.8 (80 %) then the multiplier will be- A. 2.5: B. 5.0; C. 0.2; D. None of the above. 15. If the marginal propensity to save is 0.2 then the multiplier will be- A. 2.5; 112 | Page B. 5.0: C. 0.2; D. None of the above. 16. If the Saudi economy plans to generate SR 100 billion of additional income, how much additional investment will be required when marginal propensity to consume (mpc) is equal to 80 per cent of disposable income? A. SR 100 billion; B. SR 50 billion; C. SR 20 billion; D. SR 40 billion. 17. An additional investment of SR 50 billion in the Saudi economy creates how much additional income if the marginal propensity to consume (mpc) is equal to 0.5? A. SR 25 billion; B. SR 50 billion; C. SR 100 billion; D. SR 150 billion. 18. The change in investment due to change in income is known as- A. Consumption: B. Multiplier; C. Accelerator; D. IS curve 19. The concepts of investment multiplier and accelerator are given by- A. Prof. J. M. Keynes and Prof. J. M. Clark respectively; B. Prof. R. H. Kahn and Prof. J. M. Keynes respectively: C. Prof. J. M. Keynes has given these two concepts; D. None of the above. 20. In trade/ business cycle, the cycles follow these sequence- A. Prosperity or boom - recession - depression or slump and then - Recovery; B. Prosperity or boom - depression or slump - recession and then - Recovery. C. Recession - depression or slump - Recovery and then - Prosperity or boom D. Recovery - recession - depression or slump and then - Prosperity or boom.Write 7 for true and F for false statement given below: 1. Investment means the purchase of new machines, new buildings and other capital goods that add to the existing stocks of capital. 2. Expected profitability is the main motive for investment in private sector of the economy. 3. In public sector, these decisions are motivated by profitability in terms of surplus of social benefits over social costs. 4. If the MEC