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Quiz on Keynes theory of multiplier coefficient

Quiz by S.Bhaskar

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8 questions
Show answers
  • Q1
    What is the formula for the Keynesian multiplier coefficient?
    1 + MPC
    (1 - MPC) / MPC
    1 / (1 - MPC)
    MPC + 1
    30s
  • Q2
    In the context of the Keynesian multiplier coefficient, what does a value greater than 1 signify?
    No impact on GDP from changes in spending
    An increase in spending leads to a proportionally larger increase in GDP
    A decrease in spending leads to a smaller decrease in GDP
    A decrease in spending results in a larger decrease in GDP
    30s
  • Q3
    What is the main purpose of the Keynesian multiplier coefficient in economic theory?
    To determine international trade agreements
    To estimate the impact of changes in spending on overall economic activity
    To calculate government debt ratios
    To predict stock market trends
    30s
  • Q4
    How does the Keynesian multiplier coefficient differ from the simple spending multiplier?
    The Keynesian multiplier is calculated as a ratio of change in GDP to change in spending, while the simple spending multiplier is a fixed value
    The Keynesian multiplier coefficient is only applicable to government spending, while the simple spending multiplier considers all types of spending
    The Keynesian multiplier accounts for leakages like savings, taxes, and imports, while the simple spending multiplier assumes all income is spent
    The Keynesian multiplier is used in closed economies, while the simple spending multiplier is used in open economies
    30s
  • Q5
    What does a Keynesian multiplier coefficient of 2 indicate?
    The impact of spending on GDP will be negligible
    The impact of spending on GDP will be halved
    An initial increase in spending will lead to a doubling of the impact on GDP
    There will be no effect on GDP from changes in spending
    30s
  • Q6
    What is the Keynesian multiplier coefficient also known as?
    Income-expenditure multiplier
    Supply-side multiplier
    Monetary multiplier
    Fiscal multiplier
    30s
  • Q7
    How does the marginal propensity to save affect the value of the Keynesian multiplier coefficient?
    The marginal propensity to save has no impact on the Keynesian multiplier coefficient
    A higher marginal propensity to save leads to a smaller Keynesian multiplier coefficient
    A higher marginal propensity to save results in a larger Keynesian multiplier coefficient
    The relationship between the two variables is indirect and unpredictable
    30s
  • Q8
    How does the concept of time horizon impact the effectiveness of the Keynesian multiplier coefficient?
    In the long run, the Keynesian multiplier coefficient is more effective as all leakages are accounted for
    The time horizon has no impact on the effectiveness of the Keynesian multiplier coefficient
    The effectiveness of the Keynesian multiplier coefficient varies randomly based on time horizon
    In the short run, the Keynesian multiplier coefficient is more effective due to less leakage of spending
    30s

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