MULTIPLIER FORMULA & MCQs

1. AD = C+I+G+NE (OR) C+I
2. AS = C+ S
3. Y = C +S
4. APC = C/Y
5. APS = S/Y
6. MPC = ∆C/∆Y
7. MPS = ∆S/∆Y
8. K = 1/MPS (or)
9. K = 1/1-MPC
10.K=∆Y/∆C
11. APC and APS can never be zero
12. At breakeven point APC=1
where C=Y
13. MPC ranges between 0 – 1
14. Multiplier and MPC - directly related
15. Multiplier and MPS -inversely related
16. C= a+b(Y)
17. S= -a+(1-b)Y
[-c= autonomous consumption
-a= Dissaving
(1-b)=MPS]


1. Multiplier =
(a)1/MPS
(b)1/1-MPC
(c) 1/1+MPC
(d)1/1-MPS

2. If MPC = 0.9 then the value of multiplier will be
(a) 6 
(b) 9 
(c) 10 
(d) 12

3. MPC:
(a) dS/dY
(b) dC/dY
(c) C/Y
(d)S/Y

4. If MPS = 1/4
the value of multiplier will be:
(a) 4 
(b) 2 
(c) 8 
(d) 6

5. If MPC = 0 the value of multiplier will be:
(a) 1 
(b) 0 
(c) 2 
(d) ∝

6. There is an inverse relationship between multiplier and
(a) MPS 
(b) MPC 
(c) APC 
(d) None

7. If MPC = 1 the multiplier will be
(a) 1 
(b) 0 
(c) ∝ 
(d) None of these

8.MPC is equal to
(a) ∆Y/∆C
(b) Y/C
(c) ∆C/∆Y
(d) C/Y

9. If C= 250 and Y=1000, the APC will be
(a). 750 
(b) 0.75 
(c) 250 
(d)0.25

10. Saving function is the formational relationship b/w
a) Income and consumption
b) Price and saving
c) Saving and income
d) Consumption and saving

11. Propensity to save is the
(a)Additional income that is not be saved
(b) Level of saving at which saving and consumption are equal
(c) Ratio of saving to income
(d) Tendency of the consumer towards higher saving

12. APS is equal to
(a). Y/S 
(b)∆ Y/∆ S 
(c) S/Y 
(d) ∆ S/ ∆ Y

13. If MPS=0.4 and ∆ Y=1000,what will be as
(a) Rs 400 
(b) Rs 500 
(c) Rs 600 
(d) Rs 250

14. If MPS=60% , MPC will be
(a) 60% 
(b) 50% 
(c) 40% 
(d)30%

15. Which of the following is correct?
(a) MPS+ MPC=1 
(b)MPC=1-MPS
(c) MPS=1-MPC 
(d) All of the above

16.If consumption function is C=by, what will be the saving function?
(a) S= a+bY
(b) S=(1-b)y
(c) S= -a+ (1-b)y
(d) S= -by

17. Aggregate demand is estimated as
(a) Private Consumption Expenditure
(b) Private Consumption Expenditure and Govt Expenditure
(c) Private investment Expenditure
(d) Private Consumption Expenditure, Govt Expenditure, Pvt Investment Expenditure
and net export

18. Marginal Propensity to save is equal to
(a) dC/ΔY
(b)C/Y
 (c) dS/dY
 (d) S/Y

19. If C=250 and Y=1000,the APC will be
(a). 750 
(b) 0.75 
(c) 250 
(d) 0.25

20.Which of the following is correct?
(a) MPS+MPC=1 
(b) MPC=1-MPS
(c) MPS=1-MPC 
(d) all of the above