1) This is the proportion of each additional unit of income that is spent on imports. a) Marginal propensity to consume b) Marginal propensity to import c) Marginal propensity to save d) Marginal propensity to tax 2) The precise relationship between an initial injection into the circular flow of income and the eventual increase in national income resulting from the injection is known as the ..... a) Increase in National Income b) economic growth c) Multiplier effect 3) MPS is the same thing as ....... a) 1-MPM b) 1 - MPC c) 1 - MPT d) 1 - MPG 4) A country which engages in trading with other countries is said to have a ..... a) closed economy b) mixed economic system c) open economy d) high growth economy 5) In the circular flow of income taxes are an example of ...... a) disincentives b) injections c) incentives d) leakages 6) The income accruing to the permanent residents of a country from current economic activity during a period of time e.g. one year is known as ? a) national income b) national wages c) national earnings d) national activity 7) Which of the following is an example of an injection into the CFOI? a) Savings b) Taxes c) Imports d) Exports 8) If MPC is .4 and the MPT is .2 then what is the multiplier? a) 1.5 b) 2 c) 1.25 d) 1.8 9) If Consumption in Year 1 is €6m and year 2 it is €9m and National Income increases by €10 from year 1 to year 2, then what is the MPC? a) .6 b) .4 c) .3 d) .7 10) Is the Marginal Propensity to Save higher or lower when interest rates are high? a) Higher b) Lower 11) If the economic expectations of a population are positive about the future then will investment and borrowing be ..... a) Lower b) Higher

LC Economics National Income (Part 1)

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