Tag: concept of consumption function, saving function and investment function

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Questions Related to concept of consumption function, saving function and investment function

Multiple choice economics concept of consumption function, saving function and investment function capital economy of a village wealth, capital and money

If a Resource is being used for generating further revenue, it will constitute _______________.

  1. Wealth

  2. Capital

  3. Both (a) and (b)

  4. Neither (a) nor (b)
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A resource used for generating revenue is both wealth (because it has value) and capital (because it is used in production).

Multiple choice economics concept of consumption function, saving function and investment function capital economy of a village wealth, capital and money

As a Factor of Production, "Capital" is _________________.

  1. A free gift of nature

  2. Produced by man alone

  3. Produced by the man working with nature

  4. Not relevant at all.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Capital is created by human labor acting upon natural resources. It is neither a free gift of nature nor produced by man alone without raw materials.

Multiple choice economics concept of consumption function, saving function and investment function capital economy of a village wealth, capital and money

As a Factor of Production, "Capital" is a ________ means of Production.

  1. Original

  2. Primary

  3. Produced

  4. Monetary
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Capital is classified as a produced means of production because it is created by humans to facilitate further production, unlike land which is an original or primary factor.

Multiple choice economics concept of consumption function, saving function and investment function capital economy of a village wealth, capital and money

Capital Formation is required for _____________________.

  1. Replacement and renovation of existing machinery and equipments

  2. Creating additional productive capacity

  3. Both (a) and (b)

  4. Neither (a) nor (b)
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Capital formation is essential for both maintaining existing productive capacity (replacement/renovation) and expanding it (additional capacity).

Multiple choice economics concept of consumption function, saving function and investment function capital economy of a village wealth, capital and money

If current consumption is reduced for the purpose of Capital Formation, that represents a _________________.

  1. Uneconomic activity

  2. Current sacrifice for future growth

  3. Decrease in demand

  4. Decrease in resources
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Capital formation requires saving, which means reducing current consumption to invest in future productive capacity. This is a trade-off between present and future.

Multiple choice economics concept of consumption function, saving function and investment function capital economy of a village wealth, capital and money

Larger production of ____________ goods would lead to higher production in future.

  1. consumer

  2. capital

  3. agricultural

  4. public

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

An increase in the stock of capital goods, which are used for the production of consumer goods, will lead to increased production of consumer goods and enhance the future production output.

Multiple choice economics concept of consumption function, saving function and investment function capital economy of a village wealth, capital and money

For the purpose of Capital Formation _____________________.

  1. Current consumption is to be sacrificed to a certain extent

  2. Current income should be saved

  3. Both (a) and (b)

  4. Neither (a) nor (b)
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Capital formation requires both the willingness to save (sacrificing current consumption) and the actual act of saving income, which is then channeled into investment.