The 'consumption function' in Keynesian economics is usually expressed as: MCQ with Answer and Explanation

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The 'consumption function' in Keynesian economics is usually expressed as:

A. MV = PT

B. Y = C + I

C. S = I

D. C = a + bY

Answer: Option D

Solution (By JKSSB Mock Tests)

The Keynesian consumption function is C = a + bY, where a is autonomous consumption and b is MPC.

This question belongs to: Economy GK Economy Set 1

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Which of the following is a characteristic of the 'Speculative Attack' models of currency crises?

A. Reserves never matter

B. A fixed exchange rate may collapse suddenly when reserves reach a critical threshold

C. Crises occur only gradually

D. Only current-account deficits cause crises

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Correct Answer: Option B

Explanation:
First-generation speculative-attack models show that an inconsistent policy mix (e.g., persistent money-financed deficits under a fixed exchange rate) leads to a sudden attack that exhausts reserves and forces abandonment of the peg.

This question belongs to: Economy GK Economy Set 1