diff --git a/IPython/core/display.py b/IPython/core/display.py
index 3af9699..301e8aa 100644
--- a/IPython/core/display.py
+++ b/IPython/core/display.py
@@ -751,7 +751,7 @@ def set_matplotlib_formats(*formats, **kwargs):
     select_figure_formats(shell, formats, **kw)
 
 @skip_doctest
-def set_matplotlib_close(close):
+def set_matplotlib_close(close=True):
     """Set whether the inline backend closes all figures automatically or not.
     
     By default, the inline backend used in the IPython Notebook will close all
@@ -772,7 +772,7 @@ def set_matplotlib_close(close):
         Should all matplotlib figures be automatically closed after each cell is
         run?
     """
-    from IPython.kernel.zmq.pylab.backend_inline import InlineBackend
-    ilbe = InlineBackend.instance()
-    ilbe.close_figures = close
+    from IPython.kernel.zmq.pylab.config import InlineBackend
+    cfg = InlineBackend.instance()
+    cfg.close_figures = close
 
diff --git a/IPython/core/tests/test_display.py b/IPython/core/tests/test_display.py
index 67fb620..8e55cc0 100644
--- a/IPython/core/tests/test_display.py
+++ b/IPython/core/tests/test_display.py
@@ -10,8 +10,11 @@ import os
 import nose.tools as nt
 
 from IPython.core import display
+from IPython.core.getipython import get_ipython
 from IPython.utils import path as ipath
 
+import IPython.testing.decorators as dec
+
 def test_image_size():
     """Simple test for display.Image(args, width=x,height=y)"""
     thisurl = 'http://www.google.fr/images/srpr/logo3w.png'
@@ -58,3 +61,58 @@ def test_image_filename_defaults():
     img = display.Image(filename=os.path.join(tpath, 'testing/tests/logo.jpg'), embed=False)
     nt.assert_equal('jpeg', img.format)
     nt.assert_is_none(img._repr_jpeg_())
+
+def _get_inline_config():
+    from IPython.kernel.zmq.pylab.config import InlineBackend
+    return InlineBackend.instance()
+    
+@dec.skip_without('matplotlib')
+def test_set_matplotlib_close():
+    cfg = _get_inline_config()
+    cfg.close_figures = False
+    display.set_matplotlib_close()
+    assert cfg.close_figures
+    display.set_matplotlib_close(False)
+    assert not cfg.close_figures
+
+_fmt_mime_map = {
+    'png': 'image/png',
+    'jpeg': 'image/jpeg',
+    'pdf': 'application/pdf',
+    'retina': 'image/png',
+    'svg': 'image/svg+xml',
+}
+
+@dec.skip_without('matplotlib')
+def test_set_matplotlib_formats():
+    from matplotlib.figure import Figure
+    formatters = get_ipython().display_formatter.formatters
+    for formats in [
+        ('png',),
+        ('pdf', 'svg'),
+        ('jpeg', 'retina', 'png'),
+        (),
+    ]:
+        active_mimes = {_fmt_mime_map[fmt] for fmt in formats}
+        display.set_matplotlib_formats(*formats)
+        for mime, f in formatters.items():
+            if mime in active_mimes:
+                nt.assert_in(Figure, f)
+            else:
+                nt.assert_not_in(Figure, f)
+
+@dec.skip_without('matplotlib')
+def test_set_matplotlib_formats_kwargs():
+    from matplotlib.figure import Figure
+    ip = get_ipython()
+    cfg = _get_inline_config()
+    cfg.print_figure_kwargs.update(dict(foo='bar'))
+    kwargs = dict(quality=10)
+    display.set_matplotlib_formats('png', **kwargs)
+    formatter = ip.display_formatter.formatters['image/png']
+    f = formatter.lookup_by_type(Figure)
+    cell = f.__closure__[0].cell_contents
+    expected = kwargs
+    expected.update(cfg.print_figure_kwargs)
+    nt.assert_equal(cell, expected)
+