[1] Funds which flow into a country to take advantage of favorable rates of interest in that country is called -
A.
Cold Money
B.
Black Money
C.
Hot Money
D.
White Money
Ans:
Hot Money
Explanation :
Hot money is a term that is most commonly used in financial markets to refer to the flow of funds (or capital) from one country to another in order to earn a short-term profit on interest rate differences and/ or anticipated exchange rate shifts. These speculative capital flows are called "hot money" because they can move very quickly in and out of markets, potentially leading to market instability.
[2] Legal Tender Money is -
A.
accepted only by Government
B.
accepted by people and Government as per the law
C.
not accepted for business purposes by law
D.
not accepted by Government
Ans:
accepted by people and Government as per the law
Explanation :
Legal tender is a medium of payment allowed by law or recognized by a legal system to be valid for meeting a financial obligation. So it is accepted by people and government on a legal basis. Paper currency and coins are common forms of legal tender in many countries.
[3] Bank rate is the rate of interest:
A.
At which public borrows money from Commercial Banks
B.
At which public borrows money from R.B.I.
C.
At which Commercial Banks borrow money from R.B.I.
D.
At which Commercial Banks borrow money from the public
Ans:
At which Commercial Banks borrow money from R.B.I.
Explanation :
Bank Rate is the interest rate at which a nation's central bank lends money to domestic banks. Often these loans are very short in duration. Managing the bank rate is a preferred method by which central banks can regulate the level of economic activity. Regulation of the economy through management of the money supply is referred to as monetary policy.
[4] Which of the following can be used for checking inflation temporarily?
A.
Increase in wages
B.
Decrease in money supply
C.
Decrease in taxes
D.
None of these
Ans:
Decrease in money supply
Explanation :
An open market operation (also known as OMO) is an activity by a central bank to buy or sell government bonds on the open market. India's Open Market Operation is much influenced by the fact that it is a developing country and that the capital flows are much different than those in the other developed countries. Economists claim that an increase in money supply alone constitutes inflation.
[5] The annual record for all the monetary transactions of a country with other countries of the world is known as -
A.
Balance of trade
B.
Balance of monetary-receipts
C.
Balance of payments
D.
Balance Sheet
Ans:
Balance of payments
Explanation :
Balance of payments (BoP) accounts arc an accounting record of all monetary transactions between a country and the rest of the world. These transactions include payments for the country's exports and imports of goods, services, financial capital, and financial transfers. The BoP accounts summarize international transactions for a specific period, usually a year, and are prepared in a single currency, typically the domestic currency for the country concerned.
[6] A country's balance of trade is unfavorable when —
A.
exports exceed imports
B.
imports exceed exports
C.
terms of trade become unfavorable
D.
None of these
Ans:
imports exceed exports
Explanation :
The balance of trade, or net exports is the difference between the monetary value of exports and imports of output in an economy over a certain period. It is the relationship between a nation's imports and exports. A positive balance is known as a trade surplus if it consists of exporting more than is imported: a negative balance is referred to as a trade deficit or, informally, a trade gap.
[7] Which one of the following categories of workers is termed as cultivators?
A.
Those who own land and cultivate
B.
Those who lease in land and cultivate
C.
Those who cultivate the land of others
D.
Those who own land and lease in from others or institutions and cultivate
Ans:
Those who cultivate the land of others
Explanation :
Agricultural laborers are those who cultivate the land of others but own no (or very little) land of their own. Owner cultivators are those who own and cultivate their own land. Landowners are those who own land but do not cultivate it themselves. So basically, a cultivator is an agricultural labourer who tills the land of others.
[8] The reserves held by Commercial Banks over and above the statutory minimum, with the RBI are called -
A.
Cash reserves
B.
Deposit reserves
C.
Excess reserves
D.
Momentary reserves
Ans:
Excess reserves
Explanation :
In banking, excess reserves are bank reserves in excess of the reserve requirement set by a central bank. They are reserves of cash more than the required amounts. Holding excess reserves has an opportunity cost if higher risk-adjusted interest can be earned by putting the funds elsewhere; the advantage of holding some funds in excess reserves is that doing so may provide enhanced liquidity and therefore more smooth operation of payment system.
[9] J. B. Say's Law of Market was not accepted by -
A.
Adam Smith
B.
Marshall
C.
Malthus
D.
David Ricardo
Ans:
Marshall
Explanation :
Malthus opposed what has come to be described as Say's Law: that supply creates its own demand. He rejected the proposition that the demand for commodities will automatically provide a motive for sufficient investment and production to satisfy such demand, or that investment and production would alone and automatically lead to an adequate demand to absorb supply. He argued that production and consumption were impelled by very different motives. Demand adjusted slowly, according to 'habit and tastes' and hence if productivity increased significantly, demand would not necessarily match supply and gluts of commodities might result.
[10] The time element in price analysis was introduced by :
A.
J.M. Keynes
B.
Alfred Marshall
C.
J.S. Mill
D.
J.R. Hicks
Ans:
Alfred Marshall
Explanation :
Marshall, who propounded the theory that price is determined by both demand and supply, also gave a great importance to the time element in the determination of price. He introduced time period analysis into pricing process to bring out the varying influence of each of two forces over price of the product in different time periods. He said, "as a general rate", "the shorter the period which one considers the greater must be the share of our attention which is given to the influence of demand on value, and the longer the period more important will be the influence of cost of production on value."
[11] Selling cost have to be incurred in case of -
A.
Perfect Competition
B.
Monopoly
C.
Monopolistic Competition
D.
None of the given options
Ans:
Monopolistic Competition
Explanation :
Selling costs are the expenses on advertisement, salesmanship, free sampling, free service, door-to- door canvassing, and so on. There is no selling problem under perfect competition where the product is homogeneous. Under monopolistic competition where the product is differentiated, selling costs are essential to push up the sales. They are incurred to persuade a buyer to purchase one product in preference to another.
[12] Inflation is a situation characterized by -
A.
Too much money chasing too few goods
B.
Too few money chasing too much goods
C.
Too many people chasing too few goods
D.
Too many people chasing too little money
Ans:
Too much money chasing too few goods
Explanation :
Demand-pull inflation is asserted to arise when aggregate demand in an economy outpaces aggregate supply. It involves inflation rising as real gross domestic product rises and unemployment falls, as the economy moves along the Phillips curve. This is commonly described as "too much money chasing too few goods."
[13] If a change in all inputs leads to a proportionate change in output, it is case of -
A.
Constant returns to scale
B.
Diminishing returns to scale
C.
Increasing returns to scale
D.
Variable returns to scale
Ans:
Constant returns to scale
Explanation :
If output increases by that same proportional change as all inputs change then there are constant returns to scale (CRS). If output increases by less than that proportional change in inputs, there are decreasing returns to scale (DRS). If output increases by more than that proportional change in inputs, there are increasing returns to scale (IRS).
[14] Which of the following is a consequence of inflationary price rise?
A.
Obstacle in development
B.
Increase in economic inequalities
C.
All of these
D.
Adverse effect on the balance of payment
Ans:
All of these
Explanation :
Inflationary price rise is harmful to a country's economic performance and to the welfare of its citizens. It can create a random redistribution of income given that inflation does not have an equal impact on individuals and groups. The balance of payments may deteriorate because domestic inflation stimulates import spending, given that imports appear relatively cheaper, and dampens export sales. A continuous price rise can be an obstacle to development as it has an adverse effect on saving and investment and causes a fall in growth.
[15] Price mechanism is a feature of -
A.
Capitalist economy
B.
Barter economy
C.
Mixed economy
D.
Socialist economy
Ans:
Capitalist economy
Explanation :
Price mechanism is an economic term that refers to the manner in which the prices of commodities affect the demand and supply of goods and services. It is essentially a feature of market-driven or capitalist economic systems. It is based on the principle that only by allowing prices to move freely will the supply of any given commodity match demand.
[16] The main feature of a capitalist economy is -
A.
Administered prices
B.
Public ownership
C.
Economic planning
D.
Private ownership
Ans:
Private ownership
Explanation :
Capitalism is an economic system that is based on private ownership of the means of production and the production of goods or services for profit. Other elements central to capitalism include capital accumulation and often competitive markets.
[17] Personal Income' equals -
A.
The household sector's income
B.
Private income minus savings of the corporate sector minus corporation tax
C.
Personal disposable income plus miscellaneous receipts of the Goverment
D.
All of the above
Ans:
Personal disposable income plus miscellaneous receipts of the Goverment
Explanation :
Disposable income is total personal income minus personal current taxes (or plus receipts of the government). In national accounts definitions, personal income, minus personal current taxes equals disposable personal income. Subtracting personal outlays (which includes the major category of personal (or, private) consumption expenditure) yields personal (or, private) savings
[18] According to the classical system, saving is a function of -
A.
Income
B.
The interest rate
C.
The real wage
D.
The Price level
Ans:
Income
Explanation :
Saving function is a mathematical relation between saving and income by the household sector. This function captures the saving-income relation, the flip side of the consumption-income relation that forms one of the key building blocks for Keynesian economics.
[19] Which of the following concepts are most closely associated with J.M. Keynes?
A.
Control of money supply
B.
Marginal utility theory
C.
Indifference curve analysis
D.
Marginal efficiency of captial
Ans:
Marginal efficiency of captial
Explanation :
The marginal efficiency of capital (MEC) is that rate of discount which would equate the price of a fixed capital asset with its present discounted value of expected income. The term "marginal efficiency of capital" was introduced by John Maynard Keynes in his General Theory, and defined as "the rate of discount which would make the present value of the series of annuities given by the returns expected from the capital asset during its life Just equal its supply price
[20] When the total product rises at an increasing rate, the -
A.
marginal product is zero
B.
marginal product is rising
C.
marginal product is falling
D.
marginal product remains constant
Ans:
marginal product is rising
Explanation :
Marginal product of an input (factor of production) is the extra output that can be produced by using one more unit of the input (for instance, the difference in output when a firm's labor usage is increased from five to six units), assuming that the quantities of no other inputs to production change. Marginal product, which occasionally goes by the alias marginal physical product (MPP), is one of two measures derived from total product. The other is average product. Marginal product is directly proportional to total product.
[21] If an industry is characterized by economies of scale then -
A.
barriers to entry are not very large
B.
long run unit costs of production decreases as the quantity the firm produces increases
C.
capital requirement are small due to the efficiency of the large scale operation
D.
the costs of entry into the market are likely to be substantial
Ans:
long run unit costs of production decreases as the quantity the firm produces increases
Explanation :
In microeconomics, economies of scale are the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer's average cost per unit to fall as the scale of output is increased. "Economies of scale" is a long run concept and refers to reductions in unit cost as the size of a facility and the usage levels of other inputs increase.
[22] Movement along the same demand curve is know as -
A.
Extension and Contraction of Demand
B.
Increase and Decrease of Demand
C.
Contraction of supply
D.
Increase of supply
Ans:
Increase and Decrease of Demand
Explanation :
A shift in the demand curve is caused by a factor affecting demand other than a change in price. If any of these factors change then the amount consumers wish to purchase changes whatever the price. The shift in the demand curve is referred to as an increase or decrease in demand. A movement along the demand curve occurs when there is a change in price, This may occur because of a change in supply conditions. The factors affecting demand are assumed to be held const ant.
[23] What are gilt-edged securities?
A.
Securities issued by the multinational companies.
B.
Securities issued by the Government
C.
Securities issued by the private sector
D.
Securities issued by the joint venture companies
Ans:
Securities issued by the Government
Explanation :
Gilt-edged securities are bonds issued by governments. They are government securities, i.e., instruments issued by the government to borrow money from the market. Gilt-edged securities are a high-grade investment with very low risk.
[24] Which curve shows the inverse relationship between unemployment and inflation rates?
A.
Supply curve
B.
Indifference curve
C.
IS curve
D.
Phillips curve
Ans:
Phillips curve
Explanation :
The Phillips curve shows the inverse relationship between inflation and unemployment: as unemployment decreases, inflation increases. The relationship, however, is not linear. Graphically, the short-run Phillips curve traces an L-shape when the unemployment rate is on the x-axis and the inflation rate is on the y-axis.
[25] Collective consumption means -
A.
household consumption
B.
individual consumption
C.
self-consumption
D.
consumption by the citizens of the country
Ans:
consumption by the citizens of the country
Explanation :
Collective consumption is a concept that refers to the many goods and services that are produced and consumed on a collective level, such as in cities or countries. These include schools, libraries, roads, bridges, public transportation, health care, welfare, fire and police protection, etc.
Explanation :
Hot money is a term that is most commonly used in financial markets to refer to the flow of funds (or capital) from one country to another in order to earn a short-term profit on interest rate differences and/ or anticipated exchange rate shifts. These speculative capital flows are called "hot money" because they can move very quickly in and out of markets, potentially leading to market instability.
[2] Legal Tender Money is -
A.
accepted only by Government
B.
accepted by people and Government as per the law
C.
not accepted for business purposes by law
D.
not accepted by Government
Ans:
accepted by people and Government as per the law
Explanation :
Legal tender is a medium of payment allowed by law or recognized by a legal system to be valid for meeting a financial obligation. So it is accepted by people and government on a legal basis. Paper currency and coins are common forms of legal tender in many countries.
[3] Bank rate is the rate of interest:
A.
At which public borrows money from Commercial Banks
B.
At which public borrows money from R.B.I.
C.
At which Commercial Banks borrow money from R.B.I.
D.
At which Commercial Banks borrow money from the public
Ans:
At which Commercial Banks borrow money from R.B.I.
Explanation :
Bank Rate is the interest rate at which a nation's central bank lends money to domestic banks. Often these loans are very short in duration. Managing the bank rate is a preferred method by which central banks can regulate the level of economic activity. Regulation of the economy through management of the money supply is referred to as monetary policy.
[4] Which of the following can be used for checking inflation temporarily?
A.
Increase in wages
B.
Decrease in money supply
C.
Decrease in taxes
D.
None of these
Ans:
Decrease in money supply
Explanation :
An open market operation (also known as OMO) is an activity by a central bank to buy or sell government bonds on the open market. India's Open Market Operation is much influenced by the fact that it is a developing country and that the capital flows are much different than those in the other developed countries. Economists claim that an increase in money supply alone constitutes inflation.
[5] The annual record for all the monetary transactions of a country with other countries of the world is known as -
A.
Balance of trade
B.
Balance of monetary-receipts
C.
Balance of payments
D.
Balance Sheet
Ans:
Balance of payments
Explanation :
Balance of payments (BoP) accounts arc an accounting record of all monetary transactions between a country and the rest of the world. These transactions include payments for the country's exports and imports of goods, services, financial capital, and financial transfers. The BoP accounts summarize international transactions for a specific period, usually a year, and are prepared in a single currency, typically the domestic currency for the country concerned.
[6] A country's balance of trade is unfavorable when —
A.
exports exceed imports
B.
imports exceed exports
C.
terms of trade become unfavorable
D.
None of these
Ans:
imports exceed exports
Explanation :
The balance of trade, or net exports is the difference between the monetary value of exports and imports of output in an economy over a certain period. It is the relationship between a nation's imports and exports. A positive balance is known as a trade surplus if it consists of exporting more than is imported: a negative balance is referred to as a trade deficit or, informally, a trade gap.
[7] Which one of the following categories of workers is termed as cultivators?
A.
Those who own land and cultivate
B.
Those who lease in land and cultivate
C.
Those who cultivate the land of others
D.
Those who own land and lease in from others or institutions and cultivate
Ans:
Those who cultivate the land of others
Explanation :
Agricultural laborers are those who cultivate the land of others but own no (or very little) land of their own. Owner cultivators are those who own and cultivate their own land. Landowners are those who own land but do not cultivate it themselves. So basically, a cultivator is an agricultural labourer who tills the land of others.
[8] The reserves held by Commercial Banks over and above the statutory minimum, with the RBI are called -
A.
Cash reserves
B.
Deposit reserves
C.
Excess reserves
D.
Momentary reserves
Ans:
Excess reserves
Explanation :
In banking, excess reserves are bank reserves in excess of the reserve requirement set by a central bank. They are reserves of cash more than the required amounts. Holding excess reserves has an opportunity cost if higher risk-adjusted interest can be earned by putting the funds elsewhere; the advantage of holding some funds in excess reserves is that doing so may provide enhanced liquidity and therefore more smooth operation of payment system.
[9] J. B. Say's Law of Market was not accepted by -
A.
Adam Smith
B.
Marshall
C.
Malthus
D.
David Ricardo
Ans:
Marshall
Explanation :
Malthus opposed what has come to be described as Say's Law: that supply creates its own demand. He rejected the proposition that the demand for commodities will automatically provide a motive for sufficient investment and production to satisfy such demand, or that investment and production would alone and automatically lead to an adequate demand to absorb supply. He argued that production and consumption were impelled by very different motives. Demand adjusted slowly, according to 'habit and tastes' and hence if productivity increased significantly, demand would not necessarily match supply and gluts of commodities might result.
[10] The time element in price analysis was introduced by :
A.
J.M. Keynes
B.
Alfred Marshall
C.
J.S. Mill
D.
J.R. Hicks
Ans:
Alfred Marshall
Explanation :
Marshall, who propounded the theory that price is determined by both demand and supply, also gave a great importance to the time element in the determination of price. He introduced time period analysis into pricing process to bring out the varying influence of each of two forces over price of the product in different time periods. He said, "as a general rate", "the shorter the period which one considers the greater must be the share of our attention which is given to the influence of demand on value, and the longer the period more important will be the influence of cost of production on value."
[11] Selling cost have to be incurred in case of -
A.
Perfect Competition
B.
Monopoly
C.
Monopolistic Competition
D.
None of the given options
Ans:
Monopolistic Competition
Explanation :
Selling costs are the expenses on advertisement, salesmanship, free sampling, free service, door-to- door canvassing, and so on. There is no selling problem under perfect competition where the product is homogeneous. Under monopolistic competition where the product is differentiated, selling costs are essential to push up the sales. They are incurred to persuade a buyer to purchase one product in preference to another.
[12] Inflation is a situation characterized by -
A.
Too much money chasing too few goods
B.
Too few money chasing too much goods
C.
Too many people chasing too few goods
D.
Too many people chasing too little money
Ans:
Too much money chasing too few goods
Explanation :
Demand-pull inflation is asserted to arise when aggregate demand in an economy outpaces aggregate supply. It involves inflation rising as real gross domestic product rises and unemployment falls, as the economy moves along the Phillips curve. This is commonly described as "too much money chasing too few goods."
[13] If a change in all inputs leads to a proportionate change in output, it is case of -
A.
Constant returns to scale
B.
Diminishing returns to scale
C.
Increasing returns to scale
D.
Variable returns to scale
Ans:
Constant returns to scale
Explanation :
If output increases by that same proportional change as all inputs change then there are constant returns to scale (CRS). If output increases by less than that proportional change in inputs, there are decreasing returns to scale (DRS). If output increases by more than that proportional change in inputs, there are increasing returns to scale (IRS).
[14] Which of the following is a consequence of inflationary price rise?
A.
Obstacle in development
B.
Increase in economic inequalities
C.
All of these
D.
Adverse effect on the balance of payment
Ans:
All of these
Explanation :
Inflationary price rise is harmful to a country's economic performance and to the welfare of its citizens. It can create a random redistribution of income given that inflation does not have an equal impact on individuals and groups. The balance of payments may deteriorate because domestic inflation stimulates import spending, given that imports appear relatively cheaper, and dampens export sales. A continuous price rise can be an obstacle to development as it has an adverse effect on saving and investment and causes a fall in growth.
[15] Price mechanism is a feature of -
A.
Capitalist economy
B.
Barter economy
C.
Mixed economy
D.
Socialist economy
Ans:
Capitalist economy
Explanation :
Price mechanism is an economic term that refers to the manner in which the prices of commodities affect the demand and supply of goods and services. It is essentially a feature of market-driven or capitalist economic systems. It is based on the principle that only by allowing prices to move freely will the supply of any given commodity match demand.
[16] The main feature of a capitalist economy is -
A.
Administered prices
B.
Public ownership
C.
Economic planning
D.
Private ownership
Ans:
Private ownership
Explanation :
Capitalism is an economic system that is based on private ownership of the means of production and the production of goods or services for profit. Other elements central to capitalism include capital accumulation and often competitive markets.
[17] Personal Income' equals -
A.
The household sector's income
B.
Private income minus savings of the corporate sector minus corporation tax
C.
Personal disposable income plus miscellaneous receipts of the Goverment
D.
All of the above
Ans:
Personal disposable income plus miscellaneous receipts of the Goverment
Explanation :
Disposable income is total personal income minus personal current taxes (or plus receipts of the government). In national accounts definitions, personal income, minus personal current taxes equals disposable personal income. Subtracting personal outlays (which includes the major category of personal (or, private) consumption expenditure) yields personal (or, private) savings
[18] According to the classical system, saving is a function of -
A.
Income
B.
The interest rate
C.
The real wage
D.
The Price level
Ans:
Income
Explanation :
Saving function is a mathematical relation between saving and income by the household sector. This function captures the saving-income relation, the flip side of the consumption-income relation that forms one of the key building blocks for Keynesian economics.
[19] Which of the following concepts are most closely associated with J.M. Keynes?
A.
Control of money supply
B.
Marginal utility theory
C.
Indifference curve analysis
D.
Marginal efficiency of captial
Ans:
Marginal efficiency of captial
Explanation :
The marginal efficiency of capital (MEC) is that rate of discount which would equate the price of a fixed capital asset with its present discounted value of expected income. The term "marginal efficiency of capital" was introduced by John Maynard Keynes in his General Theory, and defined as "the rate of discount which would make the present value of the series of annuities given by the returns expected from the capital asset during its life Just equal its supply price
[20] When the total product rises at an increasing rate, the -
A.
marginal product is zero
B.
marginal product is rising
C.
marginal product is falling
D.
marginal product remains constant
Ans:
marginal product is rising
Explanation :
Marginal product of an input (factor of production) is the extra output that can be produced by using one more unit of the input (for instance, the difference in output when a firm's labor usage is increased from five to six units), assuming that the quantities of no other inputs to production change. Marginal product, which occasionally goes by the alias marginal physical product (MPP), is one of two measures derived from total product. The other is average product. Marginal product is directly proportional to total product.
[21] If an industry is characterized by economies of scale then -
A.
barriers to entry are not very large
B.
long run unit costs of production decreases as the quantity the firm produces increases
C.
capital requirement are small due to the efficiency of the large scale operation
D.
the costs of entry into the market are likely to be substantial
Ans:
long run unit costs of production decreases as the quantity the firm produces increases
Explanation :
In microeconomics, economies of scale are the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer's average cost per unit to fall as the scale of output is increased. "Economies of scale" is a long run concept and refers to reductions in unit cost as the size of a facility and the usage levels of other inputs increase.
[22] Movement along the same demand curve is know as -
A.
Extension and Contraction of Demand
B.
Increase and Decrease of Demand
C.
Contraction of supply
D.
Increase of supply
Ans:
Increase and Decrease of Demand
Explanation :
A shift in the demand curve is caused by a factor affecting demand other than a change in price. If any of these factors change then the amount consumers wish to purchase changes whatever the price. The shift in the demand curve is referred to as an increase or decrease in demand. A movement along the demand curve occurs when there is a change in price, This may occur because of a change in supply conditions. The factors affecting demand are assumed to be held const ant.
[23] What are gilt-edged securities?
A.
Securities issued by the multinational companies.
B.
Securities issued by the Government
C.
Securities issued by the private sector
D.
Securities issued by the joint venture companies
Ans:
Securities issued by the Government
Explanation :
Gilt-edged securities are bonds issued by governments. They are government securities, i.e., instruments issued by the government to borrow money from the market. Gilt-edged securities are a high-grade investment with very low risk.
[24] Which curve shows the inverse relationship between unemployment and inflation rates?
A.
Supply curve
B.
Indifference curve
C.
IS curve
D.
Phillips curve
Ans:
Phillips curve
Explanation :
The Phillips curve shows the inverse relationship between inflation and unemployment: as unemployment decreases, inflation increases. The relationship, however, is not linear. Graphically, the short-run Phillips curve traces an L-shape when the unemployment rate is on the x-axis and the inflation rate is on the y-axis.
[25] Collective consumption means -
A.
household consumption
B.
individual consumption
C.
self-consumption
D.
consumption by the citizens of the country
Ans:
consumption by the citizens of the country
Explanation :
Collective consumption is a concept that refers to the many goods and services that are produced and consumed on a collective level, such as in cities or countries. These include schools, libraries, roads, bridges, public transportation, health care, welfare, fire and police protection, etc.
Explanation :
Bank Rate is the interest rate at which a nation's central bank lends money to domestic banks. Often these loans are very short in duration. Managing the bank rate is a preferred method by which central banks can regulate the level of economic activity. Regulation of the economy through management of the money supply is referred to as monetary policy.
[4] Which of the following can be used for checking inflation temporarily?
A.
Increase in wages
B.
Decrease in money supply
C.
Decrease in taxes
D.
None of these
Ans:
Decrease in money supply
Explanation :
An open market operation (also known as OMO) is an activity by a central bank to buy or sell government bonds on the open market. India's Open Market Operation is much influenced by the fact that it is a developing country and that the capital flows are much different than those in the other developed countries. Economists claim that an increase in money supply alone constitutes inflation.
[5] The annual record for all the monetary transactions of a country with other countries of the world is known as -
A.
Balance of trade
B.
Balance of monetary-receipts
C.
Balance of payments
D.
Balance Sheet
Ans:
Balance of payments
Explanation :
Balance of payments (BoP) accounts arc an accounting record of all monetary transactions between a country and the rest of the world. These transactions include payments for the country's exports and imports of goods, services, financial capital, and financial transfers. The BoP accounts summarize international transactions for a specific period, usually a year, and are prepared in a single currency, typically the domestic currency for the country concerned.
[6] A country's balance of trade is unfavorable when —
A.
exports exceed imports
B.
imports exceed exports
C.
terms of trade become unfavorable
D.
None of these
Ans:
imports exceed exports
Explanation :
The balance of trade, or net exports is the difference between the monetary value of exports and imports of output in an economy over a certain period. It is the relationship between a nation's imports and exports. A positive balance is known as a trade surplus if it consists of exporting more than is imported: a negative balance is referred to as a trade deficit or, informally, a trade gap.
[7] Which one of the following categories of workers is termed as cultivators?
A.
Those who own land and cultivate
B.
Those who lease in land and cultivate
C.
Those who cultivate the land of others
D.
Those who own land and lease in from others or institutions and cultivate
Ans:
Those who cultivate the land of others
Explanation :
Agricultural laborers are those who cultivate the land of others but own no (or very little) land of their own. Owner cultivators are those who own and cultivate their own land. Landowners are those who own land but do not cultivate it themselves. So basically, a cultivator is an agricultural labourer who tills the land of others.
[8] The reserves held by Commercial Banks over and above the statutory minimum, with the RBI are called -
A.
Cash reserves
B.
Deposit reserves
C.
Excess reserves
D.
Momentary reserves
Ans:
Excess reserves
Explanation :
In banking, excess reserves are bank reserves in excess of the reserve requirement set by a central bank. They are reserves of cash more than the required amounts. Holding excess reserves has an opportunity cost if higher risk-adjusted interest can be earned by putting the funds elsewhere; the advantage of holding some funds in excess reserves is that doing so may provide enhanced liquidity and therefore more smooth operation of payment system.
[9] J. B. Say's Law of Market was not accepted by -
A.
Adam Smith
B.
Marshall
C.
Malthus
D.
David Ricardo
Ans:
Marshall
Explanation :
Malthus opposed what has come to be described as Say's Law: that supply creates its own demand. He rejected the proposition that the demand for commodities will automatically provide a motive for sufficient investment and production to satisfy such demand, or that investment and production would alone and automatically lead to an adequate demand to absorb supply. He argued that production and consumption were impelled by very different motives. Demand adjusted slowly, according to 'habit and tastes' and hence if productivity increased significantly, demand would not necessarily match supply and gluts of commodities might result.
[10] The time element in price analysis was introduced by :
A.
J.M. Keynes
B.
Alfred Marshall
C.
J.S. Mill
D.
J.R. Hicks
Ans:
Alfred Marshall
Explanation :
Marshall, who propounded the theory that price is determined by both demand and supply, also gave a great importance to the time element in the determination of price. He introduced time period analysis into pricing process to bring out the varying influence of each of two forces over price of the product in different time periods. He said, "as a general rate", "the shorter the period which one considers the greater must be the share of our attention which is given to the influence of demand on value, and the longer the period more important will be the influence of cost of production on value."
[11] Selling cost have to be incurred in case of -
A.
Perfect Competition
B.
Monopoly
C.
Monopolistic Competition
D.
None of the given options
Ans:
Monopolistic Competition
Explanation :
Selling costs are the expenses on advertisement, salesmanship, free sampling, free service, door-to- door canvassing, and so on. There is no selling problem under perfect competition where the product is homogeneous. Under monopolistic competition where the product is differentiated, selling costs are essential to push up the sales. They are incurred to persuade a buyer to purchase one product in preference to another.
[12] Inflation is a situation characterized by -
A.
Too much money chasing too few goods
B.
Too few money chasing too much goods
C.
Too many people chasing too few goods
D.
Too many people chasing too little money
Ans:
Too much money chasing too few goods
Explanation :
Demand-pull inflation is asserted to arise when aggregate demand in an economy outpaces aggregate supply. It involves inflation rising as real gross domestic product rises and unemployment falls, as the economy moves along the Phillips curve. This is commonly described as "too much money chasing too few goods."
[13] If a change in all inputs leads to a proportionate change in output, it is case of -
A.
Constant returns to scale
B.
Diminishing returns to scale
C.
Increasing returns to scale
D.
Variable returns to scale
Ans:
Constant returns to scale
Explanation :
If output increases by that same proportional change as all inputs change then there are constant returns to scale (CRS). If output increases by less than that proportional change in inputs, there are decreasing returns to scale (DRS). If output increases by more than that proportional change in inputs, there are increasing returns to scale (IRS).
[14] Which of the following is a consequence of inflationary price rise?
A.
Obstacle in development
B.
Increase in economic inequalities
C.
All of these
D.
Adverse effect on the balance of payment
Ans:
All of these
Explanation :
Inflationary price rise is harmful to a country's economic performance and to the welfare of its citizens. It can create a random redistribution of income given that inflation does not have an equal impact on individuals and groups. The balance of payments may deteriorate because domestic inflation stimulates import spending, given that imports appear relatively cheaper, and dampens export sales. A continuous price rise can be an obstacle to development as it has an adverse effect on saving and investment and causes a fall in growth.
[15] Price mechanism is a feature of -
A.
Capitalist economy
B.
Barter economy
C.
Mixed economy
D.
Socialist economy
Ans:
Capitalist economy
Explanation :
Price mechanism is an economic term that refers to the manner in which the prices of commodities affect the demand and supply of goods and services. It is essentially a feature of market-driven or capitalist economic systems. It is based on the principle that only by allowing prices to move freely will the supply of any given commodity match demand.
[16] The main feature of a capitalist economy is -
A.
Administered prices
B.
Public ownership
C.
Economic planning
D.
Private ownership
Ans:
Private ownership
Explanation :
Capitalism is an economic system that is based on private ownership of the means of production and the production of goods or services for profit. Other elements central to capitalism include capital accumulation and often competitive markets.
[17] Personal Income' equals -
A.
The household sector's income
B.
Private income minus savings of the corporate sector minus corporation tax
C.
Personal disposable income plus miscellaneous receipts of the Goverment
D.
All of the above
Ans:
Personal disposable income plus miscellaneous receipts of the Goverment
Explanation :
Disposable income is total personal income minus personal current taxes (or plus receipts of the government). In national accounts definitions, personal income, minus personal current taxes equals disposable personal income. Subtracting personal outlays (which includes the major category of personal (or, private) consumption expenditure) yields personal (or, private) savings
[18] According to the classical system, saving is a function of -
A.
Income
B.
The interest rate
C.
The real wage
D.
The Price level
Ans:
Income
Explanation :
Saving function is a mathematical relation between saving and income by the household sector. This function captures the saving-income relation, the flip side of the consumption-income relation that forms one of the key building blocks for Keynesian economics.
[19] Which of the following concepts are most closely associated with J.M. Keynes?
A.
Control of money supply
B.
Marginal utility theory
C.
Indifference curve analysis
D.
Marginal efficiency of captial
Ans:
Marginal efficiency of captial
Explanation :
The marginal efficiency of capital (MEC) is that rate of discount which would equate the price of a fixed capital asset with its present discounted value of expected income. The term "marginal efficiency of capital" was introduced by John Maynard Keynes in his General Theory, and defined as "the rate of discount which would make the present value of the series of annuities given by the returns expected from the capital asset during its life Just equal its supply price
[20] When the total product rises at an increasing rate, the -
A.
marginal product is zero
B.
marginal product is rising
C.
marginal product is falling
D.
marginal product remains constant
Ans:
marginal product is rising
Explanation :
Marginal product of an input (factor of production) is the extra output that can be produced by using one more unit of the input (for instance, the difference in output when a firm's labor usage is increased from five to six units), assuming that the quantities of no other inputs to production change. Marginal product, which occasionally goes by the alias marginal physical product (MPP), is one of two measures derived from total product. The other is average product. Marginal product is directly proportional to total product.
[21] If an industry is characterized by economies of scale then -
A.
barriers to entry are not very large
B.
long run unit costs of production decreases as the quantity the firm produces increases
C.
capital requirement are small due to the efficiency of the large scale operation
D.
the costs of entry into the market are likely to be substantial
Ans:
long run unit costs of production decreases as the quantity the firm produces increases
Explanation :
In microeconomics, economies of scale are the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer's average cost per unit to fall as the scale of output is increased. "Economies of scale" is a long run concept and refers to reductions in unit cost as the size of a facility and the usage levels of other inputs increase.
[22] Movement along the same demand curve is know as -
A.
Extension and Contraction of Demand
B.
Increase and Decrease of Demand
C.
Contraction of supply
D.
Increase of supply
Ans:
Increase and Decrease of Demand
Explanation :
A shift in the demand curve is caused by a factor affecting demand other than a change in price. If any of these factors change then the amount consumers wish to purchase changes whatever the price. The shift in the demand curve is referred to as an increase or decrease in demand. A movement along the demand curve occurs when there is a change in price, This may occur because of a change in supply conditions. The factors affecting demand are assumed to be held const ant.
[23] What are gilt-edged securities?
A.
Securities issued by the multinational companies.
B.
Securities issued by the Government
C.
Securities issued by the private sector
D.
Securities issued by the joint venture companies
Ans:
Securities issued by the Government
Explanation :
Gilt-edged securities are bonds issued by governments. They are government securities, i.e., instruments issued by the government to borrow money from the market. Gilt-edged securities are a high-grade investment with very low risk.
[24] Which curve shows the inverse relationship between unemployment and inflation rates?
A.
Supply curve
B.
Indifference curve
C.
IS curve
D.
Phillips curve
Ans:
Phillips curve
Explanation :
The Phillips curve shows the inverse relationship between inflation and unemployment: as unemployment decreases, inflation increases. The relationship, however, is not linear. Graphically, the short-run Phillips curve traces an L-shape when the unemployment rate is on the x-axis and the inflation rate is on the y-axis.
[25] Collective consumption means -
A.
household consumption
B.
individual consumption
C.
self-consumption
D.
consumption by the citizens of the country
Ans:
consumption by the citizens of the country
Explanation :
Collective consumption is a concept that refers to the many goods and services that are produced and consumed on a collective level, such as in cities or countries. These include schools, libraries, roads, bridges, public transportation, health care, welfare, fire and police protection, etc.
Explanation :
Balance of payments (BoP) accounts arc an accounting record of all monetary transactions between a country and the rest of the world. These transactions include payments for the country's exports and imports of goods, services, financial capital, and financial transfers. The BoP accounts summarize international transactions for a specific period, usually a year, and are prepared in a single currency, typically the domestic currency for the country concerned.
[6] A country's balance of trade is unfavorable when —
A.
exports exceed imports
B.
imports exceed exports
C.
terms of trade become unfavorable
D.
None of these
Ans:
imports exceed exports
Explanation :
The balance of trade, or net exports is the difference between the monetary value of exports and imports of output in an economy over a certain period. It is the relationship between a nation's imports and exports. A positive balance is known as a trade surplus if it consists of exporting more than is imported: a negative balance is referred to as a trade deficit or, informally, a trade gap.
[7] Which one of the following categories of workers is termed as cultivators?
A.
Those who own land and cultivate
B.
Those who lease in land and cultivate
C.
Those who cultivate the land of others
D.
Those who own land and lease in from others or institutions and cultivate
Ans:
Those who cultivate the land of others
Explanation :
Agricultural laborers are those who cultivate the land of others but own no (or very little) land of their own. Owner cultivators are those who own and cultivate their own land. Landowners are those who own land but do not cultivate it themselves. So basically, a cultivator is an agricultural labourer who tills the land of others.
[8] The reserves held by Commercial Banks over and above the statutory minimum, with the RBI are called -
A.
Cash reserves
B.
Deposit reserves
C.
Excess reserves
D.
Momentary reserves
Ans:
Excess reserves
Explanation :
In banking, excess reserves are bank reserves in excess of the reserve requirement set by a central bank. They are reserves of cash more than the required amounts. Holding excess reserves has an opportunity cost if higher risk-adjusted interest can be earned by putting the funds elsewhere; the advantage of holding some funds in excess reserves is that doing so may provide enhanced liquidity and therefore more smooth operation of payment system.
[9] J. B. Say's Law of Market was not accepted by -
A.
Adam Smith
B.
Marshall
C.
Malthus
D.
David Ricardo
Ans:
Marshall
Explanation :
Malthus opposed what has come to be described as Say's Law: that supply creates its own demand. He rejected the proposition that the demand for commodities will automatically provide a motive for sufficient investment and production to satisfy such demand, or that investment and production would alone and automatically lead to an adequate demand to absorb supply. He argued that production and consumption were impelled by very different motives. Demand adjusted slowly, according to 'habit and tastes' and hence if productivity increased significantly, demand would not necessarily match supply and gluts of commodities might result.
[10] The time element in price analysis was introduced by :
A.
J.M. Keynes
B.
Alfred Marshall
C.
J.S. Mill
D.
J.R. Hicks
Ans:
Alfred Marshall
Explanation :
Marshall, who propounded the theory that price is determined by both demand and supply, also gave a great importance to the time element in the determination of price. He introduced time period analysis into pricing process to bring out the varying influence of each of two forces over price of the product in different time periods. He said, "as a general rate", "the shorter the period which one considers the greater must be the share of our attention which is given to the influence of demand on value, and the longer the period more important will be the influence of cost of production on value."
[11] Selling cost have to be incurred in case of -
A.
Perfect Competition
B.
Monopoly
C.
Monopolistic Competition
D.
None of the given options
Ans:
Monopolistic Competition
Explanation :
Selling costs are the expenses on advertisement, salesmanship, free sampling, free service, door-to- door canvassing, and so on. There is no selling problem under perfect competition where the product is homogeneous. Under monopolistic competition where the product is differentiated, selling costs are essential to push up the sales. They are incurred to persuade a buyer to purchase one product in preference to another.
[12] Inflation is a situation characterized by -
A.
Too much money chasing too few goods
B.
Too few money chasing too much goods
C.
Too many people chasing too few goods
D.
Too many people chasing too little money
Ans:
Too much money chasing too few goods
Explanation :
Demand-pull inflation is asserted to arise when aggregate demand in an economy outpaces aggregate supply. It involves inflation rising as real gross domestic product rises and unemployment falls, as the economy moves along the Phillips curve. This is commonly described as "too much money chasing too few goods."
[13] If a change in all inputs leads to a proportionate change in output, it is case of -
A.
Constant returns to scale
B.
Diminishing returns to scale
C.
Increasing returns to scale
D.
Variable returns to scale
Ans:
Constant returns to scale
Explanation :
If output increases by that same proportional change as all inputs change then there are constant returns to scale (CRS). If output increases by less than that proportional change in inputs, there are decreasing returns to scale (DRS). If output increases by more than that proportional change in inputs, there are increasing returns to scale (IRS).
[14] Which of the following is a consequence of inflationary price rise?
A.
Obstacle in development
B.
Increase in economic inequalities
C.
All of these
D.
Adverse effect on the balance of payment
Ans:
All of these
Explanation :
Inflationary price rise is harmful to a country's economic performance and to the welfare of its citizens. It can create a random redistribution of income given that inflation does not have an equal impact on individuals and groups. The balance of payments may deteriorate because domestic inflation stimulates import spending, given that imports appear relatively cheaper, and dampens export sales. A continuous price rise can be an obstacle to development as it has an adverse effect on saving and investment and causes a fall in growth.
[15] Price mechanism is a feature of -
A.
Capitalist economy
B.
Barter economy
C.
Mixed economy
D.
Socialist economy
Ans:
Capitalist economy
Explanation :
Price mechanism is an economic term that refers to the manner in which the prices of commodities affect the demand and supply of goods and services. It is essentially a feature of market-driven or capitalist economic systems. It is based on the principle that only by allowing prices to move freely will the supply of any given commodity match demand.
[16] The main feature of a capitalist economy is -
A.
Administered prices
B.
Public ownership
C.
Economic planning
D.
Private ownership
Ans:
Private ownership
Explanation :
Capitalism is an economic system that is based on private ownership of the means of production and the production of goods or services for profit. Other elements central to capitalism include capital accumulation and often competitive markets.
[17] Personal Income' equals -
A.
The household sector's income
B.
Private income minus savings of the corporate sector minus corporation tax
C.
Personal disposable income plus miscellaneous receipts of the Goverment
D.
All of the above
Ans:
Personal disposable income plus miscellaneous receipts of the Goverment
Explanation :
Disposable income is total personal income minus personal current taxes (or plus receipts of the government). In national accounts definitions, personal income, minus personal current taxes equals disposable personal income. Subtracting personal outlays (which includes the major category of personal (or, private) consumption expenditure) yields personal (or, private) savings
[18] According to the classical system, saving is a function of -
A.
Income
B.
The interest rate
C.
The real wage
D.
The Price level
Ans:
Income
Explanation :
Saving function is a mathematical relation between saving and income by the household sector. This function captures the saving-income relation, the flip side of the consumption-income relation that forms one of the key building blocks for Keynesian economics.
[19] Which of the following concepts are most closely associated with J.M. Keynes?
A.
Control of money supply
B.
Marginal utility theory
C.
Indifference curve analysis
D.
Marginal efficiency of captial
Ans:
Marginal efficiency of captial
Explanation :
The marginal efficiency of capital (MEC) is that rate of discount which would equate the price of a fixed capital asset with its present discounted value of expected income. The term "marginal efficiency of capital" was introduced by John Maynard Keynes in his General Theory, and defined as "the rate of discount which would make the present value of the series of annuities given by the returns expected from the capital asset during its life Just equal its supply price
[20] When the total product rises at an increasing rate, the -
A.
marginal product is zero
B.
marginal product is rising
C.
marginal product is falling
D.
marginal product remains constant
Ans:
marginal product is rising
Explanation :
Marginal product of an input (factor of production) is the extra output that can be produced by using one more unit of the input (for instance, the difference in output when a firm's labor usage is increased from five to six units), assuming that the quantities of no other inputs to production change. Marginal product, which occasionally goes by the alias marginal physical product (MPP), is one of two measures derived from total product. The other is average product. Marginal product is directly proportional to total product.
[21] If an industry is characterized by economies of scale then -
A.
barriers to entry are not very large
B.
long run unit costs of production decreases as the quantity the firm produces increases
C.
capital requirement are small due to the efficiency of the large scale operation
D.
the costs of entry into the market are likely to be substantial
Ans:
long run unit costs of production decreases as the quantity the firm produces increases
Explanation :
In microeconomics, economies of scale are the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer's average cost per unit to fall as the scale of output is increased. "Economies of scale" is a long run concept and refers to reductions in unit cost as the size of a facility and the usage levels of other inputs increase.
[22] Movement along the same demand curve is know as -
A.
Extension and Contraction of Demand
B.
Increase and Decrease of Demand
C.
Contraction of supply
D.
Increase of supply
Ans:
Increase and Decrease of Demand
Explanation :
A shift in the demand curve is caused by a factor affecting demand other than a change in price. If any of these factors change then the amount consumers wish to purchase changes whatever the price. The shift in the demand curve is referred to as an increase or decrease in demand. A movement along the demand curve occurs when there is a change in price, This may occur because of a change in supply conditions. The factors affecting demand are assumed to be held const ant.
[23] What are gilt-edged securities?
A.
Securities issued by the multinational companies.
B.
Securities issued by the Government
C.
Securities issued by the private sector
D.
Securities issued by the joint venture companies
Ans:
Securities issued by the Government
Explanation :
Gilt-edged securities are bonds issued by governments. They are government securities, i.e., instruments issued by the government to borrow money from the market. Gilt-edged securities are a high-grade investment with very low risk.
[24] Which curve shows the inverse relationship between unemployment and inflation rates?
A.
Supply curve
B.
Indifference curve
C.
IS curve
D.
Phillips curve
Ans:
Phillips curve
Explanation :
The Phillips curve shows the inverse relationship between inflation and unemployment: as unemployment decreases, inflation increases. The relationship, however, is not linear. Graphically, the short-run Phillips curve traces an L-shape when the unemployment rate is on the x-axis and the inflation rate is on the y-axis.
[25] Collective consumption means -
A.
household consumption
B.
individual consumption
C.
self-consumption
D.
consumption by the citizens of the country
Ans:
consumption by the citizens of the country
Explanation :
Collective consumption is a concept that refers to the many goods and services that are produced and consumed on a collective level, such as in cities or countries. These include schools, libraries, roads, bridges, public transportation, health care, welfare, fire and police protection, etc.
Explanation :
Agricultural laborers are those who cultivate the land of others but own no (or very little) land of their own. Owner cultivators are those who own and cultivate their own land. Landowners are those who own land but do not cultivate it themselves. So basically, a cultivator is an agricultural labourer who tills the land of others.
[8] The reserves held by Commercial Banks over and above the statutory minimum, with the RBI are called -
A.
Cash reserves
B.
Deposit reserves
C.
Excess reserves
D.
Momentary reserves
Ans:
Excess reserves
Explanation :
In banking, excess reserves are bank reserves in excess of the reserve requirement set by a central bank. They are reserves of cash more than the required amounts. Holding excess reserves has an opportunity cost if higher risk-adjusted interest can be earned by putting the funds elsewhere; the advantage of holding some funds in excess reserves is that doing so may provide enhanced liquidity and therefore more smooth operation of payment system.
[9] J. B. Say's Law of Market was not accepted by -
A.
Adam Smith
B.
Marshall
C.
Malthus
D.
David Ricardo
Ans:
Marshall
Explanation :
Malthus opposed what has come to be described as Say's Law: that supply creates its own demand. He rejected the proposition that the demand for commodities will automatically provide a motive for sufficient investment and production to satisfy such demand, or that investment and production would alone and automatically lead to an adequate demand to absorb supply. He argued that production and consumption were impelled by very different motives. Demand adjusted slowly, according to 'habit and tastes' and hence if productivity increased significantly, demand would not necessarily match supply and gluts of commodities might result.
[10] The time element in price analysis was introduced by :
A.
J.M. Keynes
B.
Alfred Marshall
C.
J.S. Mill
D.
J.R. Hicks
Ans:
Alfred Marshall
Explanation :
Marshall, who propounded the theory that price is determined by both demand and supply, also gave a great importance to the time element in the determination of price. He introduced time period analysis into pricing process to bring out the varying influence of each of two forces over price of the product in different time periods. He said, "as a general rate", "the shorter the period which one considers the greater must be the share of our attention which is given to the influence of demand on value, and the longer the period more important will be the influence of cost of production on value."
[11] Selling cost have to be incurred in case of -
A.
Perfect Competition
B.
Monopoly
C.
Monopolistic Competition
D.
None of the given options
Ans:
Monopolistic Competition
Explanation :
Selling costs are the expenses on advertisement, salesmanship, free sampling, free service, door-to- door canvassing, and so on. There is no selling problem under perfect competition where the product is homogeneous. Under monopolistic competition where the product is differentiated, selling costs are essential to push up the sales. They are incurred to persuade a buyer to purchase one product in preference to another.
[12] Inflation is a situation characterized by -
A.
Too much money chasing too few goods
B.
Too few money chasing too much goods
C.
Too many people chasing too few goods
D.
Too many people chasing too little money
Ans:
Too much money chasing too few goods
Explanation :
Demand-pull inflation is asserted to arise when aggregate demand in an economy outpaces aggregate supply. It involves inflation rising as real gross domestic product rises and unemployment falls, as the economy moves along the Phillips curve. This is commonly described as "too much money chasing too few goods."
[13] If a change in all inputs leads to a proportionate change in output, it is case of -
A.
Constant returns to scale
B.
Diminishing returns to scale
C.
Increasing returns to scale
D.
Variable returns to scale
Ans:
Constant returns to scale
Explanation :
If output increases by that same proportional change as all inputs change then there are constant returns to scale (CRS). If output increases by less than that proportional change in inputs, there are decreasing returns to scale (DRS). If output increases by more than that proportional change in inputs, there are increasing returns to scale (IRS).
[14] Which of the following is a consequence of inflationary price rise?
A.
Obstacle in development
B.
Increase in economic inequalities
C.
All of these
D.
Adverse effect on the balance of payment
Ans:
All of these
Explanation :
Inflationary price rise is harmful to a country's economic performance and to the welfare of its citizens. It can create a random redistribution of income given that inflation does not have an equal impact on individuals and groups. The balance of payments may deteriorate because domestic inflation stimulates import spending, given that imports appear relatively cheaper, and dampens export sales. A continuous price rise can be an obstacle to development as it has an adverse effect on saving and investment and causes a fall in growth.
[15] Price mechanism is a feature of -
A.
Capitalist economy
B.
Barter economy
C.
Mixed economy
D.
Socialist economy
Ans:
Capitalist economy
Explanation :
Price mechanism is an economic term that refers to the manner in which the prices of commodities affect the demand and supply of goods and services. It is essentially a feature of market-driven or capitalist economic systems. It is based on the principle that only by allowing prices to move freely will the supply of any given commodity match demand.
[16] The main feature of a capitalist economy is -
A.
Administered prices
B.
Public ownership
C.
Economic planning
D.
Private ownership
Ans:
Private ownership
Explanation :
Capitalism is an economic system that is based on private ownership of the means of production and the production of goods or services for profit. Other elements central to capitalism include capital accumulation and often competitive markets.
[17] Personal Income' equals -
A.
The household sector's income
B.
Private income minus savings of the corporate sector minus corporation tax
C.
Personal disposable income plus miscellaneous receipts of the Goverment
D.
All of the above
Ans:
Personal disposable income plus miscellaneous receipts of the Goverment
Explanation :
Disposable income is total personal income minus personal current taxes (or plus receipts of the government). In national accounts definitions, personal income, minus personal current taxes equals disposable personal income. Subtracting personal outlays (which includes the major category of personal (or, private) consumption expenditure) yields personal (or, private) savings
[18] According to the classical system, saving is a function of -
A.
Income
B.
The interest rate
C.
The real wage
D.
The Price level
Ans:
Income
Explanation :
Saving function is a mathematical relation between saving and income by the household sector. This function captures the saving-income relation, the flip side of the consumption-income relation that forms one of the key building blocks for Keynesian economics.
[19] Which of the following concepts are most closely associated with J.M. Keynes?
A.
Control of money supply
B.
Marginal utility theory
C.
Indifference curve analysis
D.
Marginal efficiency of captial
Ans:
Marginal efficiency of captial
Explanation :
The marginal efficiency of capital (MEC) is that rate of discount which would equate the price of a fixed capital asset with its present discounted value of expected income. The term "marginal efficiency of capital" was introduced by John Maynard Keynes in his General Theory, and defined as "the rate of discount which would make the present value of the series of annuities given by the returns expected from the capital asset during its life Just equal its supply price
[20] When the total product rises at an increasing rate, the -
A.
marginal product is zero
B.
marginal product is rising
C.
marginal product is falling
D.
marginal product remains constant
Ans:
marginal product is rising
Explanation :
Marginal product of an input (factor of production) is the extra output that can be produced by using one more unit of the input (for instance, the difference in output when a firm's labor usage is increased from five to six units), assuming that the quantities of no other inputs to production change. Marginal product, which occasionally goes by the alias marginal physical product (MPP), is one of two measures derived from total product. The other is average product. Marginal product is directly proportional to total product.
[21] If an industry is characterized by economies of scale then -
A.
barriers to entry are not very large
B.
long run unit costs of production decreases as the quantity the firm produces increases
C.
capital requirement are small due to the efficiency of the large scale operation
D.
the costs of entry into the market are likely to be substantial
Ans:
long run unit costs of production decreases as the quantity the firm produces increases
Explanation :
In microeconomics, economies of scale are the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer's average cost per unit to fall as the scale of output is increased. "Economies of scale" is a long run concept and refers to reductions in unit cost as the size of a facility and the usage levels of other inputs increase.
[22] Movement along the same demand curve is know as -
A.
Extension and Contraction of Demand
B.
Increase and Decrease of Demand
C.
Contraction of supply
D.
Increase of supply
Ans:
Increase and Decrease of Demand
Explanation :
A shift in the demand curve is caused by a factor affecting demand other than a change in price. If any of these factors change then the amount consumers wish to purchase changes whatever the price. The shift in the demand curve is referred to as an increase or decrease in demand. A movement along the demand curve occurs when there is a change in price, This may occur because of a change in supply conditions. The factors affecting demand are assumed to be held const ant.
[23] What are gilt-edged securities?
A.
Securities issued by the multinational companies.
B.
Securities issued by the Government
C.
Securities issued by the private sector
D.
Securities issued by the joint venture companies
Ans:
Securities issued by the Government
Explanation :
Gilt-edged securities are bonds issued by governments. They are government securities, i.e., instruments issued by the government to borrow money from the market. Gilt-edged securities are a high-grade investment with very low risk.
[24] Which curve shows the inverse relationship between unemployment and inflation rates?
A.
Supply curve
B.
Indifference curve
C.
IS curve
D.
Phillips curve
Ans:
Phillips curve
Explanation :
The Phillips curve shows the inverse relationship between inflation and unemployment: as unemployment decreases, inflation increases. The relationship, however, is not linear. Graphically, the short-run Phillips curve traces an L-shape when the unemployment rate is on the x-axis and the inflation rate is on the y-axis.
[25] Collective consumption means -
A.
household consumption
B.
individual consumption
C.
self-consumption
D.
consumption by the citizens of the country
Ans:
consumption by the citizens of the country
Explanation :
Collective consumption is a concept that refers to the many goods and services that are produced and consumed on a collective level, such as in cities or countries. These include schools, libraries, roads, bridges, public transportation, health care, welfare, fire and police protection, etc.
Explanation :
Malthus opposed what has come to be described as Say's Law: that supply creates its own demand. He rejected the proposition that the demand for commodities will automatically provide a motive for sufficient investment and production to satisfy such demand, or that investment and production would alone and automatically lead to an adequate demand to absorb supply. He argued that production and consumption were impelled by very different motives. Demand adjusted slowly, according to 'habit and tastes' and hence if productivity increased significantly, demand would not necessarily match supply and gluts of commodities might result.
[10] The time element in price analysis was introduced by :
A.
J.M. Keynes
B.
Alfred Marshall
C.
J.S. Mill
D.
J.R. Hicks
Ans:
Alfred Marshall
Explanation :
Marshall, who propounded the theory that price is determined by both demand and supply, also gave a great importance to the time element in the determination of price. He introduced time period analysis into pricing process to bring out the varying influence of each of two forces over price of the product in different time periods. He said, "as a general rate", "the shorter the period which one considers the greater must be the share of our attention which is given to the influence of demand on value, and the longer the period more important will be the influence of cost of production on value."
[11] Selling cost have to be incurred in case of -
A.
Perfect Competition
B.
Monopoly
C.
Monopolistic Competition
D.
None of the given options
Ans:
Monopolistic Competition
Explanation :
Selling costs are the expenses on advertisement, salesmanship, free sampling, free service, door-to- door canvassing, and so on. There is no selling problem under perfect competition where the product is homogeneous. Under monopolistic competition where the product is differentiated, selling costs are essential to push up the sales. They are incurred to persuade a buyer to purchase one product in preference to another.
[12] Inflation is a situation characterized by -
A.
Too much money chasing too few goods
B.
Too few money chasing too much goods
C.
Too many people chasing too few goods
D.
Too many people chasing too little money
Ans:
Too much money chasing too few goods
Explanation :
Demand-pull inflation is asserted to arise when aggregate demand in an economy outpaces aggregate supply. It involves inflation rising as real gross domestic product rises and unemployment falls, as the economy moves along the Phillips curve. This is commonly described as "too much money chasing too few goods."
[13] If a change in all inputs leads to a proportionate change in output, it is case of -
A.
Constant returns to scale
B.
Diminishing returns to scale
C.
Increasing returns to scale
D.
Variable returns to scale
Ans:
Constant returns to scale
Explanation :
If output increases by that same proportional change as all inputs change then there are constant returns to scale (CRS). If output increases by less than that proportional change in inputs, there are decreasing returns to scale (DRS). If output increases by more than that proportional change in inputs, there are increasing returns to scale (IRS).
[14] Which of the following is a consequence of inflationary price rise?
A.
Obstacle in development
B.
Increase in economic inequalities
C.
All of these
D.
Adverse effect on the balance of payment
Ans:
All of these
Explanation :
Inflationary price rise is harmful to a country's economic performance and to the welfare of its citizens. It can create a random redistribution of income given that inflation does not have an equal impact on individuals and groups. The balance of payments may deteriorate because domestic inflation stimulates import spending, given that imports appear relatively cheaper, and dampens export sales. A continuous price rise can be an obstacle to development as it has an adverse effect on saving and investment and causes a fall in growth.
[15] Price mechanism is a feature of -
A.
Capitalist economy
B.
Barter economy
C.
Mixed economy
D.
Socialist economy
Ans:
Capitalist economy
Explanation :
Price mechanism is an economic term that refers to the manner in which the prices of commodities affect the demand and supply of goods and services. It is essentially a feature of market-driven or capitalist economic systems. It is based on the principle that only by allowing prices to move freely will the supply of any given commodity match demand.
[16] The main feature of a capitalist economy is -
A.
Administered prices
B.
Public ownership
C.
Economic planning
D.
Private ownership
Ans:
Private ownership
Explanation :
Capitalism is an economic system that is based on private ownership of the means of production and the production of goods or services for profit. Other elements central to capitalism include capital accumulation and often competitive markets.
[17] Personal Income' equals -
A.
The household sector's income
B.
Private income minus savings of the corporate sector minus corporation tax
C.
Personal disposable income plus miscellaneous receipts of the Goverment
D.
All of the above
Ans:
Personal disposable income plus miscellaneous receipts of the Goverment
Explanation :
Disposable income is total personal income minus personal current taxes (or plus receipts of the government). In national accounts definitions, personal income, minus personal current taxes equals disposable personal income. Subtracting personal outlays (which includes the major category of personal (or, private) consumption expenditure) yields personal (or, private) savings
[18] According to the classical system, saving is a function of -
A.
Income
B.
The interest rate
C.
The real wage
D.
The Price level
Ans:
Income
Explanation :
Saving function is a mathematical relation between saving and income by the household sector. This function captures the saving-income relation, the flip side of the consumption-income relation that forms one of the key building blocks for Keynesian economics.
[19] Which of the following concepts are most closely associated with J.M. Keynes?
A.
Control of money supply
B.
Marginal utility theory
C.
Indifference curve analysis
D.
Marginal efficiency of captial
Ans:
Marginal efficiency of captial
Explanation :
The marginal efficiency of capital (MEC) is that rate of discount which would equate the price of a fixed capital asset with its present discounted value of expected income. The term "marginal efficiency of capital" was introduced by John Maynard Keynes in his General Theory, and defined as "the rate of discount which would make the present value of the series of annuities given by the returns expected from the capital asset during its life Just equal its supply price
[20] When the total product rises at an increasing rate, the -
A.
marginal product is zero
B.
marginal product is rising
C.
marginal product is falling
D.
marginal product remains constant
Ans:
marginal product is rising
Explanation :
Marginal product of an input (factor of production) is the extra output that can be produced by using one more unit of the input (for instance, the difference in output when a firm's labor usage is increased from five to six units), assuming that the quantities of no other inputs to production change. Marginal product, which occasionally goes by the alias marginal physical product (MPP), is one of two measures derived from total product. The other is average product. Marginal product is directly proportional to total product.
[21] If an industry is characterized by economies of scale then -
A.
barriers to entry are not very large
B.
long run unit costs of production decreases as the quantity the firm produces increases
C.
capital requirement are small due to the efficiency of the large scale operation
D.
the costs of entry into the market are likely to be substantial
Ans:
long run unit costs of production decreases as the quantity the firm produces increases
Explanation :
In microeconomics, economies of scale are the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer's average cost per unit to fall as the scale of output is increased. "Economies of scale" is a long run concept and refers to reductions in unit cost as the size of a facility and the usage levels of other inputs increase.
[22] Movement along the same demand curve is know as -
A.
Extension and Contraction of Demand
B.
Increase and Decrease of Demand
C.
Contraction of supply
D.
Increase of supply
Ans:
Increase and Decrease of Demand
Explanation :
A shift in the demand curve is caused by a factor affecting demand other than a change in price. If any of these factors change then the amount consumers wish to purchase changes whatever the price. The shift in the demand curve is referred to as an increase or decrease in demand. A movement along the demand curve occurs when there is a change in price, This may occur because of a change in supply conditions. The factors affecting demand are assumed to be held const ant.
[23] What are gilt-edged securities?
A.
Securities issued by the multinational companies.
B.
Securities issued by the Government
C.
Securities issued by the private sector
D.
Securities issued by the joint venture companies
Ans:
Securities issued by the Government
Explanation :
Gilt-edged securities are bonds issued by governments. They are government securities, i.e., instruments issued by the government to borrow money from the market. Gilt-edged securities are a high-grade investment with very low risk.
[24] Which curve shows the inverse relationship between unemployment and inflation rates?
A.
Supply curve
B.
Indifference curve
C.
IS curve
D.
Phillips curve
Ans:
Phillips curve
Explanation :
The Phillips curve shows the inverse relationship between inflation and unemployment: as unemployment decreases, inflation increases. The relationship, however, is not linear. Graphically, the short-run Phillips curve traces an L-shape when the unemployment rate is on the x-axis and the inflation rate is on the y-axis.
[25] Collective consumption means -
A.
household consumption
B.
individual consumption
C.
self-consumption
D.
consumption by the citizens of the country
Ans:
consumption by the citizens of the country
Explanation :
Collective consumption is a concept that refers to the many goods and services that are produced and consumed on a collective level, such as in cities or countries. These include schools, libraries, roads, bridges, public transportation, health care, welfare, fire and police protection, etc.
Explanation :
Selling costs are the expenses on advertisement, salesmanship, free sampling, free service, door-to- door canvassing, and so on. There is no selling problem under perfect competition where the product is homogeneous. Under monopolistic competition where the product is differentiated, selling costs are essential to push up the sales. They are incurred to persuade a buyer to purchase one product in preference to another.
[12] Inflation is a situation characterized by -
A.
Too much money chasing too few goods
B.
Too few money chasing too much goods
C.
Too many people chasing too few goods
D.
Too many people chasing too little money
Ans:
Too much money chasing too few goods
Explanation :
Demand-pull inflation is asserted to arise when aggregate demand in an economy outpaces aggregate supply. It involves inflation rising as real gross domestic product rises and unemployment falls, as the economy moves along the Phillips curve. This is commonly described as "too much money chasing too few goods."
[13] If a change in all inputs leads to a proportionate change in output, it is case of -
A.
Constant returns to scale
B.
Diminishing returns to scale
C.
Increasing returns to scale
D.
Variable returns to scale
Ans:
Constant returns to scale
Explanation :
If output increases by that same proportional change as all inputs change then there are constant returns to scale (CRS). If output increases by less than that proportional change in inputs, there are decreasing returns to scale (DRS). If output increases by more than that proportional change in inputs, there are increasing returns to scale (IRS).
[14] Which of the following is a consequence of inflationary price rise?
A.
Obstacle in development
B.
Increase in economic inequalities
C.
All of these
D.
Adverse effect on the balance of payment
Ans:
All of these
Explanation :
Inflationary price rise is harmful to a country's economic performance and to the welfare of its citizens. It can create a random redistribution of income given that inflation does not have an equal impact on individuals and groups. The balance of payments may deteriorate because domestic inflation stimulates import spending, given that imports appear relatively cheaper, and dampens export sales. A continuous price rise can be an obstacle to development as it has an adverse effect on saving and investment and causes a fall in growth.
[15] Price mechanism is a feature of -
A.
Capitalist economy
B.
Barter economy
C.
Mixed economy
D.
Socialist economy
Ans:
Capitalist economy
Explanation :
Price mechanism is an economic term that refers to the manner in which the prices of commodities affect the demand and supply of goods and services. It is essentially a feature of market-driven or capitalist economic systems. It is based on the principle that only by allowing prices to move freely will the supply of any given commodity match demand.
[16] The main feature of a capitalist economy is -
A.
Administered prices
B.
Public ownership
C.
Economic planning
D.
Private ownership
Ans:
Private ownership
Explanation :
Capitalism is an economic system that is based on private ownership of the means of production and the production of goods or services for profit. Other elements central to capitalism include capital accumulation and often competitive markets.
[17] Personal Income' equals -
A.
The household sector's income
B.
Private income minus savings of the corporate sector minus corporation tax
C.
Personal disposable income plus miscellaneous receipts of the Goverment
D.
All of the above
Ans:
Personal disposable income plus miscellaneous receipts of the Goverment
Explanation :
Disposable income is total personal income minus personal current taxes (or plus receipts of the government). In national accounts definitions, personal income, minus personal current taxes equals disposable personal income. Subtracting personal outlays (which includes the major category of personal (or, private) consumption expenditure) yields personal (or, private) savings
[18] According to the classical system, saving is a function of -
A.
Income
B.
The interest rate
C.
The real wage
D.
The Price level
Ans:
Income
Explanation :
Saving function is a mathematical relation between saving and income by the household sector. This function captures the saving-income relation, the flip side of the consumption-income relation that forms one of the key building blocks for Keynesian economics.
[19] Which of the following concepts are most closely associated with J.M. Keynes?
A.
Control of money supply
B.
Marginal utility theory
C.
Indifference curve analysis
D.
Marginal efficiency of captial
Ans:
Marginal efficiency of captial
Explanation :
The marginal efficiency of capital (MEC) is that rate of discount which would equate the price of a fixed capital asset with its present discounted value of expected income. The term "marginal efficiency of capital" was introduced by John Maynard Keynes in his General Theory, and defined as "the rate of discount which would make the present value of the series of annuities given by the returns expected from the capital asset during its life Just equal its supply price
[20] When the total product rises at an increasing rate, the -
A.
marginal product is zero
B.
marginal product is rising
C.
marginal product is falling
D.
marginal product remains constant
Ans:
marginal product is rising
Explanation :
Marginal product of an input (factor of production) is the extra output that can be produced by using one more unit of the input (for instance, the difference in output when a firm's labor usage is increased from five to six units), assuming that the quantities of no other inputs to production change. Marginal product, which occasionally goes by the alias marginal physical product (MPP), is one of two measures derived from total product. The other is average product. Marginal product is directly proportional to total product.
[21] If an industry is characterized by economies of scale then -
A.
barriers to entry are not very large
B.
long run unit costs of production decreases as the quantity the firm produces increases
C.
capital requirement are small due to the efficiency of the large scale operation
D.
the costs of entry into the market are likely to be substantial
Ans:
long run unit costs of production decreases as the quantity the firm produces increases
Explanation :
In microeconomics, economies of scale are the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer's average cost per unit to fall as the scale of output is increased. "Economies of scale" is a long run concept and refers to reductions in unit cost as the size of a facility and the usage levels of other inputs increase.
[22] Movement along the same demand curve is know as -
A.
Extension and Contraction of Demand
B.
Increase and Decrease of Demand
C.
Contraction of supply
D.
Increase of supply
Ans:
Increase and Decrease of Demand
Explanation :
A shift in the demand curve is caused by a factor affecting demand other than a change in price. If any of these factors change then the amount consumers wish to purchase changes whatever the price. The shift in the demand curve is referred to as an increase or decrease in demand. A movement along the demand curve occurs when there is a change in price, This may occur because of a change in supply conditions. The factors affecting demand are assumed to be held const ant.
[23] What are gilt-edged securities?
A.
Securities issued by the multinational companies.
B.
Securities issued by the Government
C.
Securities issued by the private sector
D.
Securities issued by the joint venture companies
Ans:
Securities issued by the Government
Explanation :
Gilt-edged securities are bonds issued by governments. They are government securities, i.e., instruments issued by the government to borrow money from the market. Gilt-edged securities are a high-grade investment with very low risk.
[24] Which curve shows the inverse relationship between unemployment and inflation rates?
A.
Supply curve
B.
Indifference curve
C.
IS curve
D.
Phillips curve
Ans:
Phillips curve
Explanation :
The Phillips curve shows the inverse relationship between inflation and unemployment: as unemployment decreases, inflation increases. The relationship, however, is not linear. Graphically, the short-run Phillips curve traces an L-shape when the unemployment rate is on the x-axis and the inflation rate is on the y-axis.
[25] Collective consumption means -
A.
household consumption
B.
individual consumption
C.
self-consumption
D.
consumption by the citizens of the country
Ans:
consumption by the citizens of the country
Explanation :
Collective consumption is a concept that refers to the many goods and services that are produced and consumed on a collective level, such as in cities or countries. These include schools, libraries, roads, bridges, public transportation, health care, welfare, fire and police protection, etc.
Explanation :
If output increases by that same proportional change as all inputs change then there are constant returns to scale (CRS). If output increases by less than that proportional change in inputs, there are decreasing returns to scale (DRS). If output increases by more than that proportional change in inputs, there are increasing returns to scale (IRS).
[14] Which of the following is a consequence of inflationary price rise?
A.
Obstacle in development
B.
Increase in economic inequalities
C.
All of these
D.
Adverse effect on the balance of payment
Ans:
All of these
Explanation :
Inflationary price rise is harmful to a country's economic performance and to the welfare of its citizens. It can create a random redistribution of income given that inflation does not have an equal impact on individuals and groups. The balance of payments may deteriorate because domestic inflation stimulates import spending, given that imports appear relatively cheaper, and dampens export sales. A continuous price rise can be an obstacle to development as it has an adverse effect on saving and investment and causes a fall in growth.
[15] Price mechanism is a feature of -
A.
Capitalist economy
B.
Barter economy
C.
Mixed economy
D.
Socialist economy
Ans:
Capitalist economy
Explanation :
Price mechanism is an economic term that refers to the manner in which the prices of commodities affect the demand and supply of goods and services. It is essentially a feature of market-driven or capitalist economic systems. It is based on the principle that only by allowing prices to move freely will the supply of any given commodity match demand.
[16] The main feature of a capitalist economy is -
A.
Administered prices
B.
Public ownership
C.
Economic planning
D.
Private ownership
Ans:
Private ownership
Explanation :
Capitalism is an economic system that is based on private ownership of the means of production and the production of goods or services for profit. Other elements central to capitalism include capital accumulation and often competitive markets.
[17] Personal Income' equals -
A.
The household sector's income
B.
Private income minus savings of the corporate sector minus corporation tax
C.
Personal disposable income plus miscellaneous receipts of the Goverment
D.
All of the above
Ans:
Personal disposable income plus miscellaneous receipts of the Goverment
Explanation :
Disposable income is total personal income minus personal current taxes (or plus receipts of the government). In national accounts definitions, personal income, minus personal current taxes equals disposable personal income. Subtracting personal outlays (which includes the major category of personal (or, private) consumption expenditure) yields personal (or, private) savings
[18] According to the classical system, saving is a function of -
A.
Income
B.
The interest rate
C.
The real wage
D.
The Price level
Ans:
Income
Explanation :
Saving function is a mathematical relation between saving and income by the household sector. This function captures the saving-income relation, the flip side of the consumption-income relation that forms one of the key building blocks for Keynesian economics.
[19] Which of the following concepts are most closely associated with J.M. Keynes?
A.
Control of money supply
B.
Marginal utility theory
C.
Indifference curve analysis
D.
Marginal efficiency of captial
Ans:
Marginal efficiency of captial
Explanation :
The marginal efficiency of capital (MEC) is that rate of discount which would equate the price of a fixed capital asset with its present discounted value of expected income. The term "marginal efficiency of capital" was introduced by John Maynard Keynes in his General Theory, and defined as "the rate of discount which would make the present value of the series of annuities given by the returns expected from the capital asset during its life Just equal its supply price
[20] When the total product rises at an increasing rate, the -
A.
marginal product is zero
B.
marginal product is rising
C.
marginal product is falling
D.
marginal product remains constant
Ans:
marginal product is rising
Explanation :
Marginal product of an input (factor of production) is the extra output that can be produced by using one more unit of the input (for instance, the difference in output when a firm's labor usage is increased from five to six units), assuming that the quantities of no other inputs to production change. Marginal product, which occasionally goes by the alias marginal physical product (MPP), is one of two measures derived from total product. The other is average product. Marginal product is directly proportional to total product.
[21] If an industry is characterized by economies of scale then -
A.
barriers to entry are not very large
B.
long run unit costs of production decreases as the quantity the firm produces increases
C.
capital requirement are small due to the efficiency of the large scale operation
D.
the costs of entry into the market are likely to be substantial
Ans:
long run unit costs of production decreases as the quantity the firm produces increases
Explanation :
In microeconomics, economies of scale are the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer's average cost per unit to fall as the scale of output is increased. "Economies of scale" is a long run concept and refers to reductions in unit cost as the size of a facility and the usage levels of other inputs increase.
[22] Movement along the same demand curve is know as -
A.
Extension and Contraction of Demand
B.
Increase and Decrease of Demand
C.
Contraction of supply
D.
Increase of supply
Ans:
Increase and Decrease of Demand
Explanation :
A shift in the demand curve is caused by a factor affecting demand other than a change in price. If any of these factors change then the amount consumers wish to purchase changes whatever the price. The shift in the demand curve is referred to as an increase or decrease in demand. A movement along the demand curve occurs when there is a change in price, This may occur because of a change in supply conditions. The factors affecting demand are assumed to be held const ant.
[23] What are gilt-edged securities?
A.
Securities issued by the multinational companies.
B.
Securities issued by the Government
C.
Securities issued by the private sector
D.
Securities issued by the joint venture companies
Ans:
Securities issued by the Government
Explanation :
Gilt-edged securities are bonds issued by governments. They are government securities, i.e., instruments issued by the government to borrow money from the market. Gilt-edged securities are a high-grade investment with very low risk.
[24] Which curve shows the inverse relationship between unemployment and inflation rates?
A.
Supply curve
B.
Indifference curve
C.
IS curve
D.
Phillips curve
Ans:
Phillips curve
Explanation :
The Phillips curve shows the inverse relationship between inflation and unemployment: as unemployment decreases, inflation increases. The relationship, however, is not linear. Graphically, the short-run Phillips curve traces an L-shape when the unemployment rate is on the x-axis and the inflation rate is on the y-axis.
[25] Collective consumption means -
A.
household consumption
B.
individual consumption
C.
self-consumption
D.
consumption by the citizens of the country
Ans:
consumption by the citizens of the country
Explanation :
Collective consumption is a concept that refers to the many goods and services that are produced and consumed on a collective level, such as in cities or countries. These include schools, libraries, roads, bridges, public transportation, health care, welfare, fire and police protection, etc.
Explanation :
Price mechanism is an economic term that refers to the manner in which the prices of commodities affect the demand and supply of goods and services. It is essentially a feature of market-driven or capitalist economic systems. It is based on the principle that only by allowing prices to move freely will the supply of any given commodity match demand.
[16] The main feature of a capitalist economy is -
A.
Administered prices
B.
Public ownership
C.
Economic planning
D.
Private ownership
Ans:
Private ownership
Explanation :
Capitalism is an economic system that is based on private ownership of the means of production and the production of goods or services for profit. Other elements central to capitalism include capital accumulation and often competitive markets.
[17] Personal Income' equals -
A.
The household sector's income
B.
Private income minus savings of the corporate sector minus corporation tax
C.
Personal disposable income plus miscellaneous receipts of the Goverment
D.
All of the above
Ans:
Personal disposable income plus miscellaneous receipts of the Goverment
Explanation :
Disposable income is total personal income minus personal current taxes (or plus receipts of the government). In national accounts definitions, personal income, minus personal current taxes equals disposable personal income. Subtracting personal outlays (which includes the major category of personal (or, private) consumption expenditure) yields personal (or, private) savings
[18] According to the classical system, saving is a function of -
A.
Income
B.
The interest rate
C.
The real wage
D.
The Price level
Ans:
Income
Explanation :
Saving function is a mathematical relation between saving and income by the household sector. This function captures the saving-income relation, the flip side of the consumption-income relation that forms one of the key building blocks for Keynesian economics.
[19] Which of the following concepts are most closely associated with J.M. Keynes?
A.
Control of money supply
B.
Marginal utility theory
C.
Indifference curve analysis
D.
Marginal efficiency of captial
Ans:
Marginal efficiency of captial
Explanation :
The marginal efficiency of capital (MEC) is that rate of discount which would equate the price of a fixed capital asset with its present discounted value of expected income. The term "marginal efficiency of capital" was introduced by John Maynard Keynes in his General Theory, and defined as "the rate of discount which would make the present value of the series of annuities given by the returns expected from the capital asset during its life Just equal its supply price
[20] When the total product rises at an increasing rate, the -
A.
marginal product is zero
B.
marginal product is rising
C.
marginal product is falling
D.
marginal product remains constant
Ans:
marginal product is rising
Explanation :
Marginal product of an input (factor of production) is the extra output that can be produced by using one more unit of the input (for instance, the difference in output when a firm's labor usage is increased from five to six units), assuming that the quantities of no other inputs to production change. Marginal product, which occasionally goes by the alias marginal physical product (MPP), is one of two measures derived from total product. The other is average product. Marginal product is directly proportional to total product.
[21] If an industry is characterized by economies of scale then -
A.
barriers to entry are not very large
B.
long run unit costs of production decreases as the quantity the firm produces increases
C.
capital requirement are small due to the efficiency of the large scale operation
D.
the costs of entry into the market are likely to be substantial
Ans:
long run unit costs of production decreases as the quantity the firm produces increases
Explanation :
In microeconomics, economies of scale are the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer's average cost per unit to fall as the scale of output is increased. "Economies of scale" is a long run concept and refers to reductions in unit cost as the size of a facility and the usage levels of other inputs increase.
[22] Movement along the same demand curve is know as -
A.
Extension and Contraction of Demand
B.
Increase and Decrease of Demand
C.
Contraction of supply
D.
Increase of supply
Ans:
Increase and Decrease of Demand
Explanation :
A shift in the demand curve is caused by a factor affecting demand other than a change in price. If any of these factors change then the amount consumers wish to purchase changes whatever the price. The shift in the demand curve is referred to as an increase or decrease in demand. A movement along the demand curve occurs when there is a change in price, This may occur because of a change in supply conditions. The factors affecting demand are assumed to be held const ant.
[23] What are gilt-edged securities?
A.
Securities issued by the multinational companies.
B.
Securities issued by the Government
C.
Securities issued by the private sector
D.
Securities issued by the joint venture companies
Ans:
Securities issued by the Government
Explanation :
Gilt-edged securities are bonds issued by governments. They are government securities, i.e., instruments issued by the government to borrow money from the market. Gilt-edged securities are a high-grade investment with very low risk.
[24] Which curve shows the inverse relationship between unemployment and inflation rates?
A.
Supply curve
B.
Indifference curve
C.
IS curve
D.
Phillips curve
Ans:
Phillips curve
Explanation :
The Phillips curve shows the inverse relationship between inflation and unemployment: as unemployment decreases, inflation increases. The relationship, however, is not linear. Graphically, the short-run Phillips curve traces an L-shape when the unemployment rate is on the x-axis and the inflation rate is on the y-axis.
[25] Collective consumption means -
A.
household consumption
B.
individual consumption
C.
self-consumption
D.
consumption by the citizens of the country
Ans:
consumption by the citizens of the country
Explanation :
Collective consumption is a concept that refers to the many goods and services that are produced and consumed on a collective level, such as in cities or countries. These include schools, libraries, roads, bridges, public transportation, health care, welfare, fire and police protection, etc.
Explanation :
Disposable income is total personal income minus personal current taxes (or plus receipts of the government). In national accounts definitions, personal income, minus personal current taxes equals disposable personal income. Subtracting personal outlays (which includes the major category of personal (or, private) consumption expenditure) yields personal (or, private) savings
[18] According to the classical system, saving is a function of -
A.
Income
B.
The interest rate
C.
The real wage
D.
The Price level
Ans:
Income
Explanation :
Saving function is a mathematical relation between saving and income by the household sector. This function captures the saving-income relation, the flip side of the consumption-income relation that forms one of the key building blocks for Keynesian economics.
[19] Which of the following concepts are most closely associated with J.M. Keynes?
A.
Control of money supply
B.
Marginal utility theory
C.
Indifference curve analysis
D.
Marginal efficiency of captial
Ans:
Marginal efficiency of captial
Explanation :
The marginal efficiency of capital (MEC) is that rate of discount which would equate the price of a fixed capital asset with its present discounted value of expected income. The term "marginal efficiency of capital" was introduced by John Maynard Keynes in his General Theory, and defined as "the rate of discount which would make the present value of the series of annuities given by the returns expected from the capital asset during its life Just equal its supply price
[20] When the total product rises at an increasing rate, the -
A.
marginal product is zero
B.
marginal product is rising
C.
marginal product is falling
D.
marginal product remains constant
Ans:
marginal product is rising
Explanation :
Marginal product of an input (factor of production) is the extra output that can be produced by using one more unit of the input (for instance, the difference in output when a firm's labor usage is increased from five to six units), assuming that the quantities of no other inputs to production change. Marginal product, which occasionally goes by the alias marginal physical product (MPP), is one of two measures derived from total product. The other is average product. Marginal product is directly proportional to total product.
[21] If an industry is characterized by economies of scale then -
A.
barriers to entry are not very large
B.
long run unit costs of production decreases as the quantity the firm produces increases
C.
capital requirement are small due to the efficiency of the large scale operation
D.
the costs of entry into the market are likely to be substantial
Ans:
long run unit costs of production decreases as the quantity the firm produces increases
Explanation :
In microeconomics, economies of scale are the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer's average cost per unit to fall as the scale of output is increased. "Economies of scale" is a long run concept and refers to reductions in unit cost as the size of a facility and the usage levels of other inputs increase.
[22] Movement along the same demand curve is know as -
A.
Extension and Contraction of Demand
B.
Increase and Decrease of Demand
C.
Contraction of supply
D.
Increase of supply
Ans:
Increase and Decrease of Demand
Explanation :
A shift in the demand curve is caused by a factor affecting demand other than a change in price. If any of these factors change then the amount consumers wish to purchase changes whatever the price. The shift in the demand curve is referred to as an increase or decrease in demand. A movement along the demand curve occurs when there is a change in price, This may occur because of a change in supply conditions. The factors affecting demand are assumed to be held const ant.
[23] What are gilt-edged securities?
A.
Securities issued by the multinational companies.
B.
Securities issued by the Government
C.
Securities issued by the private sector
D.
Securities issued by the joint venture companies
Ans:
Securities issued by the Government
Explanation :
Gilt-edged securities are bonds issued by governments. They are government securities, i.e., instruments issued by the government to borrow money from the market. Gilt-edged securities are a high-grade investment with very low risk.
[24] Which curve shows the inverse relationship between unemployment and inflation rates?
A.
Supply curve
B.
Indifference curve
C.
IS curve
D.
Phillips curve
Ans:
Phillips curve
Explanation :
The Phillips curve shows the inverse relationship between inflation and unemployment: as unemployment decreases, inflation increases. The relationship, however, is not linear. Graphically, the short-run Phillips curve traces an L-shape when the unemployment rate is on the x-axis and the inflation rate is on the y-axis.
[25] Collective consumption means -
A.
household consumption
B.
individual consumption
C.
self-consumption
D.
consumption by the citizens of the country
Ans:
consumption by the citizens of the country
Explanation :
Collective consumption is a concept that refers to the many goods and services that are produced and consumed on a collective level, such as in cities or countries. These include schools, libraries, roads, bridges, public transportation, health care, welfare, fire and police protection, etc.
Explanation :
The marginal efficiency of capital (MEC) is that rate of discount which would equate the price of a fixed capital asset with its present discounted value of expected income. The term "marginal efficiency of capital" was introduced by John Maynard Keynes in his General Theory, and defined as "the rate of discount which would make the present value of the series of annuities given by the returns expected from the capital asset during its life Just equal its supply price
[20] When the total product rises at an increasing rate, the -
A.
marginal product is zero
B.
marginal product is rising
C.
marginal product is falling
D.
marginal product remains constant
Ans:
marginal product is rising
Explanation :
Marginal product of an input (factor of production) is the extra output that can be produced by using one more unit of the input (for instance, the difference in output when a firm's labor usage is increased from five to six units), assuming that the quantities of no other inputs to production change. Marginal product, which occasionally goes by the alias marginal physical product (MPP), is one of two measures derived from total product. The other is average product. Marginal product is directly proportional to total product.
[21] If an industry is characterized by economies of scale then -
A.
barriers to entry are not very large
B.
long run unit costs of production decreases as the quantity the firm produces increases
C.
capital requirement are small due to the efficiency of the large scale operation
D.
the costs of entry into the market are likely to be substantial
Ans:
long run unit costs of production decreases as the quantity the firm produces increases
Explanation :
In microeconomics, economies of scale are the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer's average cost per unit to fall as the scale of output is increased. "Economies of scale" is a long run concept and refers to reductions in unit cost as the size of a facility and the usage levels of other inputs increase.
[22] Movement along the same demand curve is know as -
A.
Extension and Contraction of Demand
B.
Increase and Decrease of Demand
C.
Contraction of supply
D.
Increase of supply
Ans:
Increase and Decrease of Demand
Explanation :
A shift in the demand curve is caused by a factor affecting demand other than a change in price. If any of these factors change then the amount consumers wish to purchase changes whatever the price. The shift in the demand curve is referred to as an increase or decrease in demand. A movement along the demand curve occurs when there is a change in price, This may occur because of a change in supply conditions. The factors affecting demand are assumed to be held const ant.
[23] What are gilt-edged securities?
A.
Securities issued by the multinational companies.
B.
Securities issued by the Government
C.
Securities issued by the private sector
D.
Securities issued by the joint venture companies
Ans:
Securities issued by the Government
Explanation :
Gilt-edged securities are bonds issued by governments. They are government securities, i.e., instruments issued by the government to borrow money from the market. Gilt-edged securities are a high-grade investment with very low risk.
[24] Which curve shows the inverse relationship between unemployment and inflation rates?
A.
Supply curve
B.
Indifference curve
C.
IS curve
D.
Phillips curve
Ans:
Phillips curve
Explanation :
The Phillips curve shows the inverse relationship between inflation and unemployment: as unemployment decreases, inflation increases. The relationship, however, is not linear. Graphically, the short-run Phillips curve traces an L-shape when the unemployment rate is on the x-axis and the inflation rate is on the y-axis.
[25] Collective consumption means -
A.
household consumption
B.
individual consumption
C.
self-consumption
D.
consumption by the citizens of the country
Ans:
consumption by the citizens of the country
Explanation :
Collective consumption is a concept that refers to the many goods and services that are produced and consumed on a collective level, such as in cities or countries. These include schools, libraries, roads, bridges, public transportation, health care, welfare, fire and police protection, etc.
Explanation :
In microeconomics, economies of scale are the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer's average cost per unit to fall as the scale of output is increased. "Economies of scale" is a long run concept and refers to reductions in unit cost as the size of a facility and the usage levels of other inputs increase.
[22] Movement along the same demand curve is know as -
A.
Extension and Contraction of Demand
B.
Increase and Decrease of Demand
C.
Contraction of supply
D.
Increase of supply
Ans:
Increase and Decrease of Demand
Explanation :
A shift in the demand curve is caused by a factor affecting demand other than a change in price. If any of these factors change then the amount consumers wish to purchase changes whatever the price. The shift in the demand curve is referred to as an increase or decrease in demand. A movement along the demand curve occurs when there is a change in price, This may occur because of a change in supply conditions. The factors affecting demand are assumed to be held const ant.
[23] What are gilt-edged securities?
A.
Securities issued by the multinational companies.
B.
Securities issued by the Government
C.
Securities issued by the private sector
D.
Securities issued by the joint venture companies
Ans:
Securities issued by the Government
Explanation :
Gilt-edged securities are bonds issued by governments. They are government securities, i.e., instruments issued by the government to borrow money from the market. Gilt-edged securities are a high-grade investment with very low risk.
[24] Which curve shows the inverse relationship between unemployment and inflation rates?
A.
Supply curve
B.
Indifference curve
C.
IS curve
D.
Phillips curve
Ans:
Phillips curve
Explanation :
The Phillips curve shows the inverse relationship between inflation and unemployment: as unemployment decreases, inflation increases. The relationship, however, is not linear. Graphically, the short-run Phillips curve traces an L-shape when the unemployment rate is on the x-axis and the inflation rate is on the y-axis.
[25] Collective consumption means -
A.
household consumption
B.
individual consumption
C.
self-consumption
D.
consumption by the citizens of the country
Ans:
consumption by the citizens of the country
Explanation :
Collective consumption is a concept that refers to the many goods and services that are produced and consumed on a collective level, such as in cities or countries. These include schools, libraries, roads, bridges, public transportation, health care, welfare, fire and police protection, etc.
Explanation :
Gilt-edged securities are bonds issued by governments. They are government securities, i.e., instruments issued by the government to borrow money from the market. Gilt-edged securities are a high-grade investment with very low risk.
[24] Which curve shows the inverse relationship between unemployment and inflation rates?
A.
Supply curve
B.
Indifference curve
C.
IS curve
D.
Phillips curve
Ans:
Phillips curve
Explanation :
The Phillips curve shows the inverse relationship between inflation and unemployment: as unemployment decreases, inflation increases. The relationship, however, is not linear. Graphically, the short-run Phillips curve traces an L-shape when the unemployment rate is on the x-axis and the inflation rate is on the y-axis.
[25] Collective consumption means -
A.
household consumption
B.
individual consumption
C.
self-consumption
D.
consumption by the citizens of the country
Ans:
consumption by the citizens of the country
Explanation :
Collective consumption is a concept that refers to the many goods and services that are produced and consumed on a collective level, such as in cities or countries. These include schools, libraries, roads, bridges, public transportation, health care, welfare, fire and police protection, etc.
Explanation :
Collective consumption is a concept that refers to the many goods and services that are produced and consumed on a collective level, such as in cities or countries. These include schools, libraries, roads, bridges, public transportation, health care, welfare, fire and police protection, etc.