[1] Which nationalized bank of India has a shining star as its emblem?
A.
Syndicate Bank
B.
Indian Bank
C.
Bank of India
D.
Bank of Baroda
Ans:
Bank of India
Explanation :
The new logo of the Bank of Baroda is a unique representation of a universal symbol. It comprises dual 'B' letterforms that hold the rays of the rising sun. It is known as the 'Baroda Sun' which is the single most powerful source of light and energy - its far reaching rays dispel darkness to illuminate everything they touch. With this logo, Bank of Baroda seeks to be the source that will help all its stakeholders realize their goals. To customers, the hank seeks to be a one-stop. reliable partner who will help them address different financial needs. To employees, the bank offers rewarding careers and to our investors and business partners, maximum return on their investment.
[2] ISI mark is not given to which of the following products?
A.
Electrical goods
B.
Hosiery goods
C.
Biscuits
D.
Cloth
Ans:
Biscuits
Explanation :
ISI mark is a certification mark for industrial products in India, which is mandatory for certain products to be sold in India, like most of the electrical appliances viz; switches, electric motors, wiring cables, heaters, kitchen appliances etc., and other products like portland cement, LPG valves, LPG cylinders, automotive tyres.
[3] The duties levied on alcoholic liquors, narcotic drugs and opium come under—
A.
Central Excise Duty
B.
Land Revenue
C.
State Excise Duty
D.
General Sales Tax
Ans:
Central Excise Duty
Explanation :
An excise or excise tax (sometimes called an excise duty) is a type of tax charged on goods produced within the country (as opposed to customs duties, charged on goods from outside the country). It is charged on many goods like cars. writing paper, printing paper and packing paper, drugs and pharmaceuticals, alcoholic liquor, water filtration and purification devices, pan masala, etc.
[4] Theoretically trade between two countries lakes place on account of -
A.
differences In costs
B.
scarcity of goods
C.
comparative differences in costs
D.
need for exports
Ans:
comparative differences in costs
Explanation :
Trade exists for man clue to specialization and division of labor, most people concentrate on a small aspect of production, trading for other products. Trade exists between regions because different regions have a comparative advantage in the production of some tradable commodity, or because different regions' size allows for the benefits of mass production thus providing cost advantage of producing the same commodity.
[5] Short term loans to correct Balance of Payments problems is given by -
A.
I.M.F.
B.
I.B.R.D
C.
I.D.A
D.
A.D.B
Ans:
I.M.F.
Explanation :
Upon Initial IMF formation, its two primary functions were: to oversee the fixed exchange rate arrangements between countries, thus helping national governments manage their exchange rates and allowing these governments to prioritize economic growth, and to provide short-term capital to aid balance-of-payments.
[6] The outcome of 'devaluation of currency' is -
A.
increased export and improvement in balance of payment
B.
increased export and foreign reserve deficiency
C.
increased import and improvement in balance of payment
D.
increased export and import
Ans:
increased export and improvement in balance of payment
Explanation :
Devaluation is a reduction in the exchange value of a country's monetary unit in terms of gold, silver, or foreign currency. By decreasing the price of the home country's exports abroad and increasing the price of imports in the home country, devaluation encourages the home country's export sales and discourages expenditures on imports, thus improving its balance of payments.
[7] 'Gresham's Law' in Economics relates to -
A.
supply and demand
B.
circulation of currency
C.
consumption of supply
D.
distribution of goods and services
Ans:
circulation of currency
Explanation :
Gresham's law is an economic principle that states: "When a government compulsorily overvalues one type of money and undervalues another, the undervalued money will leave the country or disappear, from circulation into hoards, while the over-valued money will flood into circulation." It is commonly stated as: "Bad money drives out good."
[8] Which one of the following is an example of optional money?
A.
Currency note
B.
Coins
C.
Cheque
D.
Bond
Ans:
Cheque
Explanation :
On the basis of acceptability, money has been classified into legal tender and optional money. Legal tender money is enforced by law. Optional money is that money which may or may not be accepted as a means of payment; it has no legal sanction. Different credit instruments, like, cheques, bank drafts, etc., are the examples of optional money.
[9] 'Money' is an example of -
A.
Sunk capital
B.
Floating capital
C.
Concrete capital
D.
Social capital
Ans:
Floating capital
Explanation :
Money is something which is widely accepted in payment for goods and services and in setting debts. Money is an example of Floating Capital.
[10] The existence of a Parallel Economy or Black Money -
A.
makes the economy more competitive
B.
makes the monetary policies less effective
C.
ensures a better distribution of income and wealth
D.
ensures increasing productive investment
Ans:
makes the monetary policies less effective
Explanation :
In India, Black money refers to funds earned on the black market, on which income and other taxes has not been paid. Black money leads to black liquidity which is immune to any monetary-fiscal policy. It can move around in the economy creating excess demand in several vulnerable sectors of the economy. Of particular relevance in this context is a policy dominated by sector-wise credit rationing in order to maintain inter-sectoral balances. The cost of credit is one one part of such a policy. So, in nutshell, the existence of parallel economy erodes the effectiveness of monetary policies.
[11] An economy is in equilibrium when -
A.
planned consumption exceeds planned saving
B.
planned consumption exceeds planned investment
C.
intended investment equals intended investment
D.
intended investment exceeds intended savings
Ans:
intended investment equals intended investment
Explanation :
In economics, economic equilibrium is a state of the world where economic forces are balanced and in the absence of external influences the (equilibrium) values of economic variables will not change. The condition of equilibrium of income is the equality of intended saving and intended investment. An economy is in equilibrium when total savings equal total investment.
[12] The 'Canons of Taxation' were propounded by -
A.
Edwin Canon
B.
Adam Smith
C.
J.M. Keynes
D.
Dalton
Ans:
Adam Smith
Explanation :
Canons of Taxation were first originally laid down by economist Adam Smith in his famous book 'The Wealth of Nations". In this book, Adam smith only gave four canons of taxation: (i) canon of equity: (ii) canon of certainty: (iii) canon of convenience; and (iv) canon of economy.
[13] Beyond a certain point deficit financing will certainly lead to -
A.
inflation
B.
deflation
C.
recession
D.
economic stagnation
Ans:
inflation
Explanation :
Deficit financing is a practice in which a government spends more money than it receives as revenue, the difference being made up by borrowing or minting new funds. Some economists are of the view that it leads to inflation as governments pay off debts by printing fiat money, increasing the money supply and the purchasing power of the people which increases the aggregate demand.
[14] VAT is imposed:
A.
Directly on Consumer
B.
On first stage of production
C.
On final stage of production
D.
On all stages between production and sale
Ans:
On all stages between production and sale
Explanation :
Value Added Tax (VAT) is imposed on the value added to each commodity by a firm during all stages of production and distribution. In simple terms, it is a fee assessed against businesses at each step of the production and distribution process, usually whenever a product is resold or value is added to it. Value- added taxation in India was introduced as an indirect value added tax (VAT) into the Indian taxation system from 1 April 2005.
[15] The aim of Differentiated Interest Scheme was to provide concessional loans to -
A.
weaker section of the society
B.
Public Sector Industries
C.
Public Limited Companies
D.
big exports
Ans:
weaker section of the society
Explanation :
The Differential Rate of Interest Scheme, formulated in March 1972, offers financial assistance at concessional rate of interest. 0 4% to those who intend taking up any productive activity and has been tailored for persons whose income is very low.
[16] Investment and savings are kept equal through a change in the level of -
A.
Consumption
B.
Investment
C.
Government expenditure
D.
Income
Ans:
Consumption
Explanation :
Desired savings are kept equal to desired investment by responses to interest rate changes. Savings identity or the savings investment identity is a concept in National Income Accounting stating that the amount saved (S) in an economy will be amount invested (I). This identity only holds true because investment here is defined as including inventories. Thus, should consumers decide to save more, and spend less, the fall in demand would lead to an increase in business inventories. The change in inventories brings savings and investment into balance without any intention by business to increase investment.
[17] Which of the following is not required while computing Gross National Product (GNP)?
A.
Net foreign investment
B.
Private investment
C.
Per capita income of citizens
D.
Purchase of goods by government
Ans:
Per capita income of citizens
Explanation :
Gross National Product (GNP) is the market value of all products and services produced in one year by labour and property supplied by the residents of a country. Basically, GNP is the total value of all final goods and services produced within a nation in a particular year, plus income earned by its citizens (including income of those located abroad), minus income of non-residents located in that country. GNP measures the value of goods and services that the country's citizens produced regardless of their location.
[18] In a highly developed country the relative contribution of agriculture to GDP is -
A.
relatively high
B.
relatively low
C.
the same as that of other sectors
D.
zero
Ans:
relatively low
Explanation :
In developed countries, the labor productivity of any commercial agriculture is high, so only a very small percentage of the population is involved with agriculture even when agriculture is a major industry and export. These countries focus more on manufacturing and service industry. Agriculture or the primary sectors of the economy have sizeable contributions in the GDP of developing nations.
[19] The demand for money, according to Keynes, is for -
A.
speculative motive
B.
transaction motive
C.
precautionary motive
D.
All the above motives
Ans:
precautionary motive
Explanation :
According to Keynes, money is demanded because of three motives -transaction, precautionary and speculative. The first two motives provide yield of convenience and certainty. The third motive provides money yield. Keynes has termed demand for money as liquidity preference.
[20] Economic progress of a country is determined by -
A.
Increase in per capita income of people of country
B.
Increase in the price of produced capital goods during the year
C.
Increased numbers of Trade Unions
D.
Fall in the general price level of a country
Ans:
Increase in per capita income of people of country
Explanation :
Economic progress of a country is determined by increase in per capita income of people of that country.
[21] What is "book-building"?
A.
Preparing the income and expenditure ledgers of a company (book-keeping)
B.
Manipulating the profit and loss statements of a company
C.
A process of inviting subscriptions to a public offer of securities, essentially through a tendering process
D.
Publishers' activity
Ans:
A process of inviting subscriptions to a public offer of securities, essentially through a tendering process
Explanation :
Book building refers to the process of generating, capturing, and recording investor demand for shares during an IPO (or other securities during their issuance process) in order to support efficient price discovery. Usually, the issuer appoints a major investment bank to act as a major securities underwriter or bookrunner. The "book" is the off-market collation of investor demand by the bookrunner and is confidential to the bookrunner, issuer, and underwriter. Book-building is a process of price discovery used in public offers. The issuer sets a base price and a band within which the investor is allowed to bid for shares.
[22] A hammer in the hands of a house-wife is a good.
A.
consumer
B.
capital
C.
free
D.
intermediary
Ans:
intermediary
Explanation :
Good is any tangible item, whether produced or found naturally and which is available for exchange. Free good is a good that is so abundant is supply that it has no opportunity cost, for example, air. Intermediary good is a firm's product that is used as an input into the production process of either the same firm or another.
[23] Surplus budget is recommended during :
A.
Boom
B.
Depression
C.
Famines
D.
War
Ans:
Depression
Explanation :
Surplus budget is a budget in which government receipts arc greater than government expenditures. Such a budget is desired when the economy is battling inflation due to excess aggregate demand (AD). Surplus budget plugs the inflationary gap by lowering the level of aggregate demand. AD is lowe red on account of (i) rise in revenue collection by the government and (ii) fall in government expenditure.
[24] Economic profit or normal profit is the same as -
A.
optimum profit
B.
accounting profile
C.
maximum profit
D.
net profit
Ans:
net profit
Explanation :
Normal profit or economic profit is an economic condition occurring when the difference between a firm's total revenue and total cost is equal to zero. Simply put, normal profit is the minimum level of profit needed for a company to remain competitive in the market. In a sense, normal profit is the same as net profit which is calculated by subtracting a company's total expenses from total revenue, thus showing what the company has earned (or lost) in a given period of time. Accounting profit occurs when revenues are greater than costs, and not equal, as in the case of normal profit.
[25] Which of the following is not a feat tare of a capitalist economy?
A.
Right to private property
B.
Existence of competition
C.
Service motive
D.
Freedom of choice to consumers
Ans:
Service motive
Explanation :
Capitalism is an economic system in which each individual in his capacity as a consumer, producer, and resource owner is engaged in economic activity with a large measure of economic freedom. The inspiring force in this system is self-interest and maximization of profit. The decisions of businessmen, farmers, producers, including that of wage-earners are based on the profit motive.
Explanation :
The new logo of the Bank of Baroda is a unique representation of a universal symbol. It comprises dual 'B' letterforms that hold the rays of the rising sun. It is known as the 'Baroda Sun' which is the single most powerful source of light and energy - its far reaching rays dispel darkness to illuminate everything they touch. With this logo, Bank of Baroda seeks to be the source that will help all its stakeholders realize their goals. To customers, the hank seeks to be a one-stop. reliable partner who will help them address different financial needs. To employees, the bank offers rewarding careers and to our investors and business partners, maximum return on their investment.
[2] ISI mark is not given to which of the following products?
A.
Electrical goods
B.
Hosiery goods
C.
Biscuits
D.
Cloth
Ans:
Biscuits
Explanation :
ISI mark is a certification mark for industrial products in India, which is mandatory for certain products to be sold in India, like most of the electrical appliances viz; switches, electric motors, wiring cables, heaters, kitchen appliances etc., and other products like portland cement, LPG valves, LPG cylinders, automotive tyres.
[3] The duties levied on alcoholic liquors, narcotic drugs and opium come under—
A.
Central Excise Duty
B.
Land Revenue
C.
State Excise Duty
D.
General Sales Tax
Ans:
Central Excise Duty
Explanation :
An excise or excise tax (sometimes called an excise duty) is a type of tax charged on goods produced within the country (as opposed to customs duties, charged on goods from outside the country). It is charged on many goods like cars. writing paper, printing paper and packing paper, drugs and pharmaceuticals, alcoholic liquor, water filtration and purification devices, pan masala, etc.
[4] Theoretically trade between two countries lakes place on account of -
A.
differences In costs
B.
scarcity of goods
C.
comparative differences in costs
D.
need for exports
Ans:
comparative differences in costs
Explanation :
Trade exists for man clue to specialization and division of labor, most people concentrate on a small aspect of production, trading for other products. Trade exists between regions because different regions have a comparative advantage in the production of some tradable commodity, or because different regions' size allows for the benefits of mass production thus providing cost advantage of producing the same commodity.
[5] Short term loans to correct Balance of Payments problems is given by -
A.
I.M.F.
B.
I.B.R.D
C.
I.D.A
D.
A.D.B
Ans:
I.M.F.
Explanation :
Upon Initial IMF formation, its two primary functions were: to oversee the fixed exchange rate arrangements between countries, thus helping national governments manage their exchange rates and allowing these governments to prioritize economic growth, and to provide short-term capital to aid balance-of-payments.
[6] The outcome of 'devaluation of currency' is -
A.
increased export and improvement in balance of payment
B.
increased export and foreign reserve deficiency
C.
increased import and improvement in balance of payment
D.
increased export and import
Ans:
increased export and improvement in balance of payment
Explanation :
Devaluation is a reduction in the exchange value of a country's monetary unit in terms of gold, silver, or foreign currency. By decreasing the price of the home country's exports abroad and increasing the price of imports in the home country, devaluation encourages the home country's export sales and discourages expenditures on imports, thus improving its balance of payments.
[7] 'Gresham's Law' in Economics relates to -
A.
supply and demand
B.
circulation of currency
C.
consumption of supply
D.
distribution of goods and services
Ans:
circulation of currency
Explanation :
Gresham's law is an economic principle that states: "When a government compulsorily overvalues one type of money and undervalues another, the undervalued money will leave the country or disappear, from circulation into hoards, while the over-valued money will flood into circulation." It is commonly stated as: "Bad money drives out good."
[8] Which one of the following is an example of optional money?
A.
Currency note
B.
Coins
C.
Cheque
D.
Bond
Ans:
Cheque
Explanation :
On the basis of acceptability, money has been classified into legal tender and optional money. Legal tender money is enforced by law. Optional money is that money which may or may not be accepted as a means of payment; it has no legal sanction. Different credit instruments, like, cheques, bank drafts, etc., are the examples of optional money.
[9] 'Money' is an example of -
A.
Sunk capital
B.
Floating capital
C.
Concrete capital
D.
Social capital
Ans:
Floating capital
Explanation :
Money is something which is widely accepted in payment for goods and services and in setting debts. Money is an example of Floating Capital.
[10] The existence of a Parallel Economy or Black Money -
A.
makes the economy more competitive
B.
makes the monetary policies less effective
C.
ensures a better distribution of income and wealth
D.
ensures increasing productive investment
Ans:
makes the monetary policies less effective
Explanation :
In India, Black money refers to funds earned on the black market, on which income and other taxes has not been paid. Black money leads to black liquidity which is immune to any monetary-fiscal policy. It can move around in the economy creating excess demand in several vulnerable sectors of the economy. Of particular relevance in this context is a policy dominated by sector-wise credit rationing in order to maintain inter-sectoral balances. The cost of credit is one one part of such a policy. So, in nutshell, the existence of parallel economy erodes the effectiveness of monetary policies.
[11] An economy is in equilibrium when -
A.
planned consumption exceeds planned saving
B.
planned consumption exceeds planned investment
C.
intended investment equals intended investment
D.
intended investment exceeds intended savings
Ans:
intended investment equals intended investment
Explanation :
In economics, economic equilibrium is a state of the world where economic forces are balanced and in the absence of external influences the (equilibrium) values of economic variables will not change. The condition of equilibrium of income is the equality of intended saving and intended investment. An economy is in equilibrium when total savings equal total investment.
[12] The 'Canons of Taxation' were propounded by -
A.
Edwin Canon
B.
Adam Smith
C.
J.M. Keynes
D.
Dalton
Ans:
Adam Smith
Explanation :
Canons of Taxation were first originally laid down by economist Adam Smith in his famous book 'The Wealth of Nations". In this book, Adam smith only gave four canons of taxation: (i) canon of equity: (ii) canon of certainty: (iii) canon of convenience; and (iv) canon of economy.
[13] Beyond a certain point deficit financing will certainly lead to -
A.
inflation
B.
deflation
C.
recession
D.
economic stagnation
Ans:
inflation
Explanation :
Deficit financing is a practice in which a government spends more money than it receives as revenue, the difference being made up by borrowing or minting new funds. Some economists are of the view that it leads to inflation as governments pay off debts by printing fiat money, increasing the money supply and the purchasing power of the people which increases the aggregate demand.
[14] VAT is imposed:
A.
Directly on Consumer
B.
On first stage of production
C.
On final stage of production
D.
On all stages between production and sale
Ans:
On all stages between production and sale
Explanation :
Value Added Tax (VAT) is imposed on the value added to each commodity by a firm during all stages of production and distribution. In simple terms, it is a fee assessed against businesses at each step of the production and distribution process, usually whenever a product is resold or value is added to it. Value- added taxation in India was introduced as an indirect value added tax (VAT) into the Indian taxation system from 1 April 2005.
[15] The aim of Differentiated Interest Scheme was to provide concessional loans to -
A.
weaker section of the society
B.
Public Sector Industries
C.
Public Limited Companies
D.
big exports
Ans:
weaker section of the society
Explanation :
The Differential Rate of Interest Scheme, formulated in March 1972, offers financial assistance at concessional rate of interest. 0 4% to those who intend taking up any productive activity and has been tailored for persons whose income is very low.
[16] Investment and savings are kept equal through a change in the level of -
A.
Consumption
B.
Investment
C.
Government expenditure
D.
Income
Ans:
Consumption
Explanation :
Desired savings are kept equal to desired investment by responses to interest rate changes. Savings identity or the savings investment identity is a concept in National Income Accounting stating that the amount saved (S) in an economy will be amount invested (I). This identity only holds true because investment here is defined as including inventories. Thus, should consumers decide to save more, and spend less, the fall in demand would lead to an increase in business inventories. The change in inventories brings savings and investment into balance without any intention by business to increase investment.
[17] Which of the following is not required while computing Gross National Product (GNP)?
A.
Net foreign investment
B.
Private investment
C.
Per capita income of citizens
D.
Purchase of goods by government
Ans:
Per capita income of citizens
Explanation :
Gross National Product (GNP) is the market value of all products and services produced in one year by labour and property supplied by the residents of a country. Basically, GNP is the total value of all final goods and services produced within a nation in a particular year, plus income earned by its citizens (including income of those located abroad), minus income of non-residents located in that country. GNP measures the value of goods and services that the country's citizens produced regardless of their location.
[18] In a highly developed country the relative contribution of agriculture to GDP is -
A.
relatively high
B.
relatively low
C.
the same as that of other sectors
D.
zero
Ans:
relatively low
Explanation :
In developed countries, the labor productivity of any commercial agriculture is high, so only a very small percentage of the population is involved with agriculture even when agriculture is a major industry and export. These countries focus more on manufacturing and service industry. Agriculture or the primary sectors of the economy have sizeable contributions in the GDP of developing nations.
[19] The demand for money, according to Keynes, is for -
A.
speculative motive
B.
transaction motive
C.
precautionary motive
D.
All the above motives
Ans:
precautionary motive
Explanation :
According to Keynes, money is demanded because of three motives -transaction, precautionary and speculative. The first two motives provide yield of convenience and certainty. The third motive provides money yield. Keynes has termed demand for money as liquidity preference.
[20] Economic progress of a country is determined by -
A.
Increase in per capita income of people of country
B.
Increase in the price of produced capital goods during the year
C.
Increased numbers of Trade Unions
D.
Fall in the general price level of a country
Ans:
Increase in per capita income of people of country
Explanation :
Economic progress of a country is determined by increase in per capita income of people of that country.
[21] What is "book-building"?
A.
Preparing the income and expenditure ledgers of a company (book-keeping)
B.
Manipulating the profit and loss statements of a company
C.
A process of inviting subscriptions to a public offer of securities, essentially through a tendering process
D.
Publishers' activity
Ans:
A process of inviting subscriptions to a public offer of securities, essentially through a tendering process
Explanation :
Book building refers to the process of generating, capturing, and recording investor demand for shares during an IPO (or other securities during their issuance process) in order to support efficient price discovery. Usually, the issuer appoints a major investment bank to act as a major securities underwriter or bookrunner. The "book" is the off-market collation of investor demand by the bookrunner and is confidential to the bookrunner, issuer, and underwriter. Book-building is a process of price discovery used in public offers. The issuer sets a base price and a band within which the investor is allowed to bid for shares.
[22] A hammer in the hands of a house-wife is a good.
A.
consumer
B.
capital
C.
free
D.
intermediary
Ans:
intermediary
Explanation :
Good is any tangible item, whether produced or found naturally and which is available for exchange. Free good is a good that is so abundant is supply that it has no opportunity cost, for example, air. Intermediary good is a firm's product that is used as an input into the production process of either the same firm or another.
[23] Surplus budget is recommended during :
A.
Boom
B.
Depression
C.
Famines
D.
War
Ans:
Depression
Explanation :
Surplus budget is a budget in which government receipts arc greater than government expenditures. Such a budget is desired when the economy is battling inflation due to excess aggregate demand (AD). Surplus budget plugs the inflationary gap by lowering the level of aggregate demand. AD is lowe red on account of (i) rise in revenue collection by the government and (ii) fall in government expenditure.
[24] Economic profit or normal profit is the same as -
A.
optimum profit
B.
accounting profile
C.
maximum profit
D.
net profit
Ans:
net profit
Explanation :
Normal profit or economic profit is an economic condition occurring when the difference between a firm's total revenue and total cost is equal to zero. Simply put, normal profit is the minimum level of profit needed for a company to remain competitive in the market. In a sense, normal profit is the same as net profit which is calculated by subtracting a company's total expenses from total revenue, thus showing what the company has earned (or lost) in a given period of time. Accounting profit occurs when revenues are greater than costs, and not equal, as in the case of normal profit.
[25] Which of the following is not a feat tare of a capitalist economy?
A.
Right to private property
B.
Existence of competition
C.
Service motive
D.
Freedom of choice to consumers
Ans:
Service motive
Explanation :
Capitalism is an economic system in which each individual in his capacity as a consumer, producer, and resource owner is engaged in economic activity with a large measure of economic freedom. The inspiring force in this system is self-interest and maximization of profit. The decisions of businessmen, farmers, producers, including that of wage-earners are based on the profit motive.
Explanation :
An excise or excise tax (sometimes called an excise duty) is a type of tax charged on goods produced within the country (as opposed to customs duties, charged on goods from outside the country). It is charged on many goods like cars. writing paper, printing paper and packing paper, drugs and pharmaceuticals, alcoholic liquor, water filtration and purification devices, pan masala, etc.
[4] Theoretically trade between two countries lakes place on account of -
A.
differences In costs
B.
scarcity of goods
C.
comparative differences in costs
D.
need for exports
Ans:
comparative differences in costs
Explanation :
Trade exists for man clue to specialization and division of labor, most people concentrate on a small aspect of production, trading for other products. Trade exists between regions because different regions have a comparative advantage in the production of some tradable commodity, or because different regions' size allows for the benefits of mass production thus providing cost advantage of producing the same commodity.
[5] Short term loans to correct Balance of Payments problems is given by -
A.
I.M.F.
B.
I.B.R.D
C.
I.D.A
D.
A.D.B
Ans:
I.M.F.
Explanation :
Upon Initial IMF formation, its two primary functions were: to oversee the fixed exchange rate arrangements between countries, thus helping national governments manage their exchange rates and allowing these governments to prioritize economic growth, and to provide short-term capital to aid balance-of-payments.
[6] The outcome of 'devaluation of currency' is -
A.
increased export and improvement in balance of payment
B.
increased export and foreign reserve deficiency
C.
increased import and improvement in balance of payment
D.
increased export and import
Ans:
increased export and improvement in balance of payment
Explanation :
Devaluation is a reduction in the exchange value of a country's monetary unit in terms of gold, silver, or foreign currency. By decreasing the price of the home country's exports abroad and increasing the price of imports in the home country, devaluation encourages the home country's export sales and discourages expenditures on imports, thus improving its balance of payments.
[7] 'Gresham's Law' in Economics relates to -
A.
supply and demand
B.
circulation of currency
C.
consumption of supply
D.
distribution of goods and services
Ans:
circulation of currency
Explanation :
Gresham's law is an economic principle that states: "When a government compulsorily overvalues one type of money and undervalues another, the undervalued money will leave the country or disappear, from circulation into hoards, while the over-valued money will flood into circulation." It is commonly stated as: "Bad money drives out good."
[8] Which one of the following is an example of optional money?
A.
Currency note
B.
Coins
C.
Cheque
D.
Bond
Ans:
Cheque
Explanation :
On the basis of acceptability, money has been classified into legal tender and optional money. Legal tender money is enforced by law. Optional money is that money which may or may not be accepted as a means of payment; it has no legal sanction. Different credit instruments, like, cheques, bank drafts, etc., are the examples of optional money.
[9] 'Money' is an example of -
A.
Sunk capital
B.
Floating capital
C.
Concrete capital
D.
Social capital
Ans:
Floating capital
Explanation :
Money is something which is widely accepted in payment for goods and services and in setting debts. Money is an example of Floating Capital.
[10] The existence of a Parallel Economy or Black Money -
A.
makes the economy more competitive
B.
makes the monetary policies less effective
C.
ensures a better distribution of income and wealth
D.
ensures increasing productive investment
Ans:
makes the monetary policies less effective
Explanation :
In India, Black money refers to funds earned on the black market, on which income and other taxes has not been paid. Black money leads to black liquidity which is immune to any monetary-fiscal policy. It can move around in the economy creating excess demand in several vulnerable sectors of the economy. Of particular relevance in this context is a policy dominated by sector-wise credit rationing in order to maintain inter-sectoral balances. The cost of credit is one one part of such a policy. So, in nutshell, the existence of parallel economy erodes the effectiveness of monetary policies.
[11] An economy is in equilibrium when -
A.
planned consumption exceeds planned saving
B.
planned consumption exceeds planned investment
C.
intended investment equals intended investment
D.
intended investment exceeds intended savings
Ans:
intended investment equals intended investment
Explanation :
In economics, economic equilibrium is a state of the world where economic forces are balanced and in the absence of external influences the (equilibrium) values of economic variables will not change. The condition of equilibrium of income is the equality of intended saving and intended investment. An economy is in equilibrium when total savings equal total investment.
[12] The 'Canons of Taxation' were propounded by -
A.
Edwin Canon
B.
Adam Smith
C.
J.M. Keynes
D.
Dalton
Ans:
Adam Smith
Explanation :
Canons of Taxation were first originally laid down by economist Adam Smith in his famous book 'The Wealth of Nations". In this book, Adam smith only gave four canons of taxation: (i) canon of equity: (ii) canon of certainty: (iii) canon of convenience; and (iv) canon of economy.
[13] Beyond a certain point deficit financing will certainly lead to -
A.
inflation
B.
deflation
C.
recession
D.
economic stagnation
Ans:
inflation
Explanation :
Deficit financing is a practice in which a government spends more money than it receives as revenue, the difference being made up by borrowing or minting new funds. Some economists are of the view that it leads to inflation as governments pay off debts by printing fiat money, increasing the money supply and the purchasing power of the people which increases the aggregate demand.
[14] VAT is imposed:
A.
Directly on Consumer
B.
On first stage of production
C.
On final stage of production
D.
On all stages between production and sale
Ans:
On all stages between production and sale
Explanation :
Value Added Tax (VAT) is imposed on the value added to each commodity by a firm during all stages of production and distribution. In simple terms, it is a fee assessed against businesses at each step of the production and distribution process, usually whenever a product is resold or value is added to it. Value- added taxation in India was introduced as an indirect value added tax (VAT) into the Indian taxation system from 1 April 2005.
[15] The aim of Differentiated Interest Scheme was to provide concessional loans to -
A.
weaker section of the society
B.
Public Sector Industries
C.
Public Limited Companies
D.
big exports
Ans:
weaker section of the society
Explanation :
The Differential Rate of Interest Scheme, formulated in March 1972, offers financial assistance at concessional rate of interest. 0 4% to those who intend taking up any productive activity and has been tailored for persons whose income is very low.
[16] Investment and savings are kept equal through a change in the level of -
A.
Consumption
B.
Investment
C.
Government expenditure
D.
Income
Ans:
Consumption
Explanation :
Desired savings are kept equal to desired investment by responses to interest rate changes. Savings identity or the savings investment identity is a concept in National Income Accounting stating that the amount saved (S) in an economy will be amount invested (I). This identity only holds true because investment here is defined as including inventories. Thus, should consumers decide to save more, and spend less, the fall in demand would lead to an increase in business inventories. The change in inventories brings savings and investment into balance without any intention by business to increase investment.
[17] Which of the following is not required while computing Gross National Product (GNP)?
A.
Net foreign investment
B.
Private investment
C.
Per capita income of citizens
D.
Purchase of goods by government
Ans:
Per capita income of citizens
Explanation :
Gross National Product (GNP) is the market value of all products and services produced in one year by labour and property supplied by the residents of a country. Basically, GNP is the total value of all final goods and services produced within a nation in a particular year, plus income earned by its citizens (including income of those located abroad), minus income of non-residents located in that country. GNP measures the value of goods and services that the country's citizens produced regardless of their location.
[18] In a highly developed country the relative contribution of agriculture to GDP is -
A.
relatively high
B.
relatively low
C.
the same as that of other sectors
D.
zero
Ans:
relatively low
Explanation :
In developed countries, the labor productivity of any commercial agriculture is high, so only a very small percentage of the population is involved with agriculture even when agriculture is a major industry and export. These countries focus more on manufacturing and service industry. Agriculture or the primary sectors of the economy have sizeable contributions in the GDP of developing nations.
[19] The demand for money, according to Keynes, is for -
A.
speculative motive
B.
transaction motive
C.
precautionary motive
D.
All the above motives
Ans:
precautionary motive
Explanation :
According to Keynes, money is demanded because of three motives -transaction, precautionary and speculative. The first two motives provide yield of convenience and certainty. The third motive provides money yield. Keynes has termed demand for money as liquidity preference.
[20] Economic progress of a country is determined by -
A.
Increase in per capita income of people of country
B.
Increase in the price of produced capital goods during the year
C.
Increased numbers of Trade Unions
D.
Fall in the general price level of a country
Ans:
Increase in per capita income of people of country
Explanation :
Economic progress of a country is determined by increase in per capita income of people of that country.
[21] What is "book-building"?
A.
Preparing the income and expenditure ledgers of a company (book-keeping)
B.
Manipulating the profit and loss statements of a company
C.
A process of inviting subscriptions to a public offer of securities, essentially through a tendering process
D.
Publishers' activity
Ans:
A process of inviting subscriptions to a public offer of securities, essentially through a tendering process
Explanation :
Book building refers to the process of generating, capturing, and recording investor demand for shares during an IPO (or other securities during their issuance process) in order to support efficient price discovery. Usually, the issuer appoints a major investment bank to act as a major securities underwriter or bookrunner. The "book" is the off-market collation of investor demand by the bookrunner and is confidential to the bookrunner, issuer, and underwriter. Book-building is a process of price discovery used in public offers. The issuer sets a base price and a band within which the investor is allowed to bid for shares.
[22] A hammer in the hands of a house-wife is a good.
A.
consumer
B.
capital
C.
free
D.
intermediary
Ans:
intermediary
Explanation :
Good is any tangible item, whether produced or found naturally and which is available for exchange. Free good is a good that is so abundant is supply that it has no opportunity cost, for example, air. Intermediary good is a firm's product that is used as an input into the production process of either the same firm or another.
[23] Surplus budget is recommended during :
A.
Boom
B.
Depression
C.
Famines
D.
War
Ans:
Depression
Explanation :
Surplus budget is a budget in which government receipts arc greater than government expenditures. Such a budget is desired when the economy is battling inflation due to excess aggregate demand (AD). Surplus budget plugs the inflationary gap by lowering the level of aggregate demand. AD is lowe red on account of (i) rise in revenue collection by the government and (ii) fall in government expenditure.
[24] Economic profit or normal profit is the same as -
A.
optimum profit
B.
accounting profile
C.
maximum profit
D.
net profit
Ans:
net profit
Explanation :
Normal profit or economic profit is an economic condition occurring when the difference between a firm's total revenue and total cost is equal to zero. Simply put, normal profit is the minimum level of profit needed for a company to remain competitive in the market. In a sense, normal profit is the same as net profit which is calculated by subtracting a company's total expenses from total revenue, thus showing what the company has earned (or lost) in a given period of time. Accounting profit occurs when revenues are greater than costs, and not equal, as in the case of normal profit.
[25] Which of the following is not a feat tare of a capitalist economy?
A.
Right to private property
B.
Existence of competition
C.
Service motive
D.
Freedom of choice to consumers
Ans:
Service motive
Explanation :
Capitalism is an economic system in which each individual in his capacity as a consumer, producer, and resource owner is engaged in economic activity with a large measure of economic freedom. The inspiring force in this system is self-interest and maximization of profit. The decisions of businessmen, farmers, producers, including that of wage-earners are based on the profit motive.
Explanation :
Upon Initial IMF formation, its two primary functions were: to oversee the fixed exchange rate arrangements between countries, thus helping national governments manage their exchange rates and allowing these governments to prioritize economic growth, and to provide short-term capital to aid balance-of-payments.
[6] The outcome of 'devaluation of currency' is -
A.
increased export and improvement in balance of payment
B.
increased export and foreign reserve deficiency
C.
increased import and improvement in balance of payment
D.
increased export and import
Ans:
increased export and improvement in balance of payment
Explanation :
Devaluation is a reduction in the exchange value of a country's monetary unit in terms of gold, silver, or foreign currency. By decreasing the price of the home country's exports abroad and increasing the price of imports in the home country, devaluation encourages the home country's export sales and discourages expenditures on imports, thus improving its balance of payments.
[7] 'Gresham's Law' in Economics relates to -
A.
supply and demand
B.
circulation of currency
C.
consumption of supply
D.
distribution of goods and services
Ans:
circulation of currency
Explanation :
Gresham's law is an economic principle that states: "When a government compulsorily overvalues one type of money and undervalues another, the undervalued money will leave the country or disappear, from circulation into hoards, while the over-valued money will flood into circulation." It is commonly stated as: "Bad money drives out good."
[8] Which one of the following is an example of optional money?
A.
Currency note
B.
Coins
C.
Cheque
D.
Bond
Ans:
Cheque
Explanation :
On the basis of acceptability, money has been classified into legal tender and optional money. Legal tender money is enforced by law. Optional money is that money which may or may not be accepted as a means of payment; it has no legal sanction. Different credit instruments, like, cheques, bank drafts, etc., are the examples of optional money.
[9] 'Money' is an example of -
A.
Sunk capital
B.
Floating capital
C.
Concrete capital
D.
Social capital
Ans:
Floating capital
Explanation :
Money is something which is widely accepted in payment for goods and services and in setting debts. Money is an example of Floating Capital.
[10] The existence of a Parallel Economy or Black Money -
A.
makes the economy more competitive
B.
makes the monetary policies less effective
C.
ensures a better distribution of income and wealth
D.
ensures increasing productive investment
Ans:
makes the monetary policies less effective
Explanation :
In India, Black money refers to funds earned on the black market, on which income and other taxes has not been paid. Black money leads to black liquidity which is immune to any monetary-fiscal policy. It can move around in the economy creating excess demand in several vulnerable sectors of the economy. Of particular relevance in this context is a policy dominated by sector-wise credit rationing in order to maintain inter-sectoral balances. The cost of credit is one one part of such a policy. So, in nutshell, the existence of parallel economy erodes the effectiveness of monetary policies.
[11] An economy is in equilibrium when -
A.
planned consumption exceeds planned saving
B.
planned consumption exceeds planned investment
C.
intended investment equals intended investment
D.
intended investment exceeds intended savings
Ans:
intended investment equals intended investment
Explanation :
In economics, economic equilibrium is a state of the world where economic forces are balanced and in the absence of external influences the (equilibrium) values of economic variables will not change. The condition of equilibrium of income is the equality of intended saving and intended investment. An economy is in equilibrium when total savings equal total investment.
[12] The 'Canons of Taxation' were propounded by -
A.
Edwin Canon
B.
Adam Smith
C.
J.M. Keynes
D.
Dalton
Ans:
Adam Smith
Explanation :
Canons of Taxation were first originally laid down by economist Adam Smith in his famous book 'The Wealth of Nations". In this book, Adam smith only gave four canons of taxation: (i) canon of equity: (ii) canon of certainty: (iii) canon of convenience; and (iv) canon of economy.
[13] Beyond a certain point deficit financing will certainly lead to -
A.
inflation
B.
deflation
C.
recession
D.
economic stagnation
Ans:
inflation
Explanation :
Deficit financing is a practice in which a government spends more money than it receives as revenue, the difference being made up by borrowing or minting new funds. Some economists are of the view that it leads to inflation as governments pay off debts by printing fiat money, increasing the money supply and the purchasing power of the people which increases the aggregate demand.
[14] VAT is imposed:
A.
Directly on Consumer
B.
On first stage of production
C.
On final stage of production
D.
On all stages between production and sale
Ans:
On all stages between production and sale
Explanation :
Value Added Tax (VAT) is imposed on the value added to each commodity by a firm during all stages of production and distribution. In simple terms, it is a fee assessed against businesses at each step of the production and distribution process, usually whenever a product is resold or value is added to it. Value- added taxation in India was introduced as an indirect value added tax (VAT) into the Indian taxation system from 1 April 2005.
[15] The aim of Differentiated Interest Scheme was to provide concessional loans to -
A.
weaker section of the society
B.
Public Sector Industries
C.
Public Limited Companies
D.
big exports
Ans:
weaker section of the society
Explanation :
The Differential Rate of Interest Scheme, formulated in March 1972, offers financial assistance at concessional rate of interest. 0 4% to those who intend taking up any productive activity and has been tailored for persons whose income is very low.
[16] Investment and savings are kept equal through a change in the level of -
A.
Consumption
B.
Investment
C.
Government expenditure
D.
Income
Ans:
Consumption
Explanation :
Desired savings are kept equal to desired investment by responses to interest rate changes. Savings identity or the savings investment identity is a concept in National Income Accounting stating that the amount saved (S) in an economy will be amount invested (I). This identity only holds true because investment here is defined as including inventories. Thus, should consumers decide to save more, and spend less, the fall in demand would lead to an increase in business inventories. The change in inventories brings savings and investment into balance without any intention by business to increase investment.
[17] Which of the following is not required while computing Gross National Product (GNP)?
A.
Net foreign investment
B.
Private investment
C.
Per capita income of citizens
D.
Purchase of goods by government
Ans:
Per capita income of citizens
Explanation :
Gross National Product (GNP) is the market value of all products and services produced in one year by labour and property supplied by the residents of a country. Basically, GNP is the total value of all final goods and services produced within a nation in a particular year, plus income earned by its citizens (including income of those located abroad), minus income of non-residents located in that country. GNP measures the value of goods and services that the country's citizens produced regardless of their location.
[18] In a highly developed country the relative contribution of agriculture to GDP is -
A.
relatively high
B.
relatively low
C.
the same as that of other sectors
D.
zero
Ans:
relatively low
Explanation :
In developed countries, the labor productivity of any commercial agriculture is high, so only a very small percentage of the population is involved with agriculture even when agriculture is a major industry and export. These countries focus more on manufacturing and service industry. Agriculture or the primary sectors of the economy have sizeable contributions in the GDP of developing nations.
[19] The demand for money, according to Keynes, is for -
A.
speculative motive
B.
transaction motive
C.
precautionary motive
D.
All the above motives
Ans:
precautionary motive
Explanation :
According to Keynes, money is demanded because of three motives -transaction, precautionary and speculative. The first two motives provide yield of convenience and certainty. The third motive provides money yield. Keynes has termed demand for money as liquidity preference.
[20] Economic progress of a country is determined by -
A.
Increase in per capita income of people of country
B.
Increase in the price of produced capital goods during the year
C.
Increased numbers of Trade Unions
D.
Fall in the general price level of a country
Ans:
Increase in per capita income of people of country
Explanation :
Economic progress of a country is determined by increase in per capita income of people of that country.
[21] What is "book-building"?
A.
Preparing the income and expenditure ledgers of a company (book-keeping)
B.
Manipulating the profit and loss statements of a company
C.
A process of inviting subscriptions to a public offer of securities, essentially through a tendering process
D.
Publishers' activity
Ans:
A process of inviting subscriptions to a public offer of securities, essentially through a tendering process
Explanation :
Book building refers to the process of generating, capturing, and recording investor demand for shares during an IPO (or other securities during their issuance process) in order to support efficient price discovery. Usually, the issuer appoints a major investment bank to act as a major securities underwriter or bookrunner. The "book" is the off-market collation of investor demand by the bookrunner and is confidential to the bookrunner, issuer, and underwriter. Book-building is a process of price discovery used in public offers. The issuer sets a base price and a band within which the investor is allowed to bid for shares.
[22] A hammer in the hands of a house-wife is a good.
A.
consumer
B.
capital
C.
free
D.
intermediary
Ans:
intermediary
Explanation :
Good is any tangible item, whether produced or found naturally and which is available for exchange. Free good is a good that is so abundant is supply that it has no opportunity cost, for example, air. Intermediary good is a firm's product that is used as an input into the production process of either the same firm or another.
[23] Surplus budget is recommended during :
A.
Boom
B.
Depression
C.
Famines
D.
War
Ans:
Depression
Explanation :
Surplus budget is a budget in which government receipts arc greater than government expenditures. Such a budget is desired when the economy is battling inflation due to excess aggregate demand (AD). Surplus budget plugs the inflationary gap by lowering the level of aggregate demand. AD is lowe red on account of (i) rise in revenue collection by the government and (ii) fall in government expenditure.
[24] Economic profit or normal profit is the same as -
A.
optimum profit
B.
accounting profile
C.
maximum profit
D.
net profit
Ans:
net profit
Explanation :
Normal profit or economic profit is an economic condition occurring when the difference between a firm's total revenue and total cost is equal to zero. Simply put, normal profit is the minimum level of profit needed for a company to remain competitive in the market. In a sense, normal profit is the same as net profit which is calculated by subtracting a company's total expenses from total revenue, thus showing what the company has earned (or lost) in a given period of time. Accounting profit occurs when revenues are greater than costs, and not equal, as in the case of normal profit.
[25] Which of the following is not a feat tare of a capitalist economy?
A.
Right to private property
B.
Existence of competition
C.
Service motive
D.
Freedom of choice to consumers
Ans:
Service motive
Explanation :
Capitalism is an economic system in which each individual in his capacity as a consumer, producer, and resource owner is engaged in economic activity with a large measure of economic freedom. The inspiring force in this system is self-interest and maximization of profit. The decisions of businessmen, farmers, producers, including that of wage-earners are based on the profit motive.
Explanation :
Gresham's law is an economic principle that states: "When a government compulsorily overvalues one type of money and undervalues another, the undervalued money will leave the country or disappear, from circulation into hoards, while the over-valued money will flood into circulation." It is commonly stated as: "Bad money drives out good."
[8] Which one of the following is an example of optional money?
A.
Currency note
B.
Coins
C.
Cheque
D.
Bond
Ans:
Cheque
Explanation :
On the basis of acceptability, money has been classified into legal tender and optional money. Legal tender money is enforced by law. Optional money is that money which may or may not be accepted as a means of payment; it has no legal sanction. Different credit instruments, like, cheques, bank drafts, etc., are the examples of optional money.
[9] 'Money' is an example of -
A.
Sunk capital
B.
Floating capital
C.
Concrete capital
D.
Social capital
Ans:
Floating capital
Explanation :
Money is something which is widely accepted in payment for goods and services and in setting debts. Money is an example of Floating Capital.
[10] The existence of a Parallel Economy or Black Money -
A.
makes the economy more competitive
B.
makes the monetary policies less effective
C.
ensures a better distribution of income and wealth
D.
ensures increasing productive investment
Ans:
makes the monetary policies less effective
Explanation :
In India, Black money refers to funds earned on the black market, on which income and other taxes has not been paid. Black money leads to black liquidity which is immune to any monetary-fiscal policy. It can move around in the economy creating excess demand in several vulnerable sectors of the economy. Of particular relevance in this context is a policy dominated by sector-wise credit rationing in order to maintain inter-sectoral balances. The cost of credit is one one part of such a policy. So, in nutshell, the existence of parallel economy erodes the effectiveness of monetary policies.
[11] An economy is in equilibrium when -
A.
planned consumption exceeds planned saving
B.
planned consumption exceeds planned investment
C.
intended investment equals intended investment
D.
intended investment exceeds intended savings
Ans:
intended investment equals intended investment
Explanation :
In economics, economic equilibrium is a state of the world where economic forces are balanced and in the absence of external influences the (equilibrium) values of economic variables will not change. The condition of equilibrium of income is the equality of intended saving and intended investment. An economy is in equilibrium when total savings equal total investment.
[12] The 'Canons of Taxation' were propounded by -
A.
Edwin Canon
B.
Adam Smith
C.
J.M. Keynes
D.
Dalton
Ans:
Adam Smith
Explanation :
Canons of Taxation were first originally laid down by economist Adam Smith in his famous book 'The Wealth of Nations". In this book, Adam smith only gave four canons of taxation: (i) canon of equity: (ii) canon of certainty: (iii) canon of convenience; and (iv) canon of economy.
[13] Beyond a certain point deficit financing will certainly lead to -
A.
inflation
B.
deflation
C.
recession
D.
economic stagnation
Ans:
inflation
Explanation :
Deficit financing is a practice in which a government spends more money than it receives as revenue, the difference being made up by borrowing or minting new funds. Some economists are of the view that it leads to inflation as governments pay off debts by printing fiat money, increasing the money supply and the purchasing power of the people which increases the aggregate demand.
[14] VAT is imposed:
A.
Directly on Consumer
B.
On first stage of production
C.
On final stage of production
D.
On all stages between production and sale
Ans:
On all stages between production and sale
Explanation :
Value Added Tax (VAT) is imposed on the value added to each commodity by a firm during all stages of production and distribution. In simple terms, it is a fee assessed against businesses at each step of the production and distribution process, usually whenever a product is resold or value is added to it. Value- added taxation in India was introduced as an indirect value added tax (VAT) into the Indian taxation system from 1 April 2005.
[15] The aim of Differentiated Interest Scheme was to provide concessional loans to -
A.
weaker section of the society
B.
Public Sector Industries
C.
Public Limited Companies
D.
big exports
Ans:
weaker section of the society
Explanation :
The Differential Rate of Interest Scheme, formulated in March 1972, offers financial assistance at concessional rate of interest. 0 4% to those who intend taking up any productive activity and has been tailored for persons whose income is very low.
[16] Investment and savings are kept equal through a change in the level of -
A.
Consumption
B.
Investment
C.
Government expenditure
D.
Income
Ans:
Consumption
Explanation :
Desired savings are kept equal to desired investment by responses to interest rate changes. Savings identity or the savings investment identity is a concept in National Income Accounting stating that the amount saved (S) in an economy will be amount invested (I). This identity only holds true because investment here is defined as including inventories. Thus, should consumers decide to save more, and spend less, the fall in demand would lead to an increase in business inventories. The change in inventories brings savings and investment into balance without any intention by business to increase investment.
[17] Which of the following is not required while computing Gross National Product (GNP)?
A.
Net foreign investment
B.
Private investment
C.
Per capita income of citizens
D.
Purchase of goods by government
Ans:
Per capita income of citizens
Explanation :
Gross National Product (GNP) is the market value of all products and services produced in one year by labour and property supplied by the residents of a country. Basically, GNP is the total value of all final goods and services produced within a nation in a particular year, plus income earned by its citizens (including income of those located abroad), minus income of non-residents located in that country. GNP measures the value of goods and services that the country's citizens produced regardless of their location.
[18] In a highly developed country the relative contribution of agriculture to GDP is -
A.
relatively high
B.
relatively low
C.
the same as that of other sectors
D.
zero
Ans:
relatively low
Explanation :
In developed countries, the labor productivity of any commercial agriculture is high, so only a very small percentage of the population is involved with agriculture even when agriculture is a major industry and export. These countries focus more on manufacturing and service industry. Agriculture or the primary sectors of the economy have sizeable contributions in the GDP of developing nations.
[19] The demand for money, according to Keynes, is for -
A.
speculative motive
B.
transaction motive
C.
precautionary motive
D.
All the above motives
Ans:
precautionary motive
Explanation :
According to Keynes, money is demanded because of three motives -transaction, precautionary and speculative. The first two motives provide yield of convenience and certainty. The third motive provides money yield. Keynes has termed demand for money as liquidity preference.
[20] Economic progress of a country is determined by -
A.
Increase in per capita income of people of country
B.
Increase in the price of produced capital goods during the year
C.
Increased numbers of Trade Unions
D.
Fall in the general price level of a country
Ans:
Increase in per capita income of people of country
Explanation :
Economic progress of a country is determined by increase in per capita income of people of that country.
[21] What is "book-building"?
A.
Preparing the income and expenditure ledgers of a company (book-keeping)
B.
Manipulating the profit and loss statements of a company
C.
A process of inviting subscriptions to a public offer of securities, essentially through a tendering process
D.
Publishers' activity
Ans:
A process of inviting subscriptions to a public offer of securities, essentially through a tendering process
Explanation :
Book building refers to the process of generating, capturing, and recording investor demand for shares during an IPO (or other securities during their issuance process) in order to support efficient price discovery. Usually, the issuer appoints a major investment bank to act as a major securities underwriter or bookrunner. The "book" is the off-market collation of investor demand by the bookrunner and is confidential to the bookrunner, issuer, and underwriter. Book-building is a process of price discovery used in public offers. The issuer sets a base price and a band within which the investor is allowed to bid for shares.
[22] A hammer in the hands of a house-wife is a good.
A.
consumer
B.
capital
C.
free
D.
intermediary
Ans:
intermediary
Explanation :
Good is any tangible item, whether produced or found naturally and which is available for exchange. Free good is a good that is so abundant is supply that it has no opportunity cost, for example, air. Intermediary good is a firm's product that is used as an input into the production process of either the same firm or another.
[23] Surplus budget is recommended during :
A.
Boom
B.
Depression
C.
Famines
D.
War
Ans:
Depression
Explanation :
Surplus budget is a budget in which government receipts arc greater than government expenditures. Such a budget is desired when the economy is battling inflation due to excess aggregate demand (AD). Surplus budget plugs the inflationary gap by lowering the level of aggregate demand. AD is lowe red on account of (i) rise in revenue collection by the government and (ii) fall in government expenditure.
[24] Economic profit or normal profit is the same as -
A.
optimum profit
B.
accounting profile
C.
maximum profit
D.
net profit
Ans:
net profit
Explanation :
Normal profit or economic profit is an economic condition occurring when the difference between a firm's total revenue and total cost is equal to zero. Simply put, normal profit is the minimum level of profit needed for a company to remain competitive in the market. In a sense, normal profit is the same as net profit which is calculated by subtracting a company's total expenses from total revenue, thus showing what the company has earned (or lost) in a given period of time. Accounting profit occurs when revenues are greater than costs, and not equal, as in the case of normal profit.
[25] Which of the following is not a feat tare of a capitalist economy?
A.
Right to private property
B.
Existence of competition
C.
Service motive
D.
Freedom of choice to consumers
Ans:
Service motive
Explanation :
Capitalism is an economic system in which each individual in his capacity as a consumer, producer, and resource owner is engaged in economic activity with a large measure of economic freedom. The inspiring force in this system is self-interest and maximization of profit. The decisions of businessmen, farmers, producers, including that of wage-earners are based on the profit motive.
Explanation :
Money is something which is widely accepted in payment for goods and services and in setting debts. Money is an example of Floating Capital.
[10] The existence of a Parallel Economy or Black Money -
A.
makes the economy more competitive
B.
makes the monetary policies less effective
C.
ensures a better distribution of income and wealth
D.
ensures increasing productive investment
Ans:
makes the monetary policies less effective
Explanation :
In India, Black money refers to funds earned on the black market, on which income and other taxes has not been paid. Black money leads to black liquidity which is immune to any monetary-fiscal policy. It can move around in the economy creating excess demand in several vulnerable sectors of the economy. Of particular relevance in this context is a policy dominated by sector-wise credit rationing in order to maintain inter-sectoral balances. The cost of credit is one one part of such a policy. So, in nutshell, the existence of parallel economy erodes the effectiveness of monetary policies.
[11] An economy is in equilibrium when -
A.
planned consumption exceeds planned saving
B.
planned consumption exceeds planned investment
C.
intended investment equals intended investment
D.
intended investment exceeds intended savings
Ans:
intended investment equals intended investment
Explanation :
In economics, economic equilibrium is a state of the world where economic forces are balanced and in the absence of external influences the (equilibrium) values of economic variables will not change. The condition of equilibrium of income is the equality of intended saving and intended investment. An economy is in equilibrium when total savings equal total investment.
[12] The 'Canons of Taxation' were propounded by -
A.
Edwin Canon
B.
Adam Smith
C.
J.M. Keynes
D.
Dalton
Ans:
Adam Smith
Explanation :
Canons of Taxation were first originally laid down by economist Adam Smith in his famous book 'The Wealth of Nations". In this book, Adam smith only gave four canons of taxation: (i) canon of equity: (ii) canon of certainty: (iii) canon of convenience; and (iv) canon of economy.
[13] Beyond a certain point deficit financing will certainly lead to -
A.
inflation
B.
deflation
C.
recession
D.
economic stagnation
Ans:
inflation
Explanation :
Deficit financing is a practice in which a government spends more money than it receives as revenue, the difference being made up by borrowing or minting new funds. Some economists are of the view that it leads to inflation as governments pay off debts by printing fiat money, increasing the money supply and the purchasing power of the people which increases the aggregate demand.
[14] VAT is imposed:
A.
Directly on Consumer
B.
On first stage of production
C.
On final stage of production
D.
On all stages between production and sale
Ans:
On all stages between production and sale
Explanation :
Value Added Tax (VAT) is imposed on the value added to each commodity by a firm during all stages of production and distribution. In simple terms, it is a fee assessed against businesses at each step of the production and distribution process, usually whenever a product is resold or value is added to it. Value- added taxation in India was introduced as an indirect value added tax (VAT) into the Indian taxation system from 1 April 2005.
[15] The aim of Differentiated Interest Scheme was to provide concessional loans to -
A.
weaker section of the society
B.
Public Sector Industries
C.
Public Limited Companies
D.
big exports
Ans:
weaker section of the society
Explanation :
The Differential Rate of Interest Scheme, formulated in March 1972, offers financial assistance at concessional rate of interest. 0 4% to those who intend taking up any productive activity and has been tailored for persons whose income is very low.
[16] Investment and savings are kept equal through a change in the level of -
A.
Consumption
B.
Investment
C.
Government expenditure
D.
Income
Ans:
Consumption
Explanation :
Desired savings are kept equal to desired investment by responses to interest rate changes. Savings identity or the savings investment identity is a concept in National Income Accounting stating that the amount saved (S) in an economy will be amount invested (I). This identity only holds true because investment here is defined as including inventories. Thus, should consumers decide to save more, and spend less, the fall in demand would lead to an increase in business inventories. The change in inventories brings savings and investment into balance without any intention by business to increase investment.
[17] Which of the following is not required while computing Gross National Product (GNP)?
A.
Net foreign investment
B.
Private investment
C.
Per capita income of citizens
D.
Purchase of goods by government
Ans:
Per capita income of citizens
Explanation :
Gross National Product (GNP) is the market value of all products and services produced in one year by labour and property supplied by the residents of a country. Basically, GNP is the total value of all final goods and services produced within a nation in a particular year, plus income earned by its citizens (including income of those located abroad), minus income of non-residents located in that country. GNP measures the value of goods and services that the country's citizens produced regardless of their location.
[18] In a highly developed country the relative contribution of agriculture to GDP is -
A.
relatively high
B.
relatively low
C.
the same as that of other sectors
D.
zero
Ans:
relatively low
Explanation :
In developed countries, the labor productivity of any commercial agriculture is high, so only a very small percentage of the population is involved with agriculture even when agriculture is a major industry and export. These countries focus more on manufacturing and service industry. Agriculture or the primary sectors of the economy have sizeable contributions in the GDP of developing nations.
[19] The demand for money, according to Keynes, is for -
A.
speculative motive
B.
transaction motive
C.
precautionary motive
D.
All the above motives
Ans:
precautionary motive
Explanation :
According to Keynes, money is demanded because of three motives -transaction, precautionary and speculative. The first two motives provide yield of convenience and certainty. The third motive provides money yield. Keynes has termed demand for money as liquidity preference.
[20] Economic progress of a country is determined by -
A.
Increase in per capita income of people of country
B.
Increase in the price of produced capital goods during the year
C.
Increased numbers of Trade Unions
D.
Fall in the general price level of a country
Ans:
Increase in per capita income of people of country
Explanation :
Economic progress of a country is determined by increase in per capita income of people of that country.
[21] What is "book-building"?
A.
Preparing the income and expenditure ledgers of a company (book-keeping)
B.
Manipulating the profit and loss statements of a company
C.
A process of inviting subscriptions to a public offer of securities, essentially through a tendering process
D.
Publishers' activity
Ans:
A process of inviting subscriptions to a public offer of securities, essentially through a tendering process
Explanation :
Book building refers to the process of generating, capturing, and recording investor demand for shares during an IPO (or other securities during their issuance process) in order to support efficient price discovery. Usually, the issuer appoints a major investment bank to act as a major securities underwriter or bookrunner. The "book" is the off-market collation of investor demand by the bookrunner and is confidential to the bookrunner, issuer, and underwriter. Book-building is a process of price discovery used in public offers. The issuer sets a base price and a band within which the investor is allowed to bid for shares.
[22] A hammer in the hands of a house-wife is a good.
A.
consumer
B.
capital
C.
free
D.
intermediary
Ans:
intermediary
Explanation :
Good is any tangible item, whether produced or found naturally and which is available for exchange. Free good is a good that is so abundant is supply that it has no opportunity cost, for example, air. Intermediary good is a firm's product that is used as an input into the production process of either the same firm or another.
[23] Surplus budget is recommended during :
A.
Boom
B.
Depression
C.
Famines
D.
War
Ans:
Depression
Explanation :
Surplus budget is a budget in which government receipts arc greater than government expenditures. Such a budget is desired when the economy is battling inflation due to excess aggregate demand (AD). Surplus budget plugs the inflationary gap by lowering the level of aggregate demand. AD is lowe red on account of (i) rise in revenue collection by the government and (ii) fall in government expenditure.
[24] Economic profit or normal profit is the same as -
A.
optimum profit
B.
accounting profile
C.
maximum profit
D.
net profit
Ans:
net profit
Explanation :
Normal profit or economic profit is an economic condition occurring when the difference between a firm's total revenue and total cost is equal to zero. Simply put, normal profit is the minimum level of profit needed for a company to remain competitive in the market. In a sense, normal profit is the same as net profit which is calculated by subtracting a company's total expenses from total revenue, thus showing what the company has earned (or lost) in a given period of time. Accounting profit occurs when revenues are greater than costs, and not equal, as in the case of normal profit.
[25] Which of the following is not a feat tare of a capitalist economy?
A.
Right to private property
B.
Existence of competition
C.
Service motive
D.
Freedom of choice to consumers
Ans:
Service motive
Explanation :
Capitalism is an economic system in which each individual in his capacity as a consumer, producer, and resource owner is engaged in economic activity with a large measure of economic freedom. The inspiring force in this system is self-interest and maximization of profit. The decisions of businessmen, farmers, producers, including that of wage-earners are based on the profit motive.
Explanation :
In economics, economic equilibrium is a state of the world where economic forces are balanced and in the absence of external influences the (equilibrium) values of economic variables will not change. The condition of equilibrium of income is the equality of intended saving and intended investment. An economy is in equilibrium when total savings equal total investment.
[12] The 'Canons of Taxation' were propounded by -
A.
Edwin Canon
B.
Adam Smith
C.
J.M. Keynes
D.
Dalton
Ans:
Adam Smith
Explanation :
Canons of Taxation were first originally laid down by economist Adam Smith in his famous book 'The Wealth of Nations". In this book, Adam smith only gave four canons of taxation: (i) canon of equity: (ii) canon of certainty: (iii) canon of convenience; and (iv) canon of economy.
[13] Beyond a certain point deficit financing will certainly lead to -
A.
inflation
B.
deflation
C.
recession
D.
economic stagnation
Ans:
inflation
Explanation :
Deficit financing is a practice in which a government spends more money than it receives as revenue, the difference being made up by borrowing or minting new funds. Some economists are of the view that it leads to inflation as governments pay off debts by printing fiat money, increasing the money supply and the purchasing power of the people which increases the aggregate demand.
[14] VAT is imposed:
A.
Directly on Consumer
B.
On first stage of production
C.
On final stage of production
D.
On all stages between production and sale
Ans:
On all stages between production and sale
Explanation :
Value Added Tax (VAT) is imposed on the value added to each commodity by a firm during all stages of production and distribution. In simple terms, it is a fee assessed against businesses at each step of the production and distribution process, usually whenever a product is resold or value is added to it. Value- added taxation in India was introduced as an indirect value added tax (VAT) into the Indian taxation system from 1 April 2005.
[15] The aim of Differentiated Interest Scheme was to provide concessional loans to -
A.
weaker section of the society
B.
Public Sector Industries
C.
Public Limited Companies
D.
big exports
Ans:
weaker section of the society
Explanation :
The Differential Rate of Interest Scheme, formulated in March 1972, offers financial assistance at concessional rate of interest. 0 4% to those who intend taking up any productive activity and has been tailored for persons whose income is very low.
[16] Investment and savings are kept equal through a change in the level of -
A.
Consumption
B.
Investment
C.
Government expenditure
D.
Income
Ans:
Consumption
Explanation :
Desired savings are kept equal to desired investment by responses to interest rate changes. Savings identity or the savings investment identity is a concept in National Income Accounting stating that the amount saved (S) in an economy will be amount invested (I). This identity only holds true because investment here is defined as including inventories. Thus, should consumers decide to save more, and spend less, the fall in demand would lead to an increase in business inventories. The change in inventories brings savings and investment into balance without any intention by business to increase investment.
[17] Which of the following is not required while computing Gross National Product (GNP)?
A.
Net foreign investment
B.
Private investment
C.
Per capita income of citizens
D.
Purchase of goods by government
Ans:
Per capita income of citizens
Explanation :
Gross National Product (GNP) is the market value of all products and services produced in one year by labour and property supplied by the residents of a country. Basically, GNP is the total value of all final goods and services produced within a nation in a particular year, plus income earned by its citizens (including income of those located abroad), minus income of non-residents located in that country. GNP measures the value of goods and services that the country's citizens produced regardless of their location.
[18] In a highly developed country the relative contribution of agriculture to GDP is -
A.
relatively high
B.
relatively low
C.
the same as that of other sectors
D.
zero
Ans:
relatively low
Explanation :
In developed countries, the labor productivity of any commercial agriculture is high, so only a very small percentage of the population is involved with agriculture even when agriculture is a major industry and export. These countries focus more on manufacturing and service industry. Agriculture or the primary sectors of the economy have sizeable contributions in the GDP of developing nations.
[19] The demand for money, according to Keynes, is for -
A.
speculative motive
B.
transaction motive
C.
precautionary motive
D.
All the above motives
Ans:
precautionary motive
Explanation :
According to Keynes, money is demanded because of three motives -transaction, precautionary and speculative. The first two motives provide yield of convenience and certainty. The third motive provides money yield. Keynes has termed demand for money as liquidity preference.
[20] Economic progress of a country is determined by -
A.
Increase in per capita income of people of country
B.
Increase in the price of produced capital goods during the year
C.
Increased numbers of Trade Unions
D.
Fall in the general price level of a country
Ans:
Increase in per capita income of people of country
Explanation :
Economic progress of a country is determined by increase in per capita income of people of that country.
[21] What is "book-building"?
A.
Preparing the income and expenditure ledgers of a company (book-keeping)
B.
Manipulating the profit and loss statements of a company
C.
A process of inviting subscriptions to a public offer of securities, essentially through a tendering process
D.
Publishers' activity
Ans:
A process of inviting subscriptions to a public offer of securities, essentially through a tendering process
Explanation :
Book building refers to the process of generating, capturing, and recording investor demand for shares during an IPO (or other securities during their issuance process) in order to support efficient price discovery. Usually, the issuer appoints a major investment bank to act as a major securities underwriter or bookrunner. The "book" is the off-market collation of investor demand by the bookrunner and is confidential to the bookrunner, issuer, and underwriter. Book-building is a process of price discovery used in public offers. The issuer sets a base price and a band within which the investor is allowed to bid for shares.
[22] A hammer in the hands of a house-wife is a good.
A.
consumer
B.
capital
C.
free
D.
intermediary
Ans:
intermediary
Explanation :
Good is any tangible item, whether produced or found naturally and which is available for exchange. Free good is a good that is so abundant is supply that it has no opportunity cost, for example, air. Intermediary good is a firm's product that is used as an input into the production process of either the same firm or another.
[23] Surplus budget is recommended during :
A.
Boom
B.
Depression
C.
Famines
D.
War
Ans:
Depression
Explanation :
Surplus budget is a budget in which government receipts arc greater than government expenditures. Such a budget is desired when the economy is battling inflation due to excess aggregate demand (AD). Surplus budget plugs the inflationary gap by lowering the level of aggregate demand. AD is lowe red on account of (i) rise in revenue collection by the government and (ii) fall in government expenditure.
[24] Economic profit or normal profit is the same as -
A.
optimum profit
B.
accounting profile
C.
maximum profit
D.
net profit
Ans:
net profit
Explanation :
Normal profit or economic profit is an economic condition occurring when the difference between a firm's total revenue and total cost is equal to zero. Simply put, normal profit is the minimum level of profit needed for a company to remain competitive in the market. In a sense, normal profit is the same as net profit which is calculated by subtracting a company's total expenses from total revenue, thus showing what the company has earned (or lost) in a given period of time. Accounting profit occurs when revenues are greater than costs, and not equal, as in the case of normal profit.
[25] Which of the following is not a feat tare of a capitalist economy?
A.
Right to private property
B.
Existence of competition
C.
Service motive
D.
Freedom of choice to consumers
Ans:
Service motive
Explanation :
Capitalism is an economic system in which each individual in his capacity as a consumer, producer, and resource owner is engaged in economic activity with a large measure of economic freedom. The inspiring force in this system is self-interest and maximization of profit. The decisions of businessmen, farmers, producers, including that of wage-earners are based on the profit motive.
Explanation :
Deficit financing is a practice in which a government spends more money than it receives as revenue, the difference being made up by borrowing or minting new funds. Some economists are of the view that it leads to inflation as governments pay off debts by printing fiat money, increasing the money supply and the purchasing power of the people which increases the aggregate demand.
[14] VAT is imposed:
A.
Directly on Consumer
B.
On first stage of production
C.
On final stage of production
D.
On all stages between production and sale
Ans:
On all stages between production and sale
Explanation :
Value Added Tax (VAT) is imposed on the value added to each commodity by a firm during all stages of production and distribution. In simple terms, it is a fee assessed against businesses at each step of the production and distribution process, usually whenever a product is resold or value is added to it. Value- added taxation in India was introduced as an indirect value added tax (VAT) into the Indian taxation system from 1 April 2005.
[15] The aim of Differentiated Interest Scheme was to provide concessional loans to -
A.
weaker section of the society
B.
Public Sector Industries
C.
Public Limited Companies
D.
big exports
Ans:
weaker section of the society
Explanation :
The Differential Rate of Interest Scheme, formulated in March 1972, offers financial assistance at concessional rate of interest. 0 4% to those who intend taking up any productive activity and has been tailored for persons whose income is very low.
[16] Investment and savings are kept equal through a change in the level of -
A.
Consumption
B.
Investment
C.
Government expenditure
D.
Income
Ans:
Consumption
Explanation :
Desired savings are kept equal to desired investment by responses to interest rate changes. Savings identity or the savings investment identity is a concept in National Income Accounting stating that the amount saved (S) in an economy will be amount invested (I). This identity only holds true because investment here is defined as including inventories. Thus, should consumers decide to save more, and spend less, the fall in demand would lead to an increase in business inventories. The change in inventories brings savings and investment into balance without any intention by business to increase investment.
[17] Which of the following is not required while computing Gross National Product (GNP)?
A.
Net foreign investment
B.
Private investment
C.
Per capita income of citizens
D.
Purchase of goods by government
Ans:
Per capita income of citizens
Explanation :
Gross National Product (GNP) is the market value of all products and services produced in one year by labour and property supplied by the residents of a country. Basically, GNP is the total value of all final goods and services produced within a nation in a particular year, plus income earned by its citizens (including income of those located abroad), minus income of non-residents located in that country. GNP measures the value of goods and services that the country's citizens produced regardless of their location.
[18] In a highly developed country the relative contribution of agriculture to GDP is -
A.
relatively high
B.
relatively low
C.
the same as that of other sectors
D.
zero
Ans:
relatively low
Explanation :
In developed countries, the labor productivity of any commercial agriculture is high, so only a very small percentage of the population is involved with agriculture even when agriculture is a major industry and export. These countries focus more on manufacturing and service industry. Agriculture or the primary sectors of the economy have sizeable contributions in the GDP of developing nations.
[19] The demand for money, according to Keynes, is for -
A.
speculative motive
B.
transaction motive
C.
precautionary motive
D.
All the above motives
Ans:
precautionary motive
Explanation :
According to Keynes, money is demanded because of three motives -transaction, precautionary and speculative. The first two motives provide yield of convenience and certainty. The third motive provides money yield. Keynes has termed demand for money as liquidity preference.
[20] Economic progress of a country is determined by -
A.
Increase in per capita income of people of country
B.
Increase in the price of produced capital goods during the year
C.
Increased numbers of Trade Unions
D.
Fall in the general price level of a country
Ans:
Increase in per capita income of people of country
Explanation :
Economic progress of a country is determined by increase in per capita income of people of that country.
[21] What is "book-building"?
A.
Preparing the income and expenditure ledgers of a company (book-keeping)
B.
Manipulating the profit and loss statements of a company
C.
A process of inviting subscriptions to a public offer of securities, essentially through a tendering process
D.
Publishers' activity
Ans:
A process of inviting subscriptions to a public offer of securities, essentially through a tendering process
Explanation :
Book building refers to the process of generating, capturing, and recording investor demand for shares during an IPO (or other securities during their issuance process) in order to support efficient price discovery. Usually, the issuer appoints a major investment bank to act as a major securities underwriter or bookrunner. The "book" is the off-market collation of investor demand by the bookrunner and is confidential to the bookrunner, issuer, and underwriter. Book-building is a process of price discovery used in public offers. The issuer sets a base price and a band within which the investor is allowed to bid for shares.
[22] A hammer in the hands of a house-wife is a good.
A.
consumer
B.
capital
C.
free
D.
intermediary
Ans:
intermediary
Explanation :
Good is any tangible item, whether produced or found naturally and which is available for exchange. Free good is a good that is so abundant is supply that it has no opportunity cost, for example, air. Intermediary good is a firm's product that is used as an input into the production process of either the same firm or another.
[23] Surplus budget is recommended during :
A.
Boom
B.
Depression
C.
Famines
D.
War
Ans:
Depression
Explanation :
Surplus budget is a budget in which government receipts arc greater than government expenditures. Such a budget is desired when the economy is battling inflation due to excess aggregate demand (AD). Surplus budget plugs the inflationary gap by lowering the level of aggregate demand. AD is lowe red on account of (i) rise in revenue collection by the government and (ii) fall in government expenditure.
[24] Economic profit or normal profit is the same as -
A.
optimum profit
B.
accounting profile
C.
maximum profit
D.
net profit
Ans:
net profit
Explanation :
Normal profit or economic profit is an economic condition occurring when the difference between a firm's total revenue and total cost is equal to zero. Simply put, normal profit is the minimum level of profit needed for a company to remain competitive in the market. In a sense, normal profit is the same as net profit which is calculated by subtracting a company's total expenses from total revenue, thus showing what the company has earned (or lost) in a given period of time. Accounting profit occurs when revenues are greater than costs, and not equal, as in the case of normal profit.
[25] Which of the following is not a feat tare of a capitalist economy?
A.
Right to private property
B.
Existence of competition
C.
Service motive
D.
Freedom of choice to consumers
Ans:
Service motive
Explanation :
Capitalism is an economic system in which each individual in his capacity as a consumer, producer, and resource owner is engaged in economic activity with a large measure of economic freedom. The inspiring force in this system is self-interest and maximization of profit. The decisions of businessmen, farmers, producers, including that of wage-earners are based on the profit motive.
Explanation :
The Differential Rate of Interest Scheme, formulated in March 1972, offers financial assistance at concessional rate of interest. 0 4% to those who intend taking up any productive activity and has been tailored for persons whose income is very low.
[16] Investment and savings are kept equal through a change in the level of -
A.
Consumption
B.
Investment
C.
Government expenditure
D.
Income
Ans:
Consumption
Explanation :
Desired savings are kept equal to desired investment by responses to interest rate changes. Savings identity or the savings investment identity is a concept in National Income Accounting stating that the amount saved (S) in an economy will be amount invested (I). This identity only holds true because investment here is defined as including inventories. Thus, should consumers decide to save more, and spend less, the fall in demand would lead to an increase in business inventories. The change in inventories brings savings and investment into balance without any intention by business to increase investment.
[17] Which of the following is not required while computing Gross National Product (GNP)?
A.
Net foreign investment
B.
Private investment
C.
Per capita income of citizens
D.
Purchase of goods by government
Ans:
Per capita income of citizens
Explanation :
Gross National Product (GNP) is the market value of all products and services produced in one year by labour and property supplied by the residents of a country. Basically, GNP is the total value of all final goods and services produced within a nation in a particular year, plus income earned by its citizens (including income of those located abroad), minus income of non-residents located in that country. GNP measures the value of goods and services that the country's citizens produced regardless of their location.
[18] In a highly developed country the relative contribution of agriculture to GDP is -
A.
relatively high
B.
relatively low
C.
the same as that of other sectors
D.
zero
Ans:
relatively low
Explanation :
In developed countries, the labor productivity of any commercial agriculture is high, so only a very small percentage of the population is involved with agriculture even when agriculture is a major industry and export. These countries focus more on manufacturing and service industry. Agriculture or the primary sectors of the economy have sizeable contributions in the GDP of developing nations.
[19] The demand for money, according to Keynes, is for -
A.
speculative motive
B.
transaction motive
C.
precautionary motive
D.
All the above motives
Ans:
precautionary motive
Explanation :
According to Keynes, money is demanded because of three motives -transaction, precautionary and speculative. The first two motives provide yield of convenience and certainty. The third motive provides money yield. Keynes has termed demand for money as liquidity preference.
[20] Economic progress of a country is determined by -
A.
Increase in per capita income of people of country
B.
Increase in the price of produced capital goods during the year
C.
Increased numbers of Trade Unions
D.
Fall in the general price level of a country
Ans:
Increase in per capita income of people of country
Explanation :
Economic progress of a country is determined by increase in per capita income of people of that country.
[21] What is "book-building"?
A.
Preparing the income and expenditure ledgers of a company (book-keeping)
B.
Manipulating the profit and loss statements of a company
C.
A process of inviting subscriptions to a public offer of securities, essentially through a tendering process
D.
Publishers' activity
Ans:
A process of inviting subscriptions to a public offer of securities, essentially through a tendering process
Explanation :
Book building refers to the process of generating, capturing, and recording investor demand for shares during an IPO (or other securities during their issuance process) in order to support efficient price discovery. Usually, the issuer appoints a major investment bank to act as a major securities underwriter or bookrunner. The "book" is the off-market collation of investor demand by the bookrunner and is confidential to the bookrunner, issuer, and underwriter. Book-building is a process of price discovery used in public offers. The issuer sets a base price and a band within which the investor is allowed to bid for shares.
[22] A hammer in the hands of a house-wife is a good.
A.
consumer
B.
capital
C.
free
D.
intermediary
Ans:
intermediary
Explanation :
Good is any tangible item, whether produced or found naturally and which is available for exchange. Free good is a good that is so abundant is supply that it has no opportunity cost, for example, air. Intermediary good is a firm's product that is used as an input into the production process of either the same firm or another.
[23] Surplus budget is recommended during :
A.
Boom
B.
Depression
C.
Famines
D.
War
Ans:
Depression
Explanation :
Surplus budget is a budget in which government receipts arc greater than government expenditures. Such a budget is desired when the economy is battling inflation due to excess aggregate demand (AD). Surplus budget plugs the inflationary gap by lowering the level of aggregate demand. AD is lowe red on account of (i) rise in revenue collection by the government and (ii) fall in government expenditure.
[24] Economic profit or normal profit is the same as -
A.
optimum profit
B.
accounting profile
C.
maximum profit
D.
net profit
Ans:
net profit
Explanation :
Normal profit or economic profit is an economic condition occurring when the difference between a firm's total revenue and total cost is equal to zero. Simply put, normal profit is the minimum level of profit needed for a company to remain competitive in the market. In a sense, normal profit is the same as net profit which is calculated by subtracting a company's total expenses from total revenue, thus showing what the company has earned (or lost) in a given period of time. Accounting profit occurs when revenues are greater than costs, and not equal, as in the case of normal profit.
[25] Which of the following is not a feat tare of a capitalist economy?
A.
Right to private property
B.
Existence of competition
C.
Service motive
D.
Freedom of choice to consumers
Ans:
Service motive
Explanation :
Capitalism is an economic system in which each individual in his capacity as a consumer, producer, and resource owner is engaged in economic activity with a large measure of economic freedom. The inspiring force in this system is self-interest and maximization of profit. The decisions of businessmen, farmers, producers, including that of wage-earners are based on the profit motive.
Explanation :
Gross National Product (GNP) is the market value of all products and services produced in one year by labour and property supplied by the residents of a country. Basically, GNP is the total value of all final goods and services produced within a nation in a particular year, plus income earned by its citizens (including income of those located abroad), minus income of non-residents located in that country. GNP measures the value of goods and services that the country's citizens produced regardless of their location.
[18] In a highly developed country the relative contribution of agriculture to GDP is -
A.
relatively high
B.
relatively low
C.
the same as that of other sectors
D.
zero
Ans:
relatively low
Explanation :
In developed countries, the labor productivity of any commercial agriculture is high, so only a very small percentage of the population is involved with agriculture even when agriculture is a major industry and export. These countries focus more on manufacturing and service industry. Agriculture or the primary sectors of the economy have sizeable contributions in the GDP of developing nations.
[19] The demand for money, according to Keynes, is for -
A.
speculative motive
B.
transaction motive
C.
precautionary motive
D.
All the above motives
Ans:
precautionary motive
Explanation :
According to Keynes, money is demanded because of three motives -transaction, precautionary and speculative. The first two motives provide yield of convenience and certainty. The third motive provides money yield. Keynes has termed demand for money as liquidity preference.
[20] Economic progress of a country is determined by -
A.
Increase in per capita income of people of country
B.
Increase in the price of produced capital goods during the year
C.
Increased numbers of Trade Unions
D.
Fall in the general price level of a country
Ans:
Increase in per capita income of people of country
Explanation :
Economic progress of a country is determined by increase in per capita income of people of that country.
[21] What is "book-building"?
A.
Preparing the income and expenditure ledgers of a company (book-keeping)
B.
Manipulating the profit and loss statements of a company
C.
A process of inviting subscriptions to a public offer of securities, essentially through a tendering process
D.
Publishers' activity
Ans:
A process of inviting subscriptions to a public offer of securities, essentially through a tendering process
Explanation :
Book building refers to the process of generating, capturing, and recording investor demand for shares during an IPO (or other securities during their issuance process) in order to support efficient price discovery. Usually, the issuer appoints a major investment bank to act as a major securities underwriter or bookrunner. The "book" is the off-market collation of investor demand by the bookrunner and is confidential to the bookrunner, issuer, and underwriter. Book-building is a process of price discovery used in public offers. The issuer sets a base price and a band within which the investor is allowed to bid for shares.
[22] A hammer in the hands of a house-wife is a good.
A.
consumer
B.
capital
C.
free
D.
intermediary
Ans:
intermediary
Explanation :
Good is any tangible item, whether produced or found naturally and which is available for exchange. Free good is a good that is so abundant is supply that it has no opportunity cost, for example, air. Intermediary good is a firm's product that is used as an input into the production process of either the same firm or another.
[23] Surplus budget is recommended during :
A.
Boom
B.
Depression
C.
Famines
D.
War
Ans:
Depression
Explanation :
Surplus budget is a budget in which government receipts arc greater than government expenditures. Such a budget is desired when the economy is battling inflation due to excess aggregate demand (AD). Surplus budget plugs the inflationary gap by lowering the level of aggregate demand. AD is lowe red on account of (i) rise in revenue collection by the government and (ii) fall in government expenditure.
[24] Economic profit or normal profit is the same as -
A.
optimum profit
B.
accounting profile
C.
maximum profit
D.
net profit
Ans:
net profit
Explanation :
Normal profit or economic profit is an economic condition occurring when the difference between a firm's total revenue and total cost is equal to zero. Simply put, normal profit is the minimum level of profit needed for a company to remain competitive in the market. In a sense, normal profit is the same as net profit which is calculated by subtracting a company's total expenses from total revenue, thus showing what the company has earned (or lost) in a given period of time. Accounting profit occurs when revenues are greater than costs, and not equal, as in the case of normal profit.
[25] Which of the following is not a feat tare of a capitalist economy?
A.
Right to private property
B.
Existence of competition
C.
Service motive
D.
Freedom of choice to consumers
Ans:
Service motive
Explanation :
Capitalism is an economic system in which each individual in his capacity as a consumer, producer, and resource owner is engaged in economic activity with a large measure of economic freedom. The inspiring force in this system is self-interest and maximization of profit. The decisions of businessmen, farmers, producers, including that of wage-earners are based on the profit motive.
Explanation :
According to Keynes, money is demanded because of three motives -transaction, precautionary and speculative. The first two motives provide yield of convenience and certainty. The third motive provides money yield. Keynes has termed demand for money as liquidity preference.
[20] Economic progress of a country is determined by -
A.
Increase in per capita income of people of country
B.
Increase in the price of produced capital goods during the year
C.
Increased numbers of Trade Unions
D.
Fall in the general price level of a country
Ans:
Increase in per capita income of people of country
Explanation :
Economic progress of a country is determined by increase in per capita income of people of that country.
[21] What is "book-building"?
A.
Preparing the income and expenditure ledgers of a company (book-keeping)
B.
Manipulating the profit and loss statements of a company
C.
A process of inviting subscriptions to a public offer of securities, essentially through a tendering process
D.
Publishers' activity
Ans:
A process of inviting subscriptions to a public offer of securities, essentially through a tendering process
Explanation :
Book building refers to the process of generating, capturing, and recording investor demand for shares during an IPO (or other securities during their issuance process) in order to support efficient price discovery. Usually, the issuer appoints a major investment bank to act as a major securities underwriter or bookrunner. The "book" is the off-market collation of investor demand by the bookrunner and is confidential to the bookrunner, issuer, and underwriter. Book-building is a process of price discovery used in public offers. The issuer sets a base price and a band within which the investor is allowed to bid for shares.
[22] A hammer in the hands of a house-wife is a good.
A.
consumer
B.
capital
C.
free
D.
intermediary
Ans:
intermediary
Explanation :
Good is any tangible item, whether produced or found naturally and which is available for exchange. Free good is a good that is so abundant is supply that it has no opportunity cost, for example, air. Intermediary good is a firm's product that is used as an input into the production process of either the same firm or another.
[23] Surplus budget is recommended during :
A.
Boom
B.
Depression
C.
Famines
D.
War
Ans:
Depression
Explanation :
Surplus budget is a budget in which government receipts arc greater than government expenditures. Such a budget is desired when the economy is battling inflation due to excess aggregate demand (AD). Surplus budget plugs the inflationary gap by lowering the level of aggregate demand. AD is lowe red on account of (i) rise in revenue collection by the government and (ii) fall in government expenditure.
[24] Economic profit or normal profit is the same as -
A.
optimum profit
B.
accounting profile
C.
maximum profit
D.
net profit
Ans:
net profit
Explanation :
Normal profit or economic profit is an economic condition occurring when the difference between a firm's total revenue and total cost is equal to zero. Simply put, normal profit is the minimum level of profit needed for a company to remain competitive in the market. In a sense, normal profit is the same as net profit which is calculated by subtracting a company's total expenses from total revenue, thus showing what the company has earned (or lost) in a given period of time. Accounting profit occurs when revenues are greater than costs, and not equal, as in the case of normal profit.
[25] Which of the following is not a feat tare of a capitalist economy?
A.
Right to private property
B.
Existence of competition
C.
Service motive
D.
Freedom of choice to consumers
Ans:
Service motive
Explanation :
Capitalism is an economic system in which each individual in his capacity as a consumer, producer, and resource owner is engaged in economic activity with a large measure of economic freedom. The inspiring force in this system is self-interest and maximization of profit. The decisions of businessmen, farmers, producers, including that of wage-earners are based on the profit motive.
Explanation :
Book building refers to the process of generating, capturing, and recording investor demand for shares during an IPO (or other securities during their issuance process) in order to support efficient price discovery. Usually, the issuer appoints a major investment bank to act as a major securities underwriter or bookrunner. The "book" is the off-market collation of investor demand by the bookrunner and is confidential to the bookrunner, issuer, and underwriter. Book-building is a process of price discovery used in public offers. The issuer sets a base price and a band within which the investor is allowed to bid for shares.
[22] A hammer in the hands of a house-wife is a good.
A.
consumer
B.
capital
C.
free
D.
intermediary
Ans:
intermediary
Explanation :
Good is any tangible item, whether produced or found naturally and which is available for exchange. Free good is a good that is so abundant is supply that it has no opportunity cost, for example, air. Intermediary good is a firm's product that is used as an input into the production process of either the same firm or another.
[23] Surplus budget is recommended during :
A.
Boom
B.
Depression
C.
Famines
D.
War
Ans:
Depression
Explanation :
Surplus budget is a budget in which government receipts arc greater than government expenditures. Such a budget is desired when the economy is battling inflation due to excess aggregate demand (AD). Surplus budget plugs the inflationary gap by lowering the level of aggregate demand. AD is lowe red on account of (i) rise in revenue collection by the government and (ii) fall in government expenditure.
[24] Economic profit or normal profit is the same as -
A.
optimum profit
B.
accounting profile
C.
maximum profit
D.
net profit
Ans:
net profit
Explanation :
Normal profit or economic profit is an economic condition occurring when the difference between a firm's total revenue and total cost is equal to zero. Simply put, normal profit is the minimum level of profit needed for a company to remain competitive in the market. In a sense, normal profit is the same as net profit which is calculated by subtracting a company's total expenses from total revenue, thus showing what the company has earned (or lost) in a given period of time. Accounting profit occurs when revenues are greater than costs, and not equal, as in the case of normal profit.
[25] Which of the following is not a feat tare of a capitalist economy?
A.
Right to private property
B.
Existence of competition
C.
Service motive
D.
Freedom of choice to consumers
Ans:
Service motive
Explanation :
Capitalism is an economic system in which each individual in his capacity as a consumer, producer, and resource owner is engaged in economic activity with a large measure of economic freedom. The inspiring force in this system is self-interest and maximization of profit. The decisions of businessmen, farmers, producers, including that of wage-earners are based on the profit motive.
Explanation :
Surplus budget is a budget in which government receipts arc greater than government expenditures. Such a budget is desired when the economy is battling inflation due to excess aggregate demand (AD). Surplus budget plugs the inflationary gap by lowering the level of aggregate demand. AD is lowe red on account of (i) rise in revenue collection by the government and (ii) fall in government expenditure.
[24] Economic profit or normal profit is the same as -
A.
optimum profit
B.
accounting profile
C.
maximum profit
D.
net profit
Ans:
net profit
Explanation :
Normal profit or economic profit is an economic condition occurring when the difference between a firm's total revenue and total cost is equal to zero. Simply put, normal profit is the minimum level of profit needed for a company to remain competitive in the market. In a sense, normal profit is the same as net profit which is calculated by subtracting a company's total expenses from total revenue, thus showing what the company has earned (or lost) in a given period of time. Accounting profit occurs when revenues are greater than costs, and not equal, as in the case of normal profit.
[25] Which of the following is not a feat tare of a capitalist economy?
A.
Right to private property
B.
Existence of competition
C.
Service motive
D.
Freedom of choice to consumers
Ans:
Service motive
Explanation :
Capitalism is an economic system in which each individual in his capacity as a consumer, producer, and resource owner is engaged in economic activity with a large measure of economic freedom. The inspiring force in this system is self-interest and maximization of profit. The decisions of businessmen, farmers, producers, including that of wage-earners are based on the profit motive.
Explanation :
Capitalism is an economic system in which each individual in his capacity as a consumer, producer, and resource owner is engaged in economic activity with a large measure of economic freedom. The inspiring force in this system is self-interest and maximization of profit. The decisions of businessmen, farmers, producers, including that of wage-earners are based on the profit motive.