[1] Gresham's law is related to -
A.
Consumption and demand
B.
Supply and demand
C.
Circulation of money
D.
Deficit financing
Ans:
Circulation of money
Explanation :
Gresham's law is an observation in economics that "bad money drives out good." More exactly, if coins containing metal of different value have the same value as legal tender, the coins composed of the cheaper metal will be used for payment, while those made of more expensive metal will be hoarded or exported and thus tend to disappear from circulation. Sir Thomas Gresham, financial agent of Queen Elizabeth I, was not the first to recognize this monetary principle, but his elucidation of it in 1558 prompted the economist H.D. Macleod to suggest the term Gresham's law in the 19th century.
[2] 'PROTECTION' means -
A.
Restrictions imposed on import trade
B.
Protection to home industries
C.
No free exchange of goods and services between two countries
D.
All of the above
Ans:
All of the above
Explanation :
Protectionism is the economic policy of restraining trade between states through methods such as tariffs on imported goods, restrictive quotas, and a variety of other government regulations designed to allow (according to proponents) "fair competition" between imports and goods and services produced domestically. It refers to policies or doctrines which protect businesses and workers within a country by restricting or regulating trade with foreign nations.
[3] Which one of the following does not deal with export promotion?
A.
Trade Development Authority
B.
Mineral and Metal Trading Corporation
C.
Cooperative Marketing Societies
D.
State Trading Corporation of India
Ans:
Cooperative Marketing Societies
Explanation :
Cooperative marketing is just an extension and application of the philosophy of cooperation in the area of agricultural marketing. It is a process of marketing through a cooperative society, formed for the producers, by the producers. It seeks to eliminate the middlemen between the producer and the consumer, thus getting the maximum price for their produce.
[4] Commercialization of agriculture implies -
A.
cultivation of Limbers
B.
plantation
C.
production of crops for sale
D.
production of crops like wheat or rice
Ans:
production of crops for sale
Explanation :
Commercial agriculture is large-scale production of crops for sale, intended for widespread distribution to wholesalers or retail outlets. In commercial farming crops such as wheat, maize, tea, coffee, sugarcane, cashew, rubber, banana, and cotton are harvested and sold into world markets.
[5] Agricultural income tax is a source of revenue to -
A.
Central Government
B.
State Government
C.
Local Administration
D.
Centre and State Governments
Ans:
State Government
Explanation :
The Constitution of India allocates the taxation of agricultural income to states. Land revenue is a major source of revenue for states in India
[6] Agricultural Technology is hard to spread because:
A.
it has to be adopted to local conditions.
B.
rural people are not receptive
C.
farmers are afraid to experiment on land for fear of failure.
D.
all of the above
Ans:
all of the above
Explanation :
There are many benefits of using technology in agriculture system, but there are also negative aspects. Technology transfer is most difficult in agriculture because of the differences in natural conditions, such as weather, geographical features, plant ecology, and irrigation, which overlap social and institutional restrictions. When an agricultural technology is stable as a result of the limitations imposed by the existing national conditions and social system, the limits of production are empirically foreseeable.
[7] Structural unemployment arises due to :
A.
deflationary conditions
B.
heavy industry bias
C.
shortage of raw materials
D.
inadequate productive capacity
Ans:
inadequate productive capacity
Explanation :
Structural unemployment is a form of unemployment resulting from a mismatch between demand in the labour market and the skills and locations of the workers seeking employment. Structural unemployment is a result of the dynamics of the labor market, such as agricultural workers being displaced by mechanized agriculture, unskilled laborers displaced by both mechanization and automation, or industries with declining employment. Many of these displaced workers are “left behind” due to costs of training and moving (e.g., the cost of selling one’s house in a depressed local economy), inefficiencies in the labor markets, such as discrimination or monopoly power, or because they are unsuited for work in growing sectors such as health care or high technology.
[8] The demand of a commodity is a direct demand but the demand of a factor of production is called a -
A.
Crossed demand
B.
Joint demand
C.
Derived demand
D.
Independent demand
Ans:
Derived demand
Explanation :
In the words of McConnell, the demand for factors of production is a derived demand that is derived from the finished goods and services which resources help to produce. While the demand for good is direct demand, demand for factors is derived demand. It is based on the productivity of the factors.
[9] Depreciation is loss in value of .
A.
Final goods
B.
Machinery
C.
Capital stock
D.
Stock of inventory
Ans:
Machinery
Explanation :
The term depreciation represents loss or diminution in the value of an asset consequent upon wear and tear, obsolescence, effluxion of time or permanent fall in market value. Physical deterioration of an asset is caused from movement, strain, friction, erosion etc. For instance, building, machineries, furniture, vehicles, plant etc. The wear and tear is general but primary cause of depreciation.
[10] When income increase, consumption also increases :
A.
in a lower proportion
B.
in a higher proportion
C.
in the same proportion
D.
None of the options
Ans:
in a lower proportion
Explanation :
According to the Keynesian Consumption theory, "men are disposed, as a rule and on average, to increase their consumption as their income increases, but not by as much as the increase in their income." Another feature of consumer behavior is that when income increases, people do not spend their entire incremental income on consumption. They save a part of it for their financial security during the period of =employment, illness, etc. In simple words, the marginal propensity to consume decreases, i.e., house-holds spend a decreasing proportion of marginal income on consumption.
[11] A camera in the hands of a professional photographer is a _ good.
A.
Free
B.
Intermediary
C.
Consumer
D.
Capital
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,
[12] The economist who believed that unemployment is impossible and that market mechanism has a built in regulatory system to meet any ups and downs -
A.
J.M.Keynes
B.
Ohlin
C.
J. B. Say
D.
Galbraith
Ans:
J. B. Say
Explanation :
The classical economists' belief in full employment as a normal condition of a free market economy is based on Say's Law of Markets. It was on the basis of this law that the classical economists thought that general over-production and hence general unemployment were impossible. The law simply states "supply creates its own demand."
[13] Liquidity Preference means -
A.
holding assets in the form of bonds and shares
B.
holding assets in the form of cash
C.
creation of immovable property
D.
assets in the form of jewellery
Ans:
holding assets in the form of cash
Explanation :
Liquidity preference refers to the demand for money, considered as liquidity. The concept was first developed by John Maynard Keynes in his book The General Theory of Employment, Interest and Money (1936). It is the desire to hold money rather than other assets, in Keynesian theory based on motives of transactions, precaution, and speculation.
[14] Aggregate net value of the output in one year is the -
A.
National income at factor cost
B.
Gross Domestic Product at market prices
C.
Net. National Product at market prices
D.
Gross National Product at market prices
Ans:
Net. National Product at market prices
Explanation :
Net national product at market price is the market value of the output of final goods and services produced at current price in one year of a country. If we subtract the depreciation charges from the gross national product, we get net national product at market price, Net national product at market price=Gross national product at market price-Depreciation.
[15] The sum total of incomes received for the services of labour, land or capital in a country is called :
A.
Gross domestic product
B.
National income
C.
Gross domestic income
D.
Gross national income
Ans:
Gross domestic income
Explanation :
The Gross Domestic Income (GDI) is the total in-come received by all sectors of an economy within a nation. It includes the sum of all wages, profits, and taxes, minus subsidies. Since all income is derived from production (including the production of services), the gross domestic income of a count should exactly equal its gross domestic product (GDP).
[16] Which of the following results by dividing national income by size of population?
A.
Per capita income
B.
Subsistence level
C.
Subsistence expenditure-
D.
Per capita production
Ans:
Per capita income
Explanation :
Per capita income or average income or income per person is a measure of mean income within an economic aggregate, such as a country or city. It is calculated by taking a measure of all sources of income in the aggregate (such as GDP or Gross National Income) and dividing it by the total population.
[17] The first computer made available for commercial use was -
A.
MANIAC
B.
ENIAC
C.
UNIVAC
D.
EDSAC
Ans:
UNIVAC
Explanation :
The UNIVAC computer was the first commercially available computer invented by John Presper Eckert and John Mauchly. As well as being the first American commercial computer, the UNIVAC I was the first American computer designed at the outset for business and administrative use (i.e., for the fast execution of large numbers of relatively simple arithmetic and data transport operations, as opposed to the complex numerical calculations required by scientific computers). As such the UNIVAC competed directly against punch-card machines (mainly made by IBM).
[18] Malthusian theory of population explored the relationship between -
A.
food supply and technology
B.
food supply and population growth
C.
population growth and development
D.
optimum growth and resources
Ans:
food supply and population growth
Explanation :
According to Malthusian theory of population, population increases in a geometrical ratio, whereas food supply increases in an arithmetic ratio. This disharmony would lead to widespread poverty and starvation, which would only be checked by natural occurrences such as disease, high infant mortality, famine, war or moral restraint.
[19] In public budgets, zero-base budgeting was first introduced in -
A.
USA
B.
UK
C.
France
D.
Sweden
Ans:
USA
Explanation :
Zero-based budgeting is an approach to planning and decision-making which reverses the working process of traditional budgeting. This technique of budgeting was developed by Peter Phyrr in the United States and was first implemented at Texas Instruments in the 1960s. In 1973, President Jimmy Carter contracted with Phyrr to implement a ZBB system for the State of Georgia executive budget process.
[20] The sale proceeds of Government Bonds come under the budget head of -
A.
Revenue Receipts
B.
Current Expenditure
C.
Capital Outlay
D.
Capital Receipts
Ans:
Capital Receipts
Explanation :
Capital receipts are the funds received into the businesses that are not part of the operating activities of the establishment. Capital receipts primarily include external assistance, market loans, small savings, principal investment in bonds, and Government provident funds. A capital receipt is a receipt which is derived from sale or purchase of capital assets like plant and machinery, furniture, investment (long term) etc., which shall not be occurring all the time.
[21] The incidence of sales tax falls on -
A.
Consumers
B.
Wholesale dealers
C.
Retail dealers
D.
Producers
Ans:
Consumers
Explanation :
In economics, tax incidence is the analysis of the effect of a particular tax on the distribution of economic welfare. Tax incidence is said to "fall" upon the group that ultimately bears the burden of, or ultimately has to pay the tax. The key concept is that the tax incidence or tax burden does not depend on where the revenue is collected, but on the price elasticity of demand and price elasticity of supply.
[22] Government securities are considered liquid because they are -
A.
backed by the Government treasury
B.
convertible into other types of saving deposits
C.
quickly and easily marketable
D.
stable in value
Ans:
quickly and easily marketable
Explanation :
Liquid Asset is an asset that can be converted into cash quickly and with minimal impact to the price received. In a liquid market, assets can be easily converted without considerable price fluctuation, and with a minimal decline in worth. A liquid market is a type of market that possesses a high level of stability, and low spreads between asking and selling prices. Securities issued by the Government are considered risk-free, and as such, their yields are often used as the benchmarks for fixed- income securities with the same maturities. The government securities market constitutes a key segment of the financial market, heavily traded offering virtually credit risk-free highly liquid financial instruments, which market participants are more willing to transact and take positions.
[23] Deflation is a situation in which -
A.
The value of money is falling.
B.
The price of goods is increasing.
C.
The value of money is increasing.
D.
The price level is stagnant.
Ans:
The value of money is increasing.
Explanation :
Deflation is a situation where the prices of goods and commodities in a country go down. i.e., there is negative inflation. This is caused due to reduced supply of money/credit. Inflation reduces the real value of money over time; conversely, deflation increases the real value of money - the currency of a national or regional economy.
[24] Stagflation refers to a situation which is characterized by -
A.
stagnant employment and deflation
B.
deflation and rising unemployment
C.
inflation and rising employment.
D.
inflation and rising unemployment
Ans:
inflation and rising unemployment
Explanation :
Stagflation describes a situation where an inflation rate is high, the economic growth rate slows down, and unemployment remains steadily high. It raises a dilemma for economic policy since actions designed to lower inflation may exacerbate unemployment, and vice versa.
[25] How will a reduction in 'Bank Rate' affect the availability of credit?
A.
Credit will increase
B.
Credit will not increase
C.
Credit will decrease
D.
None of these
Ans:
Credit will increase
Explanation :
Bank rate, also referred to as the discount rate, is the rate of interest which a central bank charges on the loans and advances to a commercial bank. Whenever the banks have any shortage of funds they can borrow it from the central bank. Repo (Repurchase) rate is the rate at which the central bank lends short-term money to the banks against securities. A reduction in the repo rate will help banks to get money at a cheaper rate. When the repo rate increases borrowing from the central bank becomes more expensive. It is more applicable when there is a liquidity crunch in the market.
Explanation :
Gresham's law is an observation in economics that "bad money drives out good." More exactly, if coins containing metal of different value have the same value as legal tender, the coins composed of the cheaper metal will be used for payment, while those made of more expensive metal will be hoarded or exported and thus tend to disappear from circulation. Sir Thomas Gresham, financial agent of Queen Elizabeth I, was not the first to recognize this monetary principle, but his elucidation of it in 1558 prompted the economist H.D. Macleod to suggest the term Gresham's law in the 19th century.
[2] 'PROTECTION' means -
A.
Restrictions imposed on import trade
B.
Protection to home industries
C.
No free exchange of goods and services between two countries
D.
All of the above
Ans:
All of the above
Explanation :
Protectionism is the economic policy of restraining trade between states through methods such as tariffs on imported goods, restrictive quotas, and a variety of other government regulations designed to allow (according to proponents) "fair competition" between imports and goods and services produced domestically. It refers to policies or doctrines which protect businesses and workers within a country by restricting or regulating trade with foreign nations.
[3] Which one of the following does not deal with export promotion?
A.
Trade Development Authority
B.
Mineral and Metal Trading Corporation
C.
Cooperative Marketing Societies
D.
State Trading Corporation of India
Ans:
Cooperative Marketing Societies
Explanation :
Cooperative marketing is just an extension and application of the philosophy of cooperation in the area of agricultural marketing. It is a process of marketing through a cooperative society, formed for the producers, by the producers. It seeks to eliminate the middlemen between the producer and the consumer, thus getting the maximum price for their produce.
[4] Commercialization of agriculture implies -
A.
cultivation of Limbers
B.
plantation
C.
production of crops for sale
D.
production of crops like wheat or rice
Ans:
production of crops for sale
Explanation :
Commercial agriculture is large-scale production of crops for sale, intended for widespread distribution to wholesalers or retail outlets. In commercial farming crops such as wheat, maize, tea, coffee, sugarcane, cashew, rubber, banana, and cotton are harvested and sold into world markets.
[5] Agricultural income tax is a source of revenue to -
A.
Central Government
B.
State Government
C.
Local Administration
D.
Centre and State Governments
Ans:
State Government
Explanation :
The Constitution of India allocates the taxation of agricultural income to states. Land revenue is a major source of revenue for states in India
[6] Agricultural Technology is hard to spread because:
A.
it has to be adopted to local conditions.
B.
rural people are not receptive
C.
farmers are afraid to experiment on land for fear of failure.
D.
all of the above
Ans:
all of the above
Explanation :
There are many benefits of using technology in agriculture system, but there are also negative aspects. Technology transfer is most difficult in agriculture because of the differences in natural conditions, such as weather, geographical features, plant ecology, and irrigation, which overlap social and institutional restrictions. When an agricultural technology is stable as a result of the limitations imposed by the existing national conditions and social system, the limits of production are empirically foreseeable.
[7] Structural unemployment arises due to :
A.
deflationary conditions
B.
heavy industry bias
C.
shortage of raw materials
D.
inadequate productive capacity
Ans:
inadequate productive capacity
Explanation :
Structural unemployment is a form of unemployment resulting from a mismatch between demand in the labour market and the skills and locations of the workers seeking employment. Structural unemployment is a result of the dynamics of the labor market, such as agricultural workers being displaced by mechanized agriculture, unskilled laborers displaced by both mechanization and automation, or industries with declining employment. Many of these displaced workers are “left behind” due to costs of training and moving (e.g., the cost of selling one’s house in a depressed local economy), inefficiencies in the labor markets, such as discrimination or monopoly power, or because they are unsuited for work in growing sectors such as health care or high technology.
[8] The demand of a commodity is a direct demand but the demand of a factor of production is called a -
A.
Crossed demand
B.
Joint demand
C.
Derived demand
D.
Independent demand
Ans:
Derived demand
Explanation :
In the words of McConnell, the demand for factors of production is a derived demand that is derived from the finished goods and services which resources help to produce. While the demand for good is direct demand, demand for factors is derived demand. It is based on the productivity of the factors.
[9] Depreciation is loss in value of .
A.
Final goods
B.
Machinery
C.
Capital stock
D.
Stock of inventory
Ans:
Machinery
Explanation :
The term depreciation represents loss or diminution in the value of an asset consequent upon wear and tear, obsolescence, effluxion of time or permanent fall in market value. Physical deterioration of an asset is caused from movement, strain, friction, erosion etc. For instance, building, machineries, furniture, vehicles, plant etc. The wear and tear is general but primary cause of depreciation.
[10] When income increase, consumption also increases :
A.
in a lower proportion
B.
in a higher proportion
C.
in the same proportion
D.
None of the options
Ans:
in a lower proportion
Explanation :
According to the Keynesian Consumption theory, "men are disposed, as a rule and on average, to increase their consumption as their income increases, but not by as much as the increase in their income." Another feature of consumer behavior is that when income increases, people do not spend their entire incremental income on consumption. They save a part of it for their financial security during the period of =employment, illness, etc. In simple words, the marginal propensity to consume decreases, i.e., house-holds spend a decreasing proportion of marginal income on consumption.
[11] A camera in the hands of a professional photographer is a _ good.
A.
Free
B.
Intermediary
C.
Consumer
D.
Capital
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,
[12] The economist who believed that unemployment is impossible and that market mechanism has a built in regulatory system to meet any ups and downs -
A.
J.M.Keynes
B.
Ohlin
C.
J. B. Say
D.
Galbraith
Ans:
J. B. Say
Explanation :
The classical economists' belief in full employment as a normal condition of a free market economy is based on Say's Law of Markets. It was on the basis of this law that the classical economists thought that general over-production and hence general unemployment were impossible. The law simply states "supply creates its own demand."
[13] Liquidity Preference means -
A.
holding assets in the form of bonds and shares
B.
holding assets in the form of cash
C.
creation of immovable property
D.
assets in the form of jewellery
Ans:
holding assets in the form of cash
Explanation :
Liquidity preference refers to the demand for money, considered as liquidity. The concept was first developed by John Maynard Keynes in his book The General Theory of Employment, Interest and Money (1936). It is the desire to hold money rather than other assets, in Keynesian theory based on motives of transactions, precaution, and speculation.
[14] Aggregate net value of the output in one year is the -
A.
National income at factor cost
B.
Gross Domestic Product at market prices
C.
Net. National Product at market prices
D.
Gross National Product at market prices
Ans:
Net. National Product at market prices
Explanation :
Net national product at market price is the market value of the output of final goods and services produced at current price in one year of a country. If we subtract the depreciation charges from the gross national product, we get net national product at market price, Net national product at market price=Gross national product at market price-Depreciation.
[15] The sum total of incomes received for the services of labour, land or capital in a country is called :
A.
Gross domestic product
B.
National income
C.
Gross domestic income
D.
Gross national income
Ans:
Gross domestic income
Explanation :
The Gross Domestic Income (GDI) is the total in-come received by all sectors of an economy within a nation. It includes the sum of all wages, profits, and taxes, minus subsidies. Since all income is derived from production (including the production of services), the gross domestic income of a count should exactly equal its gross domestic product (GDP).
[16] Which of the following results by dividing national income by size of population?
A.
Per capita income
B.
Subsistence level
C.
Subsistence expenditure-
D.
Per capita production
Ans:
Per capita income
Explanation :
Per capita income or average income or income per person is a measure of mean income within an economic aggregate, such as a country or city. It is calculated by taking a measure of all sources of income in the aggregate (such as GDP or Gross National Income) and dividing it by the total population.
[17] The first computer made available for commercial use was -
A.
MANIAC
B.
ENIAC
C.
UNIVAC
D.
EDSAC
Ans:
UNIVAC
Explanation :
The UNIVAC computer was the first commercially available computer invented by John Presper Eckert and John Mauchly. As well as being the first American commercial computer, the UNIVAC I was the first American computer designed at the outset for business and administrative use (i.e., for the fast execution of large numbers of relatively simple arithmetic and data transport operations, as opposed to the complex numerical calculations required by scientific computers). As such the UNIVAC competed directly against punch-card machines (mainly made by IBM).
[18] Malthusian theory of population explored the relationship between -
A.
food supply and technology
B.
food supply and population growth
C.
population growth and development
D.
optimum growth and resources
Ans:
food supply and population growth
Explanation :
According to Malthusian theory of population, population increases in a geometrical ratio, whereas food supply increases in an arithmetic ratio. This disharmony would lead to widespread poverty and starvation, which would only be checked by natural occurrences such as disease, high infant mortality, famine, war or moral restraint.
[19] In public budgets, zero-base budgeting was first introduced in -
A.
USA
B.
UK
C.
France
D.
Sweden
Ans:
USA
Explanation :
Zero-based budgeting is an approach to planning and decision-making which reverses the working process of traditional budgeting. This technique of budgeting was developed by Peter Phyrr in the United States and was first implemented at Texas Instruments in the 1960s. In 1973, President Jimmy Carter contracted with Phyrr to implement a ZBB system for the State of Georgia executive budget process.
[20] The sale proceeds of Government Bonds come under the budget head of -
A.
Revenue Receipts
B.
Current Expenditure
C.
Capital Outlay
D.
Capital Receipts
Ans:
Capital Receipts
Explanation :
Capital receipts are the funds received into the businesses that are not part of the operating activities of the establishment. Capital receipts primarily include external assistance, market loans, small savings, principal investment in bonds, and Government provident funds. A capital receipt is a receipt which is derived from sale or purchase of capital assets like plant and machinery, furniture, investment (long term) etc., which shall not be occurring all the time.
[21] The incidence of sales tax falls on -
A.
Consumers
B.
Wholesale dealers
C.
Retail dealers
D.
Producers
Ans:
Consumers
Explanation :
In economics, tax incidence is the analysis of the effect of a particular tax on the distribution of economic welfare. Tax incidence is said to "fall" upon the group that ultimately bears the burden of, or ultimately has to pay the tax. The key concept is that the tax incidence or tax burden does not depend on where the revenue is collected, but on the price elasticity of demand and price elasticity of supply.
[22] Government securities are considered liquid because they are -
A.
backed by the Government treasury
B.
convertible into other types of saving deposits
C.
quickly and easily marketable
D.
stable in value
Ans:
quickly and easily marketable
Explanation :
Liquid Asset is an asset that can be converted into cash quickly and with minimal impact to the price received. In a liquid market, assets can be easily converted without considerable price fluctuation, and with a minimal decline in worth. A liquid market is a type of market that possesses a high level of stability, and low spreads between asking and selling prices. Securities issued by the Government are considered risk-free, and as such, their yields are often used as the benchmarks for fixed- income securities with the same maturities. The government securities market constitutes a key segment of the financial market, heavily traded offering virtually credit risk-free highly liquid financial instruments, which market participants are more willing to transact and take positions.
[23] Deflation is a situation in which -
A.
The value of money is falling.
B.
The price of goods is increasing.
C.
The value of money is increasing.
D.
The price level is stagnant.
Ans:
The value of money is increasing.
Explanation :
Deflation is a situation where the prices of goods and commodities in a country go down. i.e., there is negative inflation. This is caused due to reduced supply of money/credit. Inflation reduces the real value of money over time; conversely, deflation increases the real value of money - the currency of a national or regional economy.
[24] Stagflation refers to a situation which is characterized by -
A.
stagnant employment and deflation
B.
deflation and rising unemployment
C.
inflation and rising employment.
D.
inflation and rising unemployment
Ans:
inflation and rising unemployment
Explanation :
Stagflation describes a situation where an inflation rate is high, the economic growth rate slows down, and unemployment remains steadily high. It raises a dilemma for economic policy since actions designed to lower inflation may exacerbate unemployment, and vice versa.
[25] How will a reduction in 'Bank Rate' affect the availability of credit?
A.
Credit will increase
B.
Credit will not increase
C.
Credit will decrease
D.
None of these
Ans:
Credit will increase
Explanation :
Bank rate, also referred to as the discount rate, is the rate of interest which a central bank charges on the loans and advances to a commercial bank. Whenever the banks have any shortage of funds they can borrow it from the central bank. Repo (Repurchase) rate is the rate at which the central bank lends short-term money to the banks against securities. A reduction in the repo rate will help banks to get money at a cheaper rate. When the repo rate increases borrowing from the central bank becomes more expensive. It is more applicable when there is a liquidity crunch in the market.
Explanation :
Cooperative marketing is just an extension and application of the philosophy of cooperation in the area of agricultural marketing. It is a process of marketing through a cooperative society, formed for the producers, by the producers. It seeks to eliminate the middlemen between the producer and the consumer, thus getting the maximum price for their produce.
[4] Commercialization of agriculture implies -
A.
cultivation of Limbers
B.
plantation
C.
production of crops for sale
D.
production of crops like wheat or rice
Ans:
production of crops for sale
Explanation :
Commercial agriculture is large-scale production of crops for sale, intended for widespread distribution to wholesalers or retail outlets. In commercial farming crops such as wheat, maize, tea, coffee, sugarcane, cashew, rubber, banana, and cotton are harvested and sold into world markets.
[5] Agricultural income tax is a source of revenue to -
A.
Central Government
B.
State Government
C.
Local Administration
D.
Centre and State Governments
Ans:
State Government
Explanation :
The Constitution of India allocates the taxation of agricultural income to states. Land revenue is a major source of revenue for states in India
[6] Agricultural Technology is hard to spread because:
A.
it has to be adopted to local conditions.
B.
rural people are not receptive
C.
farmers are afraid to experiment on land for fear of failure.
D.
all of the above
Ans:
all of the above
Explanation :
There are many benefits of using technology in agriculture system, but there are also negative aspects. Technology transfer is most difficult in agriculture because of the differences in natural conditions, such as weather, geographical features, plant ecology, and irrigation, which overlap social and institutional restrictions. When an agricultural technology is stable as a result of the limitations imposed by the existing national conditions and social system, the limits of production are empirically foreseeable.
[7] Structural unemployment arises due to :
A.
deflationary conditions
B.
heavy industry bias
C.
shortage of raw materials
D.
inadequate productive capacity
Ans:
inadequate productive capacity
Explanation :
Structural unemployment is a form of unemployment resulting from a mismatch between demand in the labour market and the skills and locations of the workers seeking employment. Structural unemployment is a result of the dynamics of the labor market, such as agricultural workers being displaced by mechanized agriculture, unskilled laborers displaced by both mechanization and automation, or industries with declining employment. Many of these displaced workers are “left behind” due to costs of training and moving (e.g., the cost of selling one’s house in a depressed local economy), inefficiencies in the labor markets, such as discrimination or monopoly power, or because they are unsuited for work in growing sectors such as health care or high technology.
[8] The demand of a commodity is a direct demand but the demand of a factor of production is called a -
A.
Crossed demand
B.
Joint demand
C.
Derived demand
D.
Independent demand
Ans:
Derived demand
Explanation :
In the words of McConnell, the demand for factors of production is a derived demand that is derived from the finished goods and services which resources help to produce. While the demand for good is direct demand, demand for factors is derived demand. It is based on the productivity of the factors.
[9] Depreciation is loss in value of .
A.
Final goods
B.
Machinery
C.
Capital stock
D.
Stock of inventory
Ans:
Machinery
Explanation :
The term depreciation represents loss or diminution in the value of an asset consequent upon wear and tear, obsolescence, effluxion of time or permanent fall in market value. Physical deterioration of an asset is caused from movement, strain, friction, erosion etc. For instance, building, machineries, furniture, vehicles, plant etc. The wear and tear is general but primary cause of depreciation.
[10] When income increase, consumption also increases :
A.
in a lower proportion
B.
in a higher proportion
C.
in the same proportion
D.
None of the options
Ans:
in a lower proportion
Explanation :
According to the Keynesian Consumption theory, "men are disposed, as a rule and on average, to increase their consumption as their income increases, but not by as much as the increase in their income." Another feature of consumer behavior is that when income increases, people do not spend their entire incremental income on consumption. They save a part of it for their financial security during the period of =employment, illness, etc. In simple words, the marginal propensity to consume decreases, i.e., house-holds spend a decreasing proportion of marginal income on consumption.
[11] A camera in the hands of a professional photographer is a _ good.
A.
Free
B.
Intermediary
C.
Consumer
D.
Capital
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,
[12] The economist who believed that unemployment is impossible and that market mechanism has a built in regulatory system to meet any ups and downs -
A.
J.M.Keynes
B.
Ohlin
C.
J. B. Say
D.
Galbraith
Ans:
J. B. Say
Explanation :
The classical economists' belief in full employment as a normal condition of a free market economy is based on Say's Law of Markets. It was on the basis of this law that the classical economists thought that general over-production and hence general unemployment were impossible. The law simply states "supply creates its own demand."
[13] Liquidity Preference means -
A.
holding assets in the form of bonds and shares
B.
holding assets in the form of cash
C.
creation of immovable property
D.
assets in the form of jewellery
Ans:
holding assets in the form of cash
Explanation :
Liquidity preference refers to the demand for money, considered as liquidity. The concept was first developed by John Maynard Keynes in his book The General Theory of Employment, Interest and Money (1936). It is the desire to hold money rather than other assets, in Keynesian theory based on motives of transactions, precaution, and speculation.
[14] Aggregate net value of the output in one year is the -
A.
National income at factor cost
B.
Gross Domestic Product at market prices
C.
Net. National Product at market prices
D.
Gross National Product at market prices
Ans:
Net. National Product at market prices
Explanation :
Net national product at market price is the market value of the output of final goods and services produced at current price in one year of a country. If we subtract the depreciation charges from the gross national product, we get net national product at market price, Net national product at market price=Gross national product at market price-Depreciation.
[15] The sum total of incomes received for the services of labour, land or capital in a country is called :
A.
Gross domestic product
B.
National income
C.
Gross domestic income
D.
Gross national income
Ans:
Gross domestic income
Explanation :
The Gross Domestic Income (GDI) is the total in-come received by all sectors of an economy within a nation. It includes the sum of all wages, profits, and taxes, minus subsidies. Since all income is derived from production (including the production of services), the gross domestic income of a count should exactly equal its gross domestic product (GDP).
[16] Which of the following results by dividing national income by size of population?
A.
Per capita income
B.
Subsistence level
C.
Subsistence expenditure-
D.
Per capita production
Ans:
Per capita income
Explanation :
Per capita income or average income or income per person is a measure of mean income within an economic aggregate, such as a country or city. It is calculated by taking a measure of all sources of income in the aggregate (such as GDP or Gross National Income) and dividing it by the total population.
[17] The first computer made available for commercial use was -
A.
MANIAC
B.
ENIAC
C.
UNIVAC
D.
EDSAC
Ans:
UNIVAC
Explanation :
The UNIVAC computer was the first commercially available computer invented by John Presper Eckert and John Mauchly. As well as being the first American commercial computer, the UNIVAC I was the first American computer designed at the outset for business and administrative use (i.e., for the fast execution of large numbers of relatively simple arithmetic and data transport operations, as opposed to the complex numerical calculations required by scientific computers). As such the UNIVAC competed directly against punch-card machines (mainly made by IBM).
[18] Malthusian theory of population explored the relationship between -
A.
food supply and technology
B.
food supply and population growth
C.
population growth and development
D.
optimum growth and resources
Ans:
food supply and population growth
Explanation :
According to Malthusian theory of population, population increases in a geometrical ratio, whereas food supply increases in an arithmetic ratio. This disharmony would lead to widespread poverty and starvation, which would only be checked by natural occurrences such as disease, high infant mortality, famine, war or moral restraint.
[19] In public budgets, zero-base budgeting was first introduced in -
A.
USA
B.
UK
C.
France
D.
Sweden
Ans:
USA
Explanation :
Zero-based budgeting is an approach to planning and decision-making which reverses the working process of traditional budgeting. This technique of budgeting was developed by Peter Phyrr in the United States and was first implemented at Texas Instruments in the 1960s. In 1973, President Jimmy Carter contracted with Phyrr to implement a ZBB system for the State of Georgia executive budget process.
[20] The sale proceeds of Government Bonds come under the budget head of -
A.
Revenue Receipts
B.
Current Expenditure
C.
Capital Outlay
D.
Capital Receipts
Ans:
Capital Receipts
Explanation :
Capital receipts are the funds received into the businesses that are not part of the operating activities of the establishment. Capital receipts primarily include external assistance, market loans, small savings, principal investment in bonds, and Government provident funds. A capital receipt is a receipt which is derived from sale or purchase of capital assets like plant and machinery, furniture, investment (long term) etc., which shall not be occurring all the time.
[21] The incidence of sales tax falls on -
A.
Consumers
B.
Wholesale dealers
C.
Retail dealers
D.
Producers
Ans:
Consumers
Explanation :
In economics, tax incidence is the analysis of the effect of a particular tax on the distribution of economic welfare. Tax incidence is said to "fall" upon the group that ultimately bears the burden of, or ultimately has to pay the tax. The key concept is that the tax incidence or tax burden does not depend on where the revenue is collected, but on the price elasticity of demand and price elasticity of supply.
[22] Government securities are considered liquid because they are -
A.
backed by the Government treasury
B.
convertible into other types of saving deposits
C.
quickly and easily marketable
D.
stable in value
Ans:
quickly and easily marketable
Explanation :
Liquid Asset is an asset that can be converted into cash quickly and with minimal impact to the price received. In a liquid market, assets can be easily converted without considerable price fluctuation, and with a minimal decline in worth. A liquid market is a type of market that possesses a high level of stability, and low spreads between asking and selling prices. Securities issued by the Government are considered risk-free, and as such, their yields are often used as the benchmarks for fixed- income securities with the same maturities. The government securities market constitutes a key segment of the financial market, heavily traded offering virtually credit risk-free highly liquid financial instruments, which market participants are more willing to transact and take positions.
[23] Deflation is a situation in which -
A.
The value of money is falling.
B.
The price of goods is increasing.
C.
The value of money is increasing.
D.
The price level is stagnant.
Ans:
The value of money is increasing.
Explanation :
Deflation is a situation where the prices of goods and commodities in a country go down. i.e., there is negative inflation. This is caused due to reduced supply of money/credit. Inflation reduces the real value of money over time; conversely, deflation increases the real value of money - the currency of a national or regional economy.
[24] Stagflation refers to a situation which is characterized by -
A.
stagnant employment and deflation
B.
deflation and rising unemployment
C.
inflation and rising employment.
D.
inflation and rising unemployment
Ans:
inflation and rising unemployment
Explanation :
Stagflation describes a situation where an inflation rate is high, the economic growth rate slows down, and unemployment remains steadily high. It raises a dilemma for economic policy since actions designed to lower inflation may exacerbate unemployment, and vice versa.
[25] How will a reduction in 'Bank Rate' affect the availability of credit?
A.
Credit will increase
B.
Credit will not increase
C.
Credit will decrease
D.
None of these
Ans:
Credit will increase
Explanation :
Bank rate, also referred to as the discount rate, is the rate of interest which a central bank charges on the loans and advances to a commercial bank. Whenever the banks have any shortage of funds they can borrow it from the central bank. Repo (Repurchase) rate is the rate at which the central bank lends short-term money to the banks against securities. A reduction in the repo rate will help banks to get money at a cheaper rate. When the repo rate increases borrowing from the central bank becomes more expensive. It is more applicable when there is a liquidity crunch in the market.
Explanation :
The Constitution of India allocates the taxation of agricultural income to states. Land revenue is a major source of revenue for states in India
[6] Agricultural Technology is hard to spread because:
A.
it has to be adopted to local conditions.
B.
rural people are not receptive
C.
farmers are afraid to experiment on land for fear of failure.
D.
all of the above
Ans:
all of the above
Explanation :
There are many benefits of using technology in agriculture system, but there are also negative aspects. Technology transfer is most difficult in agriculture because of the differences in natural conditions, such as weather, geographical features, plant ecology, and irrigation, which overlap social and institutional restrictions. When an agricultural technology is stable as a result of the limitations imposed by the existing national conditions and social system, the limits of production are empirically foreseeable.
[7] Structural unemployment arises due to :
A.
deflationary conditions
B.
heavy industry bias
C.
shortage of raw materials
D.
inadequate productive capacity
Ans:
inadequate productive capacity
Explanation :
Structural unemployment is a form of unemployment resulting from a mismatch between demand in the labour market and the skills and locations of the workers seeking employment. Structural unemployment is a result of the dynamics of the labor market, such as agricultural workers being displaced by mechanized agriculture, unskilled laborers displaced by both mechanization and automation, or industries with declining employment. Many of these displaced workers are “left behind” due to costs of training and moving (e.g., the cost of selling one’s house in a depressed local economy), inefficiencies in the labor markets, such as discrimination or monopoly power, or because they are unsuited for work in growing sectors such as health care or high technology.
[8] The demand of a commodity is a direct demand but the demand of a factor of production is called a -
A.
Crossed demand
B.
Joint demand
C.
Derived demand
D.
Independent demand
Ans:
Derived demand
Explanation :
In the words of McConnell, the demand for factors of production is a derived demand that is derived from the finished goods and services which resources help to produce. While the demand for good is direct demand, demand for factors is derived demand. It is based on the productivity of the factors.
[9] Depreciation is loss in value of .
A.
Final goods
B.
Machinery
C.
Capital stock
D.
Stock of inventory
Ans:
Machinery
Explanation :
The term depreciation represents loss or diminution in the value of an asset consequent upon wear and tear, obsolescence, effluxion of time or permanent fall in market value. Physical deterioration of an asset is caused from movement, strain, friction, erosion etc. For instance, building, machineries, furniture, vehicles, plant etc. The wear and tear is general but primary cause of depreciation.
[10] When income increase, consumption also increases :
A.
in a lower proportion
B.
in a higher proportion
C.
in the same proportion
D.
None of the options
Ans:
in a lower proportion
Explanation :
According to the Keynesian Consumption theory, "men are disposed, as a rule and on average, to increase their consumption as their income increases, but not by as much as the increase in their income." Another feature of consumer behavior is that when income increases, people do not spend their entire incremental income on consumption. They save a part of it for their financial security during the period of =employment, illness, etc. In simple words, the marginal propensity to consume decreases, i.e., house-holds spend a decreasing proportion of marginal income on consumption.
[11] A camera in the hands of a professional photographer is a _ good.
A.
Free
B.
Intermediary
C.
Consumer
D.
Capital
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,
[12] The economist who believed that unemployment is impossible and that market mechanism has a built in regulatory system to meet any ups and downs -
A.
J.M.Keynes
B.
Ohlin
C.
J. B. Say
D.
Galbraith
Ans:
J. B. Say
Explanation :
The classical economists' belief in full employment as a normal condition of a free market economy is based on Say's Law of Markets. It was on the basis of this law that the classical economists thought that general over-production and hence general unemployment were impossible. The law simply states "supply creates its own demand."
[13] Liquidity Preference means -
A.
holding assets in the form of bonds and shares
B.
holding assets in the form of cash
C.
creation of immovable property
D.
assets in the form of jewellery
Ans:
holding assets in the form of cash
Explanation :
Liquidity preference refers to the demand for money, considered as liquidity. The concept was first developed by John Maynard Keynes in his book The General Theory of Employment, Interest and Money (1936). It is the desire to hold money rather than other assets, in Keynesian theory based on motives of transactions, precaution, and speculation.
[14] Aggregate net value of the output in one year is the -
A.
National income at factor cost
B.
Gross Domestic Product at market prices
C.
Net. National Product at market prices
D.
Gross National Product at market prices
Ans:
Net. National Product at market prices
Explanation :
Net national product at market price is the market value of the output of final goods and services produced at current price in one year of a country. If we subtract the depreciation charges from the gross national product, we get net national product at market price, Net national product at market price=Gross national product at market price-Depreciation.
[15] The sum total of incomes received for the services of labour, land or capital in a country is called :
A.
Gross domestic product
B.
National income
C.
Gross domestic income
D.
Gross national income
Ans:
Gross domestic income
Explanation :
The Gross Domestic Income (GDI) is the total in-come received by all sectors of an economy within a nation. It includes the sum of all wages, profits, and taxes, minus subsidies. Since all income is derived from production (including the production of services), the gross domestic income of a count should exactly equal its gross domestic product (GDP).
[16] Which of the following results by dividing national income by size of population?
A.
Per capita income
B.
Subsistence level
C.
Subsistence expenditure-
D.
Per capita production
Ans:
Per capita income
Explanation :
Per capita income or average income or income per person is a measure of mean income within an economic aggregate, such as a country or city. It is calculated by taking a measure of all sources of income in the aggregate (such as GDP or Gross National Income) and dividing it by the total population.
[17] The first computer made available for commercial use was -
A.
MANIAC
B.
ENIAC
C.
UNIVAC
D.
EDSAC
Ans:
UNIVAC
Explanation :
The UNIVAC computer was the first commercially available computer invented by John Presper Eckert and John Mauchly. As well as being the first American commercial computer, the UNIVAC I was the first American computer designed at the outset for business and administrative use (i.e., for the fast execution of large numbers of relatively simple arithmetic and data transport operations, as opposed to the complex numerical calculations required by scientific computers). As such the UNIVAC competed directly against punch-card machines (mainly made by IBM).
[18] Malthusian theory of population explored the relationship between -
A.
food supply and technology
B.
food supply and population growth
C.
population growth and development
D.
optimum growth and resources
Ans:
food supply and population growth
Explanation :
According to Malthusian theory of population, population increases in a geometrical ratio, whereas food supply increases in an arithmetic ratio. This disharmony would lead to widespread poverty and starvation, which would only be checked by natural occurrences such as disease, high infant mortality, famine, war or moral restraint.
[19] In public budgets, zero-base budgeting was first introduced in -
A.
USA
B.
UK
C.
France
D.
Sweden
Ans:
USA
Explanation :
Zero-based budgeting is an approach to planning and decision-making which reverses the working process of traditional budgeting. This technique of budgeting was developed by Peter Phyrr in the United States and was first implemented at Texas Instruments in the 1960s. In 1973, President Jimmy Carter contracted with Phyrr to implement a ZBB system for the State of Georgia executive budget process.
[20] The sale proceeds of Government Bonds come under the budget head of -
A.
Revenue Receipts
B.
Current Expenditure
C.
Capital Outlay
D.
Capital Receipts
Ans:
Capital Receipts
Explanation :
Capital receipts are the funds received into the businesses that are not part of the operating activities of the establishment. Capital receipts primarily include external assistance, market loans, small savings, principal investment in bonds, and Government provident funds. A capital receipt is a receipt which is derived from sale or purchase of capital assets like plant and machinery, furniture, investment (long term) etc., which shall not be occurring all the time.
[21] The incidence of sales tax falls on -
A.
Consumers
B.
Wholesale dealers
C.
Retail dealers
D.
Producers
Ans:
Consumers
Explanation :
In economics, tax incidence is the analysis of the effect of a particular tax on the distribution of economic welfare. Tax incidence is said to "fall" upon the group that ultimately bears the burden of, or ultimately has to pay the tax. The key concept is that the tax incidence or tax burden does not depend on where the revenue is collected, but on the price elasticity of demand and price elasticity of supply.
[22] Government securities are considered liquid because they are -
A.
backed by the Government treasury
B.
convertible into other types of saving deposits
C.
quickly and easily marketable
D.
stable in value
Ans:
quickly and easily marketable
Explanation :
Liquid Asset is an asset that can be converted into cash quickly and with minimal impact to the price received. In a liquid market, assets can be easily converted without considerable price fluctuation, and with a minimal decline in worth. A liquid market is a type of market that possesses a high level of stability, and low spreads between asking and selling prices. Securities issued by the Government are considered risk-free, and as such, their yields are often used as the benchmarks for fixed- income securities with the same maturities. The government securities market constitutes a key segment of the financial market, heavily traded offering virtually credit risk-free highly liquid financial instruments, which market participants are more willing to transact and take positions.
[23] Deflation is a situation in which -
A.
The value of money is falling.
B.
The price of goods is increasing.
C.
The value of money is increasing.
D.
The price level is stagnant.
Ans:
The value of money is increasing.
Explanation :
Deflation is a situation where the prices of goods and commodities in a country go down. i.e., there is negative inflation. This is caused due to reduced supply of money/credit. Inflation reduces the real value of money over time; conversely, deflation increases the real value of money - the currency of a national or regional economy.
[24] Stagflation refers to a situation which is characterized by -
A.
stagnant employment and deflation
B.
deflation and rising unemployment
C.
inflation and rising employment.
D.
inflation and rising unemployment
Ans:
inflation and rising unemployment
Explanation :
Stagflation describes a situation where an inflation rate is high, the economic growth rate slows down, and unemployment remains steadily high. It raises a dilemma for economic policy since actions designed to lower inflation may exacerbate unemployment, and vice versa.
[25] How will a reduction in 'Bank Rate' affect the availability of credit?
A.
Credit will increase
B.
Credit will not increase
C.
Credit will decrease
D.
None of these
Ans:
Credit will increase
Explanation :
Bank rate, also referred to as the discount rate, is the rate of interest which a central bank charges on the loans and advances to a commercial bank. Whenever the banks have any shortage of funds they can borrow it from the central bank. Repo (Repurchase) rate is the rate at which the central bank lends short-term money to the banks against securities. A reduction in the repo rate will help banks to get money at a cheaper rate. When the repo rate increases borrowing from the central bank becomes more expensive. It is more applicable when there is a liquidity crunch in the market.
Explanation :
Structural unemployment is a form of unemployment resulting from a mismatch between demand in the labour market and the skills and locations of the workers seeking employment. Structural unemployment is a result of the dynamics of the labor market, such as agricultural workers being displaced by mechanized agriculture, unskilled laborers displaced by both mechanization and automation, or industries with declining employment. Many of these displaced workers are “left behind” due to costs of training and moving (e.g., the cost of selling one’s house in a depressed local economy), inefficiencies in the labor markets, such as discrimination or monopoly power, or because they are unsuited for work in growing sectors such as health care or high technology.
[8] The demand of a commodity is a direct demand but the demand of a factor of production is called a -
A.
Crossed demand
B.
Joint demand
C.
Derived demand
D.
Independent demand
Ans:
Derived demand
Explanation :
In the words of McConnell, the demand for factors of production is a derived demand that is derived from the finished goods and services which resources help to produce. While the demand for good is direct demand, demand for factors is derived demand. It is based on the productivity of the factors.
[9] Depreciation is loss in value of .
A.
Final goods
B.
Machinery
C.
Capital stock
D.
Stock of inventory
Ans:
Machinery
Explanation :
The term depreciation represents loss or diminution in the value of an asset consequent upon wear and tear, obsolescence, effluxion of time or permanent fall in market value. Physical deterioration of an asset is caused from movement, strain, friction, erosion etc. For instance, building, machineries, furniture, vehicles, plant etc. The wear and tear is general but primary cause of depreciation.
[10] When income increase, consumption also increases :
A.
in a lower proportion
B.
in a higher proportion
C.
in the same proportion
D.
None of the options
Ans:
in a lower proportion
Explanation :
According to the Keynesian Consumption theory, "men are disposed, as a rule and on average, to increase their consumption as their income increases, but not by as much as the increase in their income." Another feature of consumer behavior is that when income increases, people do not spend their entire incremental income on consumption. They save a part of it for their financial security during the period of =employment, illness, etc. In simple words, the marginal propensity to consume decreases, i.e., house-holds spend a decreasing proportion of marginal income on consumption.
[11] A camera in the hands of a professional photographer is a _ good.
A.
Free
B.
Intermediary
C.
Consumer
D.
Capital
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,
[12] The economist who believed that unemployment is impossible and that market mechanism has a built in regulatory system to meet any ups and downs -
A.
J.M.Keynes
B.
Ohlin
C.
J. B. Say
D.
Galbraith
Ans:
J. B. Say
Explanation :
The classical economists' belief in full employment as a normal condition of a free market economy is based on Say's Law of Markets. It was on the basis of this law that the classical economists thought that general over-production and hence general unemployment were impossible. The law simply states "supply creates its own demand."
[13] Liquidity Preference means -
A.
holding assets in the form of bonds and shares
B.
holding assets in the form of cash
C.
creation of immovable property
D.
assets in the form of jewellery
Ans:
holding assets in the form of cash
Explanation :
Liquidity preference refers to the demand for money, considered as liquidity. The concept was first developed by John Maynard Keynes in his book The General Theory of Employment, Interest and Money (1936). It is the desire to hold money rather than other assets, in Keynesian theory based on motives of transactions, precaution, and speculation.
[14] Aggregate net value of the output in one year is the -
A.
National income at factor cost
B.
Gross Domestic Product at market prices
C.
Net. National Product at market prices
D.
Gross National Product at market prices
Ans:
Net. National Product at market prices
Explanation :
Net national product at market price is the market value of the output of final goods and services produced at current price in one year of a country. If we subtract the depreciation charges from the gross national product, we get net national product at market price, Net national product at market price=Gross national product at market price-Depreciation.
[15] The sum total of incomes received for the services of labour, land or capital in a country is called :
A.
Gross domestic product
B.
National income
C.
Gross domestic income
D.
Gross national income
Ans:
Gross domestic income
Explanation :
The Gross Domestic Income (GDI) is the total in-come received by all sectors of an economy within a nation. It includes the sum of all wages, profits, and taxes, minus subsidies. Since all income is derived from production (including the production of services), the gross domestic income of a count should exactly equal its gross domestic product (GDP).
[16] Which of the following results by dividing national income by size of population?
A.
Per capita income
B.
Subsistence level
C.
Subsistence expenditure-
D.
Per capita production
Ans:
Per capita income
Explanation :
Per capita income or average income or income per person is a measure of mean income within an economic aggregate, such as a country or city. It is calculated by taking a measure of all sources of income in the aggregate (such as GDP or Gross National Income) and dividing it by the total population.
[17] The first computer made available for commercial use was -
A.
MANIAC
B.
ENIAC
C.
UNIVAC
D.
EDSAC
Ans:
UNIVAC
Explanation :
The UNIVAC computer was the first commercially available computer invented by John Presper Eckert and John Mauchly. As well as being the first American commercial computer, the UNIVAC I was the first American computer designed at the outset for business and administrative use (i.e., for the fast execution of large numbers of relatively simple arithmetic and data transport operations, as opposed to the complex numerical calculations required by scientific computers). As such the UNIVAC competed directly against punch-card machines (mainly made by IBM).
[18] Malthusian theory of population explored the relationship between -
A.
food supply and technology
B.
food supply and population growth
C.
population growth and development
D.
optimum growth and resources
Ans:
food supply and population growth
Explanation :
According to Malthusian theory of population, population increases in a geometrical ratio, whereas food supply increases in an arithmetic ratio. This disharmony would lead to widespread poverty and starvation, which would only be checked by natural occurrences such as disease, high infant mortality, famine, war or moral restraint.
[19] In public budgets, zero-base budgeting was first introduced in -
A.
USA
B.
UK
C.
France
D.
Sweden
Ans:
USA
Explanation :
Zero-based budgeting is an approach to planning and decision-making which reverses the working process of traditional budgeting. This technique of budgeting was developed by Peter Phyrr in the United States and was first implemented at Texas Instruments in the 1960s. In 1973, President Jimmy Carter contracted with Phyrr to implement a ZBB system for the State of Georgia executive budget process.
[20] The sale proceeds of Government Bonds come under the budget head of -
A.
Revenue Receipts
B.
Current Expenditure
C.
Capital Outlay
D.
Capital Receipts
Ans:
Capital Receipts
Explanation :
Capital receipts are the funds received into the businesses that are not part of the operating activities of the establishment. Capital receipts primarily include external assistance, market loans, small savings, principal investment in bonds, and Government provident funds. A capital receipt is a receipt which is derived from sale or purchase of capital assets like plant and machinery, furniture, investment (long term) etc., which shall not be occurring all the time.
[21] The incidence of sales tax falls on -
A.
Consumers
B.
Wholesale dealers
C.
Retail dealers
D.
Producers
Ans:
Consumers
Explanation :
In economics, tax incidence is the analysis of the effect of a particular tax on the distribution of economic welfare. Tax incidence is said to "fall" upon the group that ultimately bears the burden of, or ultimately has to pay the tax. The key concept is that the tax incidence or tax burden does not depend on where the revenue is collected, but on the price elasticity of demand and price elasticity of supply.
[22] Government securities are considered liquid because they are -
A.
backed by the Government treasury
B.
convertible into other types of saving deposits
C.
quickly and easily marketable
D.
stable in value
Ans:
quickly and easily marketable
Explanation :
Liquid Asset is an asset that can be converted into cash quickly and with minimal impact to the price received. In a liquid market, assets can be easily converted without considerable price fluctuation, and with a minimal decline in worth. A liquid market is a type of market that possesses a high level of stability, and low spreads between asking and selling prices. Securities issued by the Government are considered risk-free, and as such, their yields are often used as the benchmarks for fixed- income securities with the same maturities. The government securities market constitutes a key segment of the financial market, heavily traded offering virtually credit risk-free highly liquid financial instruments, which market participants are more willing to transact and take positions.
[23] Deflation is a situation in which -
A.
The value of money is falling.
B.
The price of goods is increasing.
C.
The value of money is increasing.
D.
The price level is stagnant.
Ans:
The value of money is increasing.
Explanation :
Deflation is a situation where the prices of goods and commodities in a country go down. i.e., there is negative inflation. This is caused due to reduced supply of money/credit. Inflation reduces the real value of money over time; conversely, deflation increases the real value of money - the currency of a national or regional economy.
[24] Stagflation refers to a situation which is characterized by -
A.
stagnant employment and deflation
B.
deflation and rising unemployment
C.
inflation and rising employment.
D.
inflation and rising unemployment
Ans:
inflation and rising unemployment
Explanation :
Stagflation describes a situation where an inflation rate is high, the economic growth rate slows down, and unemployment remains steadily high. It raises a dilemma for economic policy since actions designed to lower inflation may exacerbate unemployment, and vice versa.
[25] How will a reduction in 'Bank Rate' affect the availability of credit?
A.
Credit will increase
B.
Credit will not increase
C.
Credit will decrease
D.
None of these
Ans:
Credit will increase
Explanation :
Bank rate, also referred to as the discount rate, is the rate of interest which a central bank charges on the loans and advances to a commercial bank. Whenever the banks have any shortage of funds they can borrow it from the central bank. Repo (Repurchase) rate is the rate at which the central bank lends short-term money to the banks against securities. A reduction in the repo rate will help banks to get money at a cheaper rate. When the repo rate increases borrowing from the central bank becomes more expensive. It is more applicable when there is a liquidity crunch in the market.
Explanation :
The term depreciation represents loss or diminution in the value of an asset consequent upon wear and tear, obsolescence, effluxion of time or permanent fall in market value. Physical deterioration of an asset is caused from movement, strain, friction, erosion etc. For instance, building, machineries, furniture, vehicles, plant etc. The wear and tear is general but primary cause of depreciation.
[10] When income increase, consumption also increases :
A.
in a lower proportion
B.
in a higher proportion
C.
in the same proportion
D.
None of the options
Ans:
in a lower proportion
Explanation :
According to the Keynesian Consumption theory, "men are disposed, as a rule and on average, to increase their consumption as their income increases, but not by as much as the increase in their income." Another feature of consumer behavior is that when income increases, people do not spend their entire incremental income on consumption. They save a part of it for their financial security during the period of =employment, illness, etc. In simple words, the marginal propensity to consume decreases, i.e., house-holds spend a decreasing proportion of marginal income on consumption.
[11] A camera in the hands of a professional photographer is a _ good.
A.
Free
B.
Intermediary
C.
Consumer
D.
Capital
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,
[12] The economist who believed that unemployment is impossible and that market mechanism has a built in regulatory system to meet any ups and downs -
A.
J.M.Keynes
B.
Ohlin
C.
J. B. Say
D.
Galbraith
Ans:
J. B. Say
Explanation :
The classical economists' belief in full employment as a normal condition of a free market economy is based on Say's Law of Markets. It was on the basis of this law that the classical economists thought that general over-production and hence general unemployment were impossible. The law simply states "supply creates its own demand."
[13] Liquidity Preference means -
A.
holding assets in the form of bonds and shares
B.
holding assets in the form of cash
C.
creation of immovable property
D.
assets in the form of jewellery
Ans:
holding assets in the form of cash
Explanation :
Liquidity preference refers to the demand for money, considered as liquidity. The concept was first developed by John Maynard Keynes in his book The General Theory of Employment, Interest and Money (1936). It is the desire to hold money rather than other assets, in Keynesian theory based on motives of transactions, precaution, and speculation.
[14] Aggregate net value of the output in one year is the -
A.
National income at factor cost
B.
Gross Domestic Product at market prices
C.
Net. National Product at market prices
D.
Gross National Product at market prices
Ans:
Net. National Product at market prices
Explanation :
Net national product at market price is the market value of the output of final goods and services produced at current price in one year of a country. If we subtract the depreciation charges from the gross national product, we get net national product at market price, Net national product at market price=Gross national product at market price-Depreciation.
[15] The sum total of incomes received for the services of labour, land or capital in a country is called :
A.
Gross domestic product
B.
National income
C.
Gross domestic income
D.
Gross national income
Ans:
Gross domestic income
Explanation :
The Gross Domestic Income (GDI) is the total in-come received by all sectors of an economy within a nation. It includes the sum of all wages, profits, and taxes, minus subsidies. Since all income is derived from production (including the production of services), the gross domestic income of a count should exactly equal its gross domestic product (GDP).
[16] Which of the following results by dividing national income by size of population?
A.
Per capita income
B.
Subsistence level
C.
Subsistence expenditure-
D.
Per capita production
Ans:
Per capita income
Explanation :
Per capita income or average income or income per person is a measure of mean income within an economic aggregate, such as a country or city. It is calculated by taking a measure of all sources of income in the aggregate (such as GDP or Gross National Income) and dividing it by the total population.
[17] The first computer made available for commercial use was -
A.
MANIAC
B.
ENIAC
C.
UNIVAC
D.
EDSAC
Ans:
UNIVAC
Explanation :
The UNIVAC computer was the first commercially available computer invented by John Presper Eckert and John Mauchly. As well as being the first American commercial computer, the UNIVAC I was the first American computer designed at the outset for business and administrative use (i.e., for the fast execution of large numbers of relatively simple arithmetic and data transport operations, as opposed to the complex numerical calculations required by scientific computers). As such the UNIVAC competed directly against punch-card machines (mainly made by IBM).
[18] Malthusian theory of population explored the relationship between -
A.
food supply and technology
B.
food supply and population growth
C.
population growth and development
D.
optimum growth and resources
Ans:
food supply and population growth
Explanation :
According to Malthusian theory of population, population increases in a geometrical ratio, whereas food supply increases in an arithmetic ratio. This disharmony would lead to widespread poverty and starvation, which would only be checked by natural occurrences such as disease, high infant mortality, famine, war or moral restraint.
[19] In public budgets, zero-base budgeting was first introduced in -
A.
USA
B.
UK
C.
France
D.
Sweden
Ans:
USA
Explanation :
Zero-based budgeting is an approach to planning and decision-making which reverses the working process of traditional budgeting. This technique of budgeting was developed by Peter Phyrr in the United States and was first implemented at Texas Instruments in the 1960s. In 1973, President Jimmy Carter contracted with Phyrr to implement a ZBB system for the State of Georgia executive budget process.
[20] The sale proceeds of Government Bonds come under the budget head of -
A.
Revenue Receipts
B.
Current Expenditure
C.
Capital Outlay
D.
Capital Receipts
Ans:
Capital Receipts
Explanation :
Capital receipts are the funds received into the businesses that are not part of the operating activities of the establishment. Capital receipts primarily include external assistance, market loans, small savings, principal investment in bonds, and Government provident funds. A capital receipt is a receipt which is derived from sale or purchase of capital assets like plant and machinery, furniture, investment (long term) etc., which shall not be occurring all the time.
[21] The incidence of sales tax falls on -
A.
Consumers
B.
Wholesale dealers
C.
Retail dealers
D.
Producers
Ans:
Consumers
Explanation :
In economics, tax incidence is the analysis of the effect of a particular tax on the distribution of economic welfare. Tax incidence is said to "fall" upon the group that ultimately bears the burden of, or ultimately has to pay the tax. The key concept is that the tax incidence or tax burden does not depend on where the revenue is collected, but on the price elasticity of demand and price elasticity of supply.
[22] Government securities are considered liquid because they are -
A.
backed by the Government treasury
B.
convertible into other types of saving deposits
C.
quickly and easily marketable
D.
stable in value
Ans:
quickly and easily marketable
Explanation :
Liquid Asset is an asset that can be converted into cash quickly and with minimal impact to the price received. In a liquid market, assets can be easily converted without considerable price fluctuation, and with a minimal decline in worth. A liquid market is a type of market that possesses a high level of stability, and low spreads between asking and selling prices. Securities issued by the Government are considered risk-free, and as such, their yields are often used as the benchmarks for fixed- income securities with the same maturities. The government securities market constitutes a key segment of the financial market, heavily traded offering virtually credit risk-free highly liquid financial instruments, which market participants are more willing to transact and take positions.
[23] Deflation is a situation in which -
A.
The value of money is falling.
B.
The price of goods is increasing.
C.
The value of money is increasing.
D.
The price level is stagnant.
Ans:
The value of money is increasing.
Explanation :
Deflation is a situation where the prices of goods and commodities in a country go down. i.e., there is negative inflation. This is caused due to reduced supply of money/credit. Inflation reduces the real value of money over time; conversely, deflation increases the real value of money - the currency of a national or regional economy.
[24] Stagflation refers to a situation which is characterized by -
A.
stagnant employment and deflation
B.
deflation and rising unemployment
C.
inflation and rising employment.
D.
inflation and rising unemployment
Ans:
inflation and rising unemployment
Explanation :
Stagflation describes a situation where an inflation rate is high, the economic growth rate slows down, and unemployment remains steadily high. It raises a dilemma for economic policy since actions designed to lower inflation may exacerbate unemployment, and vice versa.
[25] How will a reduction in 'Bank Rate' affect the availability of credit?
A.
Credit will increase
B.
Credit will not increase
C.
Credit will decrease
D.
None of these
Ans:
Credit will increase
Explanation :
Bank rate, also referred to as the discount rate, is the rate of interest which a central bank charges on the loans and advances to a commercial bank. Whenever the banks have any shortage of funds they can borrow it from the central bank. Repo (Repurchase) rate is the rate at which the central bank lends short-term money to the banks against securities. A reduction in the repo rate will help banks to get money at a cheaper rate. When the repo rate increases borrowing from the central bank becomes more expensive. It is more applicable when there is a liquidity crunch in the market.
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,
[12] The economist who believed that unemployment is impossible and that market mechanism has a built in regulatory system to meet any ups and downs -
A.
J.M.Keynes
B.
Ohlin
C.
J. B. Say
D.
Galbraith
Ans:
J. B. Say
Explanation :
The classical economists' belief in full employment as a normal condition of a free market economy is based on Say's Law of Markets. It was on the basis of this law that the classical economists thought that general over-production and hence general unemployment were impossible. The law simply states "supply creates its own demand."
[13] Liquidity Preference means -
A.
holding assets in the form of bonds and shares
B.
holding assets in the form of cash
C.
creation of immovable property
D.
assets in the form of jewellery
Ans:
holding assets in the form of cash
Explanation :
Liquidity preference refers to the demand for money, considered as liquidity. The concept was first developed by John Maynard Keynes in his book The General Theory of Employment, Interest and Money (1936). It is the desire to hold money rather than other assets, in Keynesian theory based on motives of transactions, precaution, and speculation.
[14] Aggregate net value of the output in one year is the -
A.
National income at factor cost
B.
Gross Domestic Product at market prices
C.
Net. National Product at market prices
D.
Gross National Product at market prices
Ans:
Net. National Product at market prices
Explanation :
Net national product at market price is the market value of the output of final goods and services produced at current price in one year of a country. If we subtract the depreciation charges from the gross national product, we get net national product at market price, Net national product at market price=Gross national product at market price-Depreciation.
[15] The sum total of incomes received for the services of labour, land or capital in a country is called :
A.
Gross domestic product
B.
National income
C.
Gross domestic income
D.
Gross national income
Ans:
Gross domestic income
Explanation :
The Gross Domestic Income (GDI) is the total in-come received by all sectors of an economy within a nation. It includes the sum of all wages, profits, and taxes, minus subsidies. Since all income is derived from production (including the production of services), the gross domestic income of a count should exactly equal its gross domestic product (GDP).
[16] Which of the following results by dividing national income by size of population?
A.
Per capita income
B.
Subsistence level
C.
Subsistence expenditure-
D.
Per capita production
Ans:
Per capita income
Explanation :
Per capita income or average income or income per person is a measure of mean income within an economic aggregate, such as a country or city. It is calculated by taking a measure of all sources of income in the aggregate (such as GDP or Gross National Income) and dividing it by the total population.
[17] The first computer made available for commercial use was -
A.
MANIAC
B.
ENIAC
C.
UNIVAC
D.
EDSAC
Ans:
UNIVAC
Explanation :
The UNIVAC computer was the first commercially available computer invented by John Presper Eckert and John Mauchly. As well as being the first American commercial computer, the UNIVAC I was the first American computer designed at the outset for business and administrative use (i.e., for the fast execution of large numbers of relatively simple arithmetic and data transport operations, as opposed to the complex numerical calculations required by scientific computers). As such the UNIVAC competed directly against punch-card machines (mainly made by IBM).
[18] Malthusian theory of population explored the relationship between -
A.
food supply and technology
B.
food supply and population growth
C.
population growth and development
D.
optimum growth and resources
Ans:
food supply and population growth
Explanation :
According to Malthusian theory of population, population increases in a geometrical ratio, whereas food supply increases in an arithmetic ratio. This disharmony would lead to widespread poverty and starvation, which would only be checked by natural occurrences such as disease, high infant mortality, famine, war or moral restraint.
[19] In public budgets, zero-base budgeting was first introduced in -
A.
USA
B.
UK
C.
France
D.
Sweden
Ans:
USA
Explanation :
Zero-based budgeting is an approach to planning and decision-making which reverses the working process of traditional budgeting. This technique of budgeting was developed by Peter Phyrr in the United States and was first implemented at Texas Instruments in the 1960s. In 1973, President Jimmy Carter contracted with Phyrr to implement a ZBB system for the State of Georgia executive budget process.
[20] The sale proceeds of Government Bonds come under the budget head of -
A.
Revenue Receipts
B.
Current Expenditure
C.
Capital Outlay
D.
Capital Receipts
Ans:
Capital Receipts
Explanation :
Capital receipts are the funds received into the businesses that are not part of the operating activities of the establishment. Capital receipts primarily include external assistance, market loans, small savings, principal investment in bonds, and Government provident funds. A capital receipt is a receipt which is derived from sale or purchase of capital assets like plant and machinery, furniture, investment (long term) etc., which shall not be occurring all the time.
[21] The incidence of sales tax falls on -
A.
Consumers
B.
Wholesale dealers
C.
Retail dealers
D.
Producers
Ans:
Consumers
Explanation :
In economics, tax incidence is the analysis of the effect of a particular tax on the distribution of economic welfare. Tax incidence is said to "fall" upon the group that ultimately bears the burden of, or ultimately has to pay the tax. The key concept is that the tax incidence or tax burden does not depend on where the revenue is collected, but on the price elasticity of demand and price elasticity of supply.
[22] Government securities are considered liquid because they are -
A.
backed by the Government treasury
B.
convertible into other types of saving deposits
C.
quickly and easily marketable
D.
stable in value
Ans:
quickly and easily marketable
Explanation :
Liquid Asset is an asset that can be converted into cash quickly and with minimal impact to the price received. In a liquid market, assets can be easily converted without considerable price fluctuation, and with a minimal decline in worth. A liquid market is a type of market that possesses a high level of stability, and low spreads between asking and selling prices. Securities issued by the Government are considered risk-free, and as such, their yields are often used as the benchmarks for fixed- income securities with the same maturities. The government securities market constitutes a key segment of the financial market, heavily traded offering virtually credit risk-free highly liquid financial instruments, which market participants are more willing to transact and take positions.
[23] Deflation is a situation in which -
A.
The value of money is falling.
B.
The price of goods is increasing.
C.
The value of money is increasing.
D.
The price level is stagnant.
Ans:
The value of money is increasing.
Explanation :
Deflation is a situation where the prices of goods and commodities in a country go down. i.e., there is negative inflation. This is caused due to reduced supply of money/credit. Inflation reduces the real value of money over time; conversely, deflation increases the real value of money - the currency of a national or regional economy.
[24] Stagflation refers to a situation which is characterized by -
A.
stagnant employment and deflation
B.
deflation and rising unemployment
C.
inflation and rising employment.
D.
inflation and rising unemployment
Ans:
inflation and rising unemployment
Explanation :
Stagflation describes a situation where an inflation rate is high, the economic growth rate slows down, and unemployment remains steadily high. It raises a dilemma for economic policy since actions designed to lower inflation may exacerbate unemployment, and vice versa.
[25] How will a reduction in 'Bank Rate' affect the availability of credit?
A.
Credit will increase
B.
Credit will not increase
C.
Credit will decrease
D.
None of these
Ans:
Credit will increase
Explanation :
Bank rate, also referred to as the discount rate, is the rate of interest which a central bank charges on the loans and advances to a commercial bank. Whenever the banks have any shortage of funds they can borrow it from the central bank. Repo (Repurchase) rate is the rate at which the central bank lends short-term money to the banks against securities. A reduction in the repo rate will help banks to get money at a cheaper rate. When the repo rate increases borrowing from the central bank becomes more expensive. It is more applicable when there is a liquidity crunch in the market.
Explanation :
Liquidity preference refers to the demand for money, considered as liquidity. The concept was first developed by John Maynard Keynes in his book The General Theory of Employment, Interest and Money (1936). It is the desire to hold money rather than other assets, in Keynesian theory based on motives of transactions, precaution, and speculation.
[14] Aggregate net value of the output in one year is the -
A.
National income at factor cost
B.
Gross Domestic Product at market prices
C.
Net. National Product at market prices
D.
Gross National Product at market prices
Ans:
Net. National Product at market prices
Explanation :
Net national product at market price is the market value of the output of final goods and services produced at current price in one year of a country. If we subtract the depreciation charges from the gross national product, we get net national product at market price, Net national product at market price=Gross national product at market price-Depreciation.
[15] The sum total of incomes received for the services of labour, land or capital in a country is called :
A.
Gross domestic product
B.
National income
C.
Gross domestic income
D.
Gross national income
Ans:
Gross domestic income
Explanation :
The Gross Domestic Income (GDI) is the total in-come received by all sectors of an economy within a nation. It includes the sum of all wages, profits, and taxes, minus subsidies. Since all income is derived from production (including the production of services), the gross domestic income of a count should exactly equal its gross domestic product (GDP).
[16] Which of the following results by dividing national income by size of population?
A.
Per capita income
B.
Subsistence level
C.
Subsistence expenditure-
D.
Per capita production
Ans:
Per capita income
Explanation :
Per capita income or average income or income per person is a measure of mean income within an economic aggregate, such as a country or city. It is calculated by taking a measure of all sources of income in the aggregate (such as GDP or Gross National Income) and dividing it by the total population.
[17] The first computer made available for commercial use was -
A.
MANIAC
B.
ENIAC
C.
UNIVAC
D.
EDSAC
Ans:
UNIVAC
Explanation :
The UNIVAC computer was the first commercially available computer invented by John Presper Eckert and John Mauchly. As well as being the first American commercial computer, the UNIVAC I was the first American computer designed at the outset for business and administrative use (i.e., for the fast execution of large numbers of relatively simple arithmetic and data transport operations, as opposed to the complex numerical calculations required by scientific computers). As such the UNIVAC competed directly against punch-card machines (mainly made by IBM).
[18] Malthusian theory of population explored the relationship between -
A.
food supply and technology
B.
food supply and population growth
C.
population growth and development
D.
optimum growth and resources
Ans:
food supply and population growth
Explanation :
According to Malthusian theory of population, population increases in a geometrical ratio, whereas food supply increases in an arithmetic ratio. This disharmony would lead to widespread poverty and starvation, which would only be checked by natural occurrences such as disease, high infant mortality, famine, war or moral restraint.
[19] In public budgets, zero-base budgeting was first introduced in -
A.
USA
B.
UK
C.
France
D.
Sweden
Ans:
USA
Explanation :
Zero-based budgeting is an approach to planning and decision-making which reverses the working process of traditional budgeting. This technique of budgeting was developed by Peter Phyrr in the United States and was first implemented at Texas Instruments in the 1960s. In 1973, President Jimmy Carter contracted with Phyrr to implement a ZBB system for the State of Georgia executive budget process.
[20] The sale proceeds of Government Bonds come under the budget head of -
A.
Revenue Receipts
B.
Current Expenditure
C.
Capital Outlay
D.
Capital Receipts
Ans:
Capital Receipts
Explanation :
Capital receipts are the funds received into the businesses that are not part of the operating activities of the establishment. Capital receipts primarily include external assistance, market loans, small savings, principal investment in bonds, and Government provident funds. A capital receipt is a receipt which is derived from sale or purchase of capital assets like plant and machinery, furniture, investment (long term) etc., which shall not be occurring all the time.
[21] The incidence of sales tax falls on -
A.
Consumers
B.
Wholesale dealers
C.
Retail dealers
D.
Producers
Ans:
Consumers
Explanation :
In economics, tax incidence is the analysis of the effect of a particular tax on the distribution of economic welfare. Tax incidence is said to "fall" upon the group that ultimately bears the burden of, or ultimately has to pay the tax. The key concept is that the tax incidence or tax burden does not depend on where the revenue is collected, but on the price elasticity of demand and price elasticity of supply.
[22] Government securities are considered liquid because they are -
A.
backed by the Government treasury
B.
convertible into other types of saving deposits
C.
quickly and easily marketable
D.
stable in value
Ans:
quickly and easily marketable
Explanation :
Liquid Asset is an asset that can be converted into cash quickly and with minimal impact to the price received. In a liquid market, assets can be easily converted without considerable price fluctuation, and with a minimal decline in worth. A liquid market is a type of market that possesses a high level of stability, and low spreads between asking and selling prices. Securities issued by the Government are considered risk-free, and as such, their yields are often used as the benchmarks for fixed- income securities with the same maturities. The government securities market constitutes a key segment of the financial market, heavily traded offering virtually credit risk-free highly liquid financial instruments, which market participants are more willing to transact and take positions.
[23] Deflation is a situation in which -
A.
The value of money is falling.
B.
The price of goods is increasing.
C.
The value of money is increasing.
D.
The price level is stagnant.
Ans:
The value of money is increasing.
Explanation :
Deflation is a situation where the prices of goods and commodities in a country go down. i.e., there is negative inflation. This is caused due to reduced supply of money/credit. Inflation reduces the real value of money over time; conversely, deflation increases the real value of money - the currency of a national or regional economy.
[24] Stagflation refers to a situation which is characterized by -
A.
stagnant employment and deflation
B.
deflation and rising unemployment
C.
inflation and rising employment.
D.
inflation and rising unemployment
Ans:
inflation and rising unemployment
Explanation :
Stagflation describes a situation where an inflation rate is high, the economic growth rate slows down, and unemployment remains steadily high. It raises a dilemma for economic policy since actions designed to lower inflation may exacerbate unemployment, and vice versa.
[25] How will a reduction in 'Bank Rate' affect the availability of credit?
A.
Credit will increase
B.
Credit will not increase
C.
Credit will decrease
D.
None of these
Ans:
Credit will increase
Explanation :
Bank rate, also referred to as the discount rate, is the rate of interest which a central bank charges on the loans and advances to a commercial bank. Whenever the banks have any shortage of funds they can borrow it from the central bank. Repo (Repurchase) rate is the rate at which the central bank lends short-term money to the banks against securities. A reduction in the repo rate will help banks to get money at a cheaper rate. When the repo rate increases borrowing from the central bank becomes more expensive. It is more applicable when there is a liquidity crunch in the market.
Explanation :
The Gross Domestic Income (GDI) is the total in-come received by all sectors of an economy within a nation. It includes the sum of all wages, profits, and taxes, minus subsidies. Since all income is derived from production (including the production of services), the gross domestic income of a count should exactly equal its gross domestic product (GDP).
[16] Which of the following results by dividing national income by size of population?
A.
Per capita income
B.
Subsistence level
C.
Subsistence expenditure-
D.
Per capita production
Ans:
Per capita income
Explanation :
Per capita income or average income or income per person is a measure of mean income within an economic aggregate, such as a country or city. It is calculated by taking a measure of all sources of income in the aggregate (such as GDP or Gross National Income) and dividing it by the total population.
[17] The first computer made available for commercial use was -
A.
MANIAC
B.
ENIAC
C.
UNIVAC
D.
EDSAC
Ans:
UNIVAC
Explanation :
The UNIVAC computer was the first commercially available computer invented by John Presper Eckert and John Mauchly. As well as being the first American commercial computer, the UNIVAC I was the first American computer designed at the outset for business and administrative use (i.e., for the fast execution of large numbers of relatively simple arithmetic and data transport operations, as opposed to the complex numerical calculations required by scientific computers). As such the UNIVAC competed directly against punch-card machines (mainly made by IBM).
[18] Malthusian theory of population explored the relationship between -
A.
food supply and technology
B.
food supply and population growth
C.
population growth and development
D.
optimum growth and resources
Ans:
food supply and population growth
Explanation :
According to Malthusian theory of population, population increases in a geometrical ratio, whereas food supply increases in an arithmetic ratio. This disharmony would lead to widespread poverty and starvation, which would only be checked by natural occurrences such as disease, high infant mortality, famine, war or moral restraint.
[19] In public budgets, zero-base budgeting was first introduced in -
A.
USA
B.
UK
C.
France
D.
Sweden
Ans:
USA
Explanation :
Zero-based budgeting is an approach to planning and decision-making which reverses the working process of traditional budgeting. This technique of budgeting was developed by Peter Phyrr in the United States and was first implemented at Texas Instruments in the 1960s. In 1973, President Jimmy Carter contracted with Phyrr to implement a ZBB system for the State of Georgia executive budget process.
[20] The sale proceeds of Government Bonds come under the budget head of -
A.
Revenue Receipts
B.
Current Expenditure
C.
Capital Outlay
D.
Capital Receipts
Ans:
Capital Receipts
Explanation :
Capital receipts are the funds received into the businesses that are not part of the operating activities of the establishment. Capital receipts primarily include external assistance, market loans, small savings, principal investment in bonds, and Government provident funds. A capital receipt is a receipt which is derived from sale or purchase of capital assets like plant and machinery, furniture, investment (long term) etc., which shall not be occurring all the time.
[21] The incidence of sales tax falls on -
A.
Consumers
B.
Wholesale dealers
C.
Retail dealers
D.
Producers
Ans:
Consumers
Explanation :
In economics, tax incidence is the analysis of the effect of a particular tax on the distribution of economic welfare. Tax incidence is said to "fall" upon the group that ultimately bears the burden of, or ultimately has to pay the tax. The key concept is that the tax incidence or tax burden does not depend on where the revenue is collected, but on the price elasticity of demand and price elasticity of supply.
[22] Government securities are considered liquid because they are -
A.
backed by the Government treasury
B.
convertible into other types of saving deposits
C.
quickly and easily marketable
D.
stable in value
Ans:
quickly and easily marketable
Explanation :
Liquid Asset is an asset that can be converted into cash quickly and with minimal impact to the price received. In a liquid market, assets can be easily converted without considerable price fluctuation, and with a minimal decline in worth. A liquid market is a type of market that possesses a high level of stability, and low spreads between asking and selling prices. Securities issued by the Government are considered risk-free, and as such, their yields are often used as the benchmarks for fixed- income securities with the same maturities. The government securities market constitutes a key segment of the financial market, heavily traded offering virtually credit risk-free highly liquid financial instruments, which market participants are more willing to transact and take positions.
[23] Deflation is a situation in which -
A.
The value of money is falling.
B.
The price of goods is increasing.
C.
The value of money is increasing.
D.
The price level is stagnant.
Ans:
The value of money is increasing.
Explanation :
Deflation is a situation where the prices of goods and commodities in a country go down. i.e., there is negative inflation. This is caused due to reduced supply of money/credit. Inflation reduces the real value of money over time; conversely, deflation increases the real value of money - the currency of a national or regional economy.
[24] Stagflation refers to a situation which is characterized by -
A.
stagnant employment and deflation
B.
deflation and rising unemployment
C.
inflation and rising employment.
D.
inflation and rising unemployment
Ans:
inflation and rising unemployment
Explanation :
Stagflation describes a situation where an inflation rate is high, the economic growth rate slows down, and unemployment remains steadily high. It raises a dilemma for economic policy since actions designed to lower inflation may exacerbate unemployment, and vice versa.
[25] How will a reduction in 'Bank Rate' affect the availability of credit?
A.
Credit will increase
B.
Credit will not increase
C.
Credit will decrease
D.
None of these
Ans:
Credit will increase
Explanation :
Bank rate, also referred to as the discount rate, is the rate of interest which a central bank charges on the loans and advances to a commercial bank. Whenever the banks have any shortage of funds they can borrow it from the central bank. Repo (Repurchase) rate is the rate at which the central bank lends short-term money to the banks against securities. A reduction in the repo rate will help banks to get money at a cheaper rate. When the repo rate increases borrowing from the central bank becomes more expensive. It is more applicable when there is a liquidity crunch in the market.
Explanation :
The UNIVAC computer was the first commercially available computer invented by John Presper Eckert and John Mauchly. As well as being the first American commercial computer, the UNIVAC I was the first American computer designed at the outset for business and administrative use (i.e., for the fast execution of large numbers of relatively simple arithmetic and data transport operations, as opposed to the complex numerical calculations required by scientific computers). As such the UNIVAC competed directly against punch-card machines (mainly made by IBM).
[18] Malthusian theory of population explored the relationship between -
A.
food supply and technology
B.
food supply and population growth
C.
population growth and development
D.
optimum growth and resources
Ans:
food supply and population growth
Explanation :
According to Malthusian theory of population, population increases in a geometrical ratio, whereas food supply increases in an arithmetic ratio. This disharmony would lead to widespread poverty and starvation, which would only be checked by natural occurrences such as disease, high infant mortality, famine, war or moral restraint.
[19] In public budgets, zero-base budgeting was first introduced in -
A.
USA
B.
UK
C.
France
D.
Sweden
Ans:
USA
Explanation :
Zero-based budgeting is an approach to planning and decision-making which reverses the working process of traditional budgeting. This technique of budgeting was developed by Peter Phyrr in the United States and was first implemented at Texas Instruments in the 1960s. In 1973, President Jimmy Carter contracted with Phyrr to implement a ZBB system for the State of Georgia executive budget process.
[20] The sale proceeds of Government Bonds come under the budget head of -
A.
Revenue Receipts
B.
Current Expenditure
C.
Capital Outlay
D.
Capital Receipts
Ans:
Capital Receipts
Explanation :
Capital receipts are the funds received into the businesses that are not part of the operating activities of the establishment. Capital receipts primarily include external assistance, market loans, small savings, principal investment in bonds, and Government provident funds. A capital receipt is a receipt which is derived from sale or purchase of capital assets like plant and machinery, furniture, investment (long term) etc., which shall not be occurring all the time.
[21] The incidence of sales tax falls on -
A.
Consumers
B.
Wholesale dealers
C.
Retail dealers
D.
Producers
Ans:
Consumers
Explanation :
In economics, tax incidence is the analysis of the effect of a particular tax on the distribution of economic welfare. Tax incidence is said to "fall" upon the group that ultimately bears the burden of, or ultimately has to pay the tax. The key concept is that the tax incidence or tax burden does not depend on where the revenue is collected, but on the price elasticity of demand and price elasticity of supply.
[22] Government securities are considered liquid because they are -
A.
backed by the Government treasury
B.
convertible into other types of saving deposits
C.
quickly and easily marketable
D.
stable in value
Ans:
quickly and easily marketable
Explanation :
Liquid Asset is an asset that can be converted into cash quickly and with minimal impact to the price received. In a liquid market, assets can be easily converted without considerable price fluctuation, and with a minimal decline in worth. A liquid market is a type of market that possesses a high level of stability, and low spreads between asking and selling prices. Securities issued by the Government are considered risk-free, and as such, their yields are often used as the benchmarks for fixed- income securities with the same maturities. The government securities market constitutes a key segment of the financial market, heavily traded offering virtually credit risk-free highly liquid financial instruments, which market participants are more willing to transact and take positions.
[23] Deflation is a situation in which -
A.
The value of money is falling.
B.
The price of goods is increasing.
C.
The value of money is increasing.
D.
The price level is stagnant.
Ans:
The value of money is increasing.
Explanation :
Deflation is a situation where the prices of goods and commodities in a country go down. i.e., there is negative inflation. This is caused due to reduced supply of money/credit. Inflation reduces the real value of money over time; conversely, deflation increases the real value of money - the currency of a national or regional economy.
[24] Stagflation refers to a situation which is characterized by -
A.
stagnant employment and deflation
B.
deflation and rising unemployment
C.
inflation and rising employment.
D.
inflation and rising unemployment
Ans:
inflation and rising unemployment
Explanation :
Stagflation describes a situation where an inflation rate is high, the economic growth rate slows down, and unemployment remains steadily high. It raises a dilemma for economic policy since actions designed to lower inflation may exacerbate unemployment, and vice versa.
[25] How will a reduction in 'Bank Rate' affect the availability of credit?
A.
Credit will increase
B.
Credit will not increase
C.
Credit will decrease
D.
None of these
Ans:
Credit will increase
Explanation :
Bank rate, also referred to as the discount rate, is the rate of interest which a central bank charges on the loans and advances to a commercial bank. Whenever the banks have any shortage of funds they can borrow it from the central bank. Repo (Repurchase) rate is the rate at which the central bank lends short-term money to the banks against securities. A reduction in the repo rate will help banks to get money at a cheaper rate. When the repo rate increases borrowing from the central bank becomes more expensive. It is more applicable when there is a liquidity crunch in the market.
Explanation :
Zero-based budgeting is an approach to planning and decision-making which reverses the working process of traditional budgeting. This technique of budgeting was developed by Peter Phyrr in the United States and was first implemented at Texas Instruments in the 1960s. In 1973, President Jimmy Carter contracted with Phyrr to implement a ZBB system for the State of Georgia executive budget process.
[20] The sale proceeds of Government Bonds come under the budget head of -
A.
Revenue Receipts
B.
Current Expenditure
C.
Capital Outlay
D.
Capital Receipts
Ans:
Capital Receipts
Explanation :
Capital receipts are the funds received into the businesses that are not part of the operating activities of the establishment. Capital receipts primarily include external assistance, market loans, small savings, principal investment in bonds, and Government provident funds. A capital receipt is a receipt which is derived from sale or purchase of capital assets like plant and machinery, furniture, investment (long term) etc., which shall not be occurring all the time.
[21] The incidence of sales tax falls on -
A.
Consumers
B.
Wholesale dealers
C.
Retail dealers
D.
Producers
Ans:
Consumers
Explanation :
In economics, tax incidence is the analysis of the effect of a particular tax on the distribution of economic welfare. Tax incidence is said to "fall" upon the group that ultimately bears the burden of, or ultimately has to pay the tax. The key concept is that the tax incidence or tax burden does not depend on where the revenue is collected, but on the price elasticity of demand and price elasticity of supply.
[22] Government securities are considered liquid because they are -
A.
backed by the Government treasury
B.
convertible into other types of saving deposits
C.
quickly and easily marketable
D.
stable in value
Ans:
quickly and easily marketable
Explanation :
Liquid Asset is an asset that can be converted into cash quickly and with minimal impact to the price received. In a liquid market, assets can be easily converted without considerable price fluctuation, and with a minimal decline in worth. A liquid market is a type of market that possesses a high level of stability, and low spreads between asking and selling prices. Securities issued by the Government are considered risk-free, and as such, their yields are often used as the benchmarks for fixed- income securities with the same maturities. The government securities market constitutes a key segment of the financial market, heavily traded offering virtually credit risk-free highly liquid financial instruments, which market participants are more willing to transact and take positions.
[23] Deflation is a situation in which -
A.
The value of money is falling.
B.
The price of goods is increasing.
C.
The value of money is increasing.
D.
The price level is stagnant.
Ans:
The value of money is increasing.
Explanation :
Deflation is a situation where the prices of goods and commodities in a country go down. i.e., there is negative inflation. This is caused due to reduced supply of money/credit. Inflation reduces the real value of money over time; conversely, deflation increases the real value of money - the currency of a national or regional economy.
[24] Stagflation refers to a situation which is characterized by -
A.
stagnant employment and deflation
B.
deflation and rising unemployment
C.
inflation and rising employment.
D.
inflation and rising unemployment
Ans:
inflation and rising unemployment
Explanation :
Stagflation describes a situation where an inflation rate is high, the economic growth rate slows down, and unemployment remains steadily high. It raises a dilemma for economic policy since actions designed to lower inflation may exacerbate unemployment, and vice versa.
[25] How will a reduction in 'Bank Rate' affect the availability of credit?
A.
Credit will increase
B.
Credit will not increase
C.
Credit will decrease
D.
None of these
Ans:
Credit will increase
Explanation :
Bank rate, also referred to as the discount rate, is the rate of interest which a central bank charges on the loans and advances to a commercial bank. Whenever the banks have any shortage of funds they can borrow it from the central bank. Repo (Repurchase) rate is the rate at which the central bank lends short-term money to the banks against securities. A reduction in the repo rate will help banks to get money at a cheaper rate. When the repo rate increases borrowing from the central bank becomes more expensive. It is more applicable when there is a liquidity crunch in the market.
Explanation :
In economics, tax incidence is the analysis of the effect of a particular tax on the distribution of economic welfare. Tax incidence is said to "fall" upon the group that ultimately bears the burden of, or ultimately has to pay the tax. The key concept is that the tax incidence or tax burden does not depend on where the revenue is collected, but on the price elasticity of demand and price elasticity of supply.
[22] Government securities are considered liquid because they are -
A.
backed by the Government treasury
B.
convertible into other types of saving deposits
C.
quickly and easily marketable
D.
stable in value
Ans:
quickly and easily marketable
Explanation :
Liquid Asset is an asset that can be converted into cash quickly and with minimal impact to the price received. In a liquid market, assets can be easily converted without considerable price fluctuation, and with a minimal decline in worth. A liquid market is a type of market that possesses a high level of stability, and low spreads between asking and selling prices. Securities issued by the Government are considered risk-free, and as such, their yields are often used as the benchmarks for fixed- income securities with the same maturities. The government securities market constitutes a key segment of the financial market, heavily traded offering virtually credit risk-free highly liquid financial instruments, which market participants are more willing to transact and take positions.
[23] Deflation is a situation in which -
A.
The value of money is falling.
B.
The price of goods is increasing.
C.
The value of money is increasing.
D.
The price level is stagnant.
Ans:
The value of money is increasing.
Explanation :
Deflation is a situation where the prices of goods and commodities in a country go down. i.e., there is negative inflation. This is caused due to reduced supply of money/credit. Inflation reduces the real value of money over time; conversely, deflation increases the real value of money - the currency of a national or regional economy.
[24] Stagflation refers to a situation which is characterized by -
A.
stagnant employment and deflation
B.
deflation and rising unemployment
C.
inflation and rising employment.
D.
inflation and rising unemployment
Ans:
inflation and rising unemployment
Explanation :
Stagflation describes a situation where an inflation rate is high, the economic growth rate slows down, and unemployment remains steadily high. It raises a dilemma for economic policy since actions designed to lower inflation may exacerbate unemployment, and vice versa.
[25] How will a reduction in 'Bank Rate' affect the availability of credit?
A.
Credit will increase
B.
Credit will not increase
C.
Credit will decrease
D.
None of these
Ans:
Credit will increase
Explanation :
Bank rate, also referred to as the discount rate, is the rate of interest which a central bank charges on the loans and advances to a commercial bank. Whenever the banks have any shortage of funds they can borrow it from the central bank. Repo (Repurchase) rate is the rate at which the central bank lends short-term money to the banks against securities. A reduction in the repo rate will help banks to get money at a cheaper rate. When the repo rate increases borrowing from the central bank becomes more expensive. It is more applicable when there is a liquidity crunch in the market.
Explanation :
Deflation is a situation where the prices of goods and commodities in a country go down. i.e., there is negative inflation. This is caused due to reduced supply of money/credit. Inflation reduces the real value of money over time; conversely, deflation increases the real value of money - the currency of a national or regional economy.
[24] Stagflation refers to a situation which is characterized by -
A.
stagnant employment and deflation
B.
deflation and rising unemployment
C.
inflation and rising employment.
D.
inflation and rising unemployment
Ans:
inflation and rising unemployment
Explanation :
Stagflation describes a situation where an inflation rate is high, the economic growth rate slows down, and unemployment remains steadily high. It raises a dilemma for economic policy since actions designed to lower inflation may exacerbate unemployment, and vice versa.
[25] How will a reduction in 'Bank Rate' affect the availability of credit?
A.
Credit will increase
B.
Credit will not increase
C.
Credit will decrease
D.
None of these
Ans:
Credit will increase
Explanation :
Bank rate, also referred to as the discount rate, is the rate of interest which a central bank charges on the loans and advances to a commercial bank. Whenever the banks have any shortage of funds they can borrow it from the central bank. Repo (Repurchase) rate is the rate at which the central bank lends short-term money to the banks against securities. A reduction in the repo rate will help banks to get money at a cheaper rate. When the repo rate increases borrowing from the central bank becomes more expensive. It is more applicable when there is a liquidity crunch in the market.
Explanation :
Bank rate, also referred to as the discount rate, is the rate of interest which a central bank charges on the loans and advances to a commercial bank. Whenever the banks have any shortage of funds they can borrow it from the central bank. Repo (Repurchase) rate is the rate at which the central bank lends short-term money to the banks against securities. A reduction in the repo rate will help banks to get money at a cheaper rate. When the repo rate increases borrowing from the central bank becomes more expensive. It is more applicable when there is a liquidity crunch in the market.