[1] Transfer payments mean -
A.
Old age pensions
B.
Unemployment compensations
C.
Social security payments
D.
All the above
Ans:
All the above
Explanation :
Transfer payment refers to a payment made by a public authority other than one made in exchange for goods or service produced. Transfer payments are not part of the national income. Examples include Old age pensions, unemployment compensations, social security payments and child benefit.
[2] In accounting terms, what constitutes the 'closing stock'?
A.
Net Investment
B.
Gross Investment - Capital Losses
C.
Opening Stock - Capital Losses
D.
Opening Stock + Net Investment - Capital Losses
Ans:
Opening Stock + Net Investment - Capital Losses
Explanation :
Closing stock refers to the goods remaining un-sold during the year. It includes finished products, raw materials, or work in progress and is deducted from the period's costs in the balance sheets. The amount of closing stock (properly valued) is used to arrive at the cost of goods sold in a periodic inventory system with the following calculation: Opening stock + Purchases - Closing stock = Cost of goods sold.
[3] National income accounting is the study of the income and expenditure of the entire -
A.
family
B.
state
C.
economy
D.
organisation
Ans:
economy
Explanation :
National Income Accounting is a set of principles and methods used to measure the income and production of a country. There are basically two ways of measuring national economic activity: as the money value of the total production of goods and services during a given period (usually a year) or as the total of incomes derived from economic activity after allowance has been made for capital consumption.
[4] In a business, raw materials, components, work in progress and finished goods are jointly regarded as -
A.
capital stock
B.
inventory
C.
investment
D.
net worth
Ans:
inventory
Explanation :
Inventory refers to raw materials, work-in-process goods and completely finished goods that are considered to be the portion of a business's assets that are ready or will be ready for sale. Inventory represents one of the most important assets that most businesses possess, because the turnover of inventory represents one of the primary sources of revenue generation and subsequent earnings for the company's shareholders/owners.
[5] The gradation and standardization of agricultural products are conducted through -
A.
Food Corporation of India
B.
Directorate of Marketing and Inspection
C.
Indian Standards Institution
D.
Central Statistical Organization
Ans:
Directorate of Marketing and Inspection
Explanation :
The Directorate of Marketing and Inspection (DMI) is an attached Office of the Ministry of Agriculture. It was set up in the year 1935 to implement the agricultural marketing policies and programmes of the Central Government. It aims at bringing integrated development of marketing of agricultural and allied produce in the country. It is entrusted with promotion of standardization and grading of agricultural and allied produce.
[6] According to the Employment Outlook 2007 reports of the Organisation for Economic Cooperation and Development (OECD), the number of new jobs created in India every year from 2000 to 2005 is -
A.
5 million
B.
8 million
C.
11 million
D.
13 million
Ans:
11 million
Explanation :
Over the period 2000-05, India generated 11.3 million net new jobs per year, on average. The figure was 7 million in China, 2.7 million in Brazil and 0.7 million jobs hi the Russian Federation, compared with an average of 3.7 million net new jobs generated in the OECD area as a whole each year over the same period.
[7] "Marginal Cost" equals -
A.
total cost minus total benefit for the last unit produced
B.
total cost divided by total benefit for the last unit produced
C.
total cost divided by quantity
D.
the change in total cost divided by the change in quantity
Ans:
the change in total cost divided by the change in quantity
Explanation :
Marginal cost is the change in the total cost that arises when the quantity produced has an increment by unity. That is, it is the cost of producing one more unit of a good. To illustrate marginal cost let's assume that the total cost of producing 10,000 units is Rs.50,000. If we produce a total of 10,001 units the total cost is Rs.50,002. That would mean the marginal cost—the cost of producing the next unit— was Rs.2.
[8] A low interest policy is also known as –
A.
cheap money policy
B.
income generating
C.
dear money policy
D.
investment policy
Ans:
cheap money policy
Explanation :
Cheap money policy involves loan or credit with a low interest rate, or the setting of low interest rates by the central bank of the country. Cheap money is good for borrowers, but bad for investors. Cheap money policy was one of the primary catalysts of the 2008 recession.
[9] Economics classifies the manmade instrument of production as:
A.
Organization
B.
Capital
C.
equipment
D.
labour
Ans:
Capital
Explanation :
Some economists have classified factors into two categories, land and labour (or nature and man) on the ground that they are the only original or primary factors. It is said that capital has no independent origin and is merely the outcome of combined efforts of land and labour. However, other economists include all man-made instruments for production in the category of Capital.
[10] A demand curve will not shift:
A.
When only income changes
B.
When only prices of substitute products change
C.
When there is a change in advertisement expenditure
D.
When only price of the commodity changes
Ans:
When only price of the commodity changes
Explanation :
In economics, the demand curve is the graph depicting the relationship between the price of a certain commodity and the amount of it that consumers are willing and able to purchase at that given price. A change in price of the commodity leads to a movement along the demand curve without shifting it. In simple words, the increase of decrease in price of a commodity only causes contraction or extension of demand (increase causes contraction while decrease cause extension). Increase or decrease in demand only occurs only when there is a change in other determinants of demand, other than price of the commodity.
[11] Which law states that with constant taste and preferences, the proportion of income spend on food stuff diminishes as income increases?
A.
Say's Law
B.
Griffin's Law
C.
Gresham's Law
D.
Engel's Law
Ans:
Engel's Law
Explanation :
According to Engel's Law, as disposable income of a consumer increases, the percentage of income spent for food decreases if all other factors remain constant. This happens even when the actual expenditure on food rises. The income elasticity of demand of food is less than 1. A lower Engel coefficient indicates a higher standard of living.
[12] Extreme forms of markets are -
A.
Perfect competition; Oligopoly
B.
Oligopoly; Monopoly
C.
Perfect competition; Monopoly
D.
Perfect competition; Monopolistic competition
Ans:
Perfect competition; Monopoly
Explanation :
There are two extreme forms of market structure: monopoly and, its opposite, perfect competition. Perfect competition is characterized by many buyers and sellers, many products that are similar in nature and, as a result, many substitutes. A monopoly is a market structure in which there is only one producer/ seller for a product.
[13] National Income include :
A.
Financial help to earthquake victims
B.
Pocket money of a child
C.
Winning of a lottery prize
D.
Construction of a new house
Ans:
Construction of a new house
Explanation :
National income is the total value a country’s final output of all new goods and services produced in one year. So construction of a new house is certainly output of goods. Transfer payments are not a part of the national income. So private sector transfers including charitable donations and prizes to lottery winners are excluded from it.
[14] Value of out put and value added can be distinguished if we know:
A.
the value of intermediate consumption
B.
the value of net indirect taxes
C.
the value of the sales
D.
the value of consumption of fixed capital
Ans:
the value of intermediate consumption
Explanation :
Intermediate consumption is an accounting flow which consists of the total monetary value of goods and services consumed or used up as inputs in production by enterprises, including raw materials, services and various other operating expenses. Intermediate consumption (unlike fixed assets) is not normally classified in national accounts by type of good or service, because the accounts will show net output by sector of activity. Because this value must be subtracted from Gross Output to arrive at GDP, how it is exactly defined and estimated will importantly affect the size of the GDP estimate.
[15] Who prepared the first estimate of National Income for the country?
A.
Central Statistical Organisation
B.
National Income Committee
C.
Dadabhai Naoroji
D.
National Sample Survey Organisation
Ans:
Dadabhai Naoroji
Explanation :
Dadabhai Naoroji prepared the first estimates of National income in 1876. He estimated the national income by first estimating the value of agricultural production and then adding a certain percentage as nonagricultural production. However, such method can only been called as a non-scientific method.
[16] 'Supply creates its own demand'. This statement is related to -
A.
Prof. J.B. Say
B.
John Robinson
C.
Adam Smith
D.
J.S. Mill
Ans:
Prof. J.B. Say
Explanation :
Jean Baptiste Say was a French economist. He is well known for Say’s Law (or Say’s Law of Markets), often summarized as: “Aggregate supply creates its own aggregate demand”; “Supply creates its own demand”, or “Supply constitutes its own demand”. He argued that production and sale of goods in an economy automatically produces an income for the producers of the same value, which would then be reinjected into the economy and create enough demand to buy the goods. Thus production is determined by the supply of goods rather than demand.
[17] Sectoral distribution of GDP index measures .
A.
Agriculture development of a country
B.
Economic development of a country
C.
Social development of a country
D.
Socio-Economic development of a Country
Ans:
Economic development of a country
Explanation :
The sectoral distribution of GDP index measures the development of a country across several economic activities. It the market value of all final goods and services produced in a period (quarterly or yearly).
[18] Which among the following statements is not true when there is an increase in interest rate in an economy?
A.
increase in saving
B.
decrease in loan
C.
increase in production cost
D.
increase in capital return
Ans:
increase in capital return
Explanation :
Interest rate increases the cost of borrowing, which results in lesser investment activity and the purchase of consumer durables. In a low interest-rate environment, shares become a more attractive buy, raising households' financial assets. This may also contribute to higher consumer spending, and makes companies' investment projects more attractive. Lower interest rates also tend to cause currencies to depreciate: Demand for domestic goods rises when imported goods become more expensive. All of these factors raise output and employment as well as investment and consumer spending.
[19] The difference between the GNP and the NNP is equal to the -
A.
consumer expenditure on durable goods
B.
direct tax revenue
C.
indirect tax revenue
D.
capital depreciation
Ans:
capital depreciation
Explanation :
Depreciation refers to two very different but related concepts: the decrease in value of assets (fair value depreciation), and the allocation of the cost of assets to periods in which the assets are used (depreciation with (he matching principle). The difference between the GNP and NNP is equal to capital depreciation. It is the wearing out, breaking down, or technological obsolescence.
[20] By whom was the autonomous investment separated from induced investment?
A.
Schumpeter
B.
Malthus
C.
Joan Robinson
D.
Adam Smith
Ans:
Schumpeter
Explanation :
Under his concept of creative destruction, Schunipeter distinguished between two types of investment that he called induced and autonomous. Induced investment arose from the discrepancy between sup- ply and demand and autonomous investment from resources and technology created by the entrepreneurs. He also introduced a concept of "saving up" which is different from saving in the neoclassical growth models. Saving up constituted the part of out-put that is withheld from investment and consumption.
[21] When price of a substitute of commodity falls, the demand for -
A.
falls
B.
remains unchanged
C.
increases at increasing rate
D.
rises
Ans:
falls
Explanation :
Cross Price Effect refers to effect on the demand for a given commodity due to a change in the price of a substitute commodity. A change (increase or decrease) in the price of substitutes directly affects the demand for a given commodity. When price of substitute goods (say, coffee) rises, demand for the given commodity (say, tea) also rises at its same price. It leads to a rightward shift in the demand curve of the given commodity. With decrease in price of substitute goods (coffee), demand for the given commodity (tea) also decreases. It shifts the demand curve of the given commodity towards left.
[22] A mixed economy refers to an economic system where -
A.
The economy functions with foreign collaboration
B.
Only t he private sector operates under government control
C.
Both the government and the private sectors operate sectors operate simultaneously
D.
No foreign investment is allowed
Ans:
Both the government and the private sectors operate sectors operate simultaneously
Explanation :
Mixed economy is an economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies. The basic idea of the mixed economy is that the means of production are mainly under private ownership: that markets remain the dominant form of economic coordination: and that the government wields indirect influence over the economy through fiscal arid monetary policies.
[23] A Black Market is a situation where in -
A.
Goods are loaded by the producers
B.
Goods are sold secretly
C.
Goods are sold at prices higher than what is fixed by the Government
D.
Goods are made available
Ans:
Goods are sold secretly
Explanation :
Black market is the market in which illegal goods are traded. Goods acquired illegally take one of two price levels: (i) they may be cheaper than legal market prices as the supplier does not have to pay for production costs or taxes; or (ii) they may be more expensive than legal market prices as the product is difficult to acquire or produce, dangerous to handle or not easily available legally. Black-market transactions typically occur as a way for participants to avoid government price controls or taxes, conducting transactions 'under the table.' So the most defining feature of black markets is that they have to be carried out secretly as they are illegal.
[24] Buoyancy of a tax is defined as -
A.
percentage increase in tax revenue/percentage increase in tax base
B.
increase in tax revenue/ percentage increase in tax coverage
C.
increase in tax revenue/increase in tax base
D.
percentage increase in tax revenue/ increase in tax coverage
Ans:
increase in tax revenue/increase in tax base
Explanation :
Buoyancy means the growth/increase in tax collections. This is in line with the GDP growth within the economy, the industry profile and the tax structure administered by the government. Tax buoyancy measures the total response of tax revenues to changes in national income. Total response takes into account both increases in income and discretionary changes (i.e., tax rates and bases) made by tax authorities in the system. The responsiveness of tax revenues to discretionary changes in the tax rate and in the tax base in relation to the GDP is termed the buoyancy of the tax system.
[25] What is referred to as "Depository Services"?
A.
A new scheme of fixed deposits
B.
A method of regulating stock exchanges
C.
An agency for safe-keeping of securities
D.
An advisory service to investors
Ans:
An agency for safe-keeping of securities
Explanation :
A Central Securities Depository (CSD) is an organization holding securities either in certificated or un- certificated (dematerialized) form, to enable book entry transfer of securities. In some cases these organizations also carry out centralized comparison, and transaction processing such as clearing and settlement of securities. The physical securities may be immobilized by the depository, or securities may be dematerialized (so that they exist only as electronic records). The following are depository services: Demat accounts; dematerialization; rematerialization; transfer of securities; and pledge services.
Explanation :
Transfer payment refers to a payment made by a public authority other than one made in exchange for goods or service produced. Transfer payments are not part of the national income. Examples include Old age pensions, unemployment compensations, social security payments and child benefit.
[2] In accounting terms, what constitutes the 'closing stock'?
A.
Net Investment
B.
Gross Investment - Capital Losses
C.
Opening Stock - Capital Losses
D.
Opening Stock + Net Investment - Capital Losses
Ans:
Opening Stock + Net Investment - Capital Losses
Explanation :
Closing stock refers to the goods remaining un-sold during the year. It includes finished products, raw materials, or work in progress and is deducted from the period's costs in the balance sheets. The amount of closing stock (properly valued) is used to arrive at the cost of goods sold in a periodic inventory system with the following calculation: Opening stock + Purchases - Closing stock = Cost of goods sold.
[3] National income accounting is the study of the income and expenditure of the entire -
A.
family
B.
state
C.
economy
D.
organisation
Ans:
economy
Explanation :
National Income Accounting is a set of principles and methods used to measure the income and production of a country. There are basically two ways of measuring national economic activity: as the money value of the total production of goods and services during a given period (usually a year) or as the total of incomes derived from economic activity after allowance has been made for capital consumption.
[4] In a business, raw materials, components, work in progress and finished goods are jointly regarded as -
A.
capital stock
B.
inventory
C.
investment
D.
net worth
Ans:
inventory
Explanation :
Inventory refers to raw materials, work-in-process goods and completely finished goods that are considered to be the portion of a business's assets that are ready or will be ready for sale. Inventory represents one of the most important assets that most businesses possess, because the turnover of inventory represents one of the primary sources of revenue generation and subsequent earnings for the company's shareholders/owners.
[5] The gradation and standardization of agricultural products are conducted through -
A.
Food Corporation of India
B.
Directorate of Marketing and Inspection
C.
Indian Standards Institution
D.
Central Statistical Organization
Ans:
Directorate of Marketing and Inspection
Explanation :
The Directorate of Marketing and Inspection (DMI) is an attached Office of the Ministry of Agriculture. It was set up in the year 1935 to implement the agricultural marketing policies and programmes of the Central Government. It aims at bringing integrated development of marketing of agricultural and allied produce in the country. It is entrusted with promotion of standardization and grading of agricultural and allied produce.
[6] According to the Employment Outlook 2007 reports of the Organisation for Economic Cooperation and Development (OECD), the number of new jobs created in India every year from 2000 to 2005 is -
A.
5 million
B.
8 million
C.
11 million
D.
13 million
Ans:
11 million
Explanation :
Over the period 2000-05, India generated 11.3 million net new jobs per year, on average. The figure was 7 million in China, 2.7 million in Brazil and 0.7 million jobs hi the Russian Federation, compared with an average of 3.7 million net new jobs generated in the OECD area as a whole each year over the same period.
[7] "Marginal Cost" equals -
A.
total cost minus total benefit for the last unit produced
B.
total cost divided by total benefit for the last unit produced
C.
total cost divided by quantity
D.
the change in total cost divided by the change in quantity
Ans:
the change in total cost divided by the change in quantity
Explanation :
Marginal cost is the change in the total cost that arises when the quantity produced has an increment by unity. That is, it is the cost of producing one more unit of a good. To illustrate marginal cost let's assume that the total cost of producing 10,000 units is Rs.50,000. If we produce a total of 10,001 units the total cost is Rs.50,002. That would mean the marginal cost—the cost of producing the next unit— was Rs.2.
[8] A low interest policy is also known as –
A.
cheap money policy
B.
income generating
C.
dear money policy
D.
investment policy
Ans:
cheap money policy
Explanation :
Cheap money policy involves loan or credit with a low interest rate, or the setting of low interest rates by the central bank of the country. Cheap money is good for borrowers, but bad for investors. Cheap money policy was one of the primary catalysts of the 2008 recession.
[9] Economics classifies the manmade instrument of production as:
A.
Organization
B.
Capital
C.
equipment
D.
labour
Ans:
Capital
Explanation :
Some economists have classified factors into two categories, land and labour (or nature and man) on the ground that they are the only original or primary factors. It is said that capital has no independent origin and is merely the outcome of combined efforts of land and labour. However, other economists include all man-made instruments for production in the category of Capital.
[10] A demand curve will not shift:
A.
When only income changes
B.
When only prices of substitute products change
C.
When there is a change in advertisement expenditure
D.
When only price of the commodity changes
Ans:
When only price of the commodity changes
Explanation :
In economics, the demand curve is the graph depicting the relationship between the price of a certain commodity and the amount of it that consumers are willing and able to purchase at that given price. A change in price of the commodity leads to a movement along the demand curve without shifting it. In simple words, the increase of decrease in price of a commodity only causes contraction or extension of demand (increase causes contraction while decrease cause extension). Increase or decrease in demand only occurs only when there is a change in other determinants of demand, other than price of the commodity.
[11] Which law states that with constant taste and preferences, the proportion of income spend on food stuff diminishes as income increases?
A.
Say's Law
B.
Griffin's Law
C.
Gresham's Law
D.
Engel's Law
Ans:
Engel's Law
Explanation :
According to Engel's Law, as disposable income of a consumer increases, the percentage of income spent for food decreases if all other factors remain constant. This happens even when the actual expenditure on food rises. The income elasticity of demand of food is less than 1. A lower Engel coefficient indicates a higher standard of living.
[12] Extreme forms of markets are -
A.
Perfect competition; Oligopoly
B.
Oligopoly; Monopoly
C.
Perfect competition; Monopoly
D.
Perfect competition; Monopolistic competition
Ans:
Perfect competition; Monopoly
Explanation :
There are two extreme forms of market structure: monopoly and, its opposite, perfect competition. Perfect competition is characterized by many buyers and sellers, many products that are similar in nature and, as a result, many substitutes. A monopoly is a market structure in which there is only one producer/ seller for a product.
[13] National Income include :
A.
Financial help to earthquake victims
B.
Pocket money of a child
C.
Winning of a lottery prize
D.
Construction of a new house
Ans:
Construction of a new house
Explanation :
National income is the total value a country’s final output of all new goods and services produced in one year. So construction of a new house is certainly output of goods. Transfer payments are not a part of the national income. So private sector transfers including charitable donations and prizes to lottery winners are excluded from it.
[14] Value of out put and value added can be distinguished if we know:
A.
the value of intermediate consumption
B.
the value of net indirect taxes
C.
the value of the sales
D.
the value of consumption of fixed capital
Ans:
the value of intermediate consumption
Explanation :
Intermediate consumption is an accounting flow which consists of the total monetary value of goods and services consumed or used up as inputs in production by enterprises, including raw materials, services and various other operating expenses. Intermediate consumption (unlike fixed assets) is not normally classified in national accounts by type of good or service, because the accounts will show net output by sector of activity. Because this value must be subtracted from Gross Output to arrive at GDP, how it is exactly defined and estimated will importantly affect the size of the GDP estimate.
[15] Who prepared the first estimate of National Income for the country?
A.
Central Statistical Organisation
B.
National Income Committee
C.
Dadabhai Naoroji
D.
National Sample Survey Organisation
Ans:
Dadabhai Naoroji
Explanation :
Dadabhai Naoroji prepared the first estimates of National income in 1876. He estimated the national income by first estimating the value of agricultural production and then adding a certain percentage as nonagricultural production. However, such method can only been called as a non-scientific method.
[16] 'Supply creates its own demand'. This statement is related to -
A.
Prof. J.B. Say
B.
John Robinson
C.
Adam Smith
D.
J.S. Mill
Ans:
Prof. J.B. Say
Explanation :
Jean Baptiste Say was a French economist. He is well known for Say’s Law (or Say’s Law of Markets), often summarized as: “Aggregate supply creates its own aggregate demand”; “Supply creates its own demand”, or “Supply constitutes its own demand”. He argued that production and sale of goods in an economy automatically produces an income for the producers of the same value, which would then be reinjected into the economy and create enough demand to buy the goods. Thus production is determined by the supply of goods rather than demand.
[17] Sectoral distribution of GDP index measures .
A.
Agriculture development of a country
B.
Economic development of a country
C.
Social development of a country
D.
Socio-Economic development of a Country
Ans:
Economic development of a country
Explanation :
The sectoral distribution of GDP index measures the development of a country across several economic activities. It the market value of all final goods and services produced in a period (quarterly or yearly).
[18] Which among the following statements is not true when there is an increase in interest rate in an economy?
A.
increase in saving
B.
decrease in loan
C.
increase in production cost
D.
increase in capital return
Ans:
increase in capital return
Explanation :
Interest rate increases the cost of borrowing, which results in lesser investment activity and the purchase of consumer durables. In a low interest-rate environment, shares become a more attractive buy, raising households' financial assets. This may also contribute to higher consumer spending, and makes companies' investment projects more attractive. Lower interest rates also tend to cause currencies to depreciate: Demand for domestic goods rises when imported goods become more expensive. All of these factors raise output and employment as well as investment and consumer spending.
[19] The difference between the GNP and the NNP is equal to the -
A.
consumer expenditure on durable goods
B.
direct tax revenue
C.
indirect tax revenue
D.
capital depreciation
Ans:
capital depreciation
Explanation :
Depreciation refers to two very different but related concepts: the decrease in value of assets (fair value depreciation), and the allocation of the cost of assets to periods in which the assets are used (depreciation with (he matching principle). The difference between the GNP and NNP is equal to capital depreciation. It is the wearing out, breaking down, or technological obsolescence.
[20] By whom was the autonomous investment separated from induced investment?
A.
Schumpeter
B.
Malthus
C.
Joan Robinson
D.
Adam Smith
Ans:
Schumpeter
Explanation :
Under his concept of creative destruction, Schunipeter distinguished between two types of investment that he called induced and autonomous. Induced investment arose from the discrepancy between sup- ply and demand and autonomous investment from resources and technology created by the entrepreneurs. He also introduced a concept of "saving up" which is different from saving in the neoclassical growth models. Saving up constituted the part of out-put that is withheld from investment and consumption.
[21] When price of a substitute of commodity falls, the demand for -
A.
falls
B.
remains unchanged
C.
increases at increasing rate
D.
rises
Ans:
falls
Explanation :
Cross Price Effect refers to effect on the demand for a given commodity due to a change in the price of a substitute commodity. A change (increase or decrease) in the price of substitutes directly affects the demand for a given commodity. When price of substitute goods (say, coffee) rises, demand for the given commodity (say, tea) also rises at its same price. It leads to a rightward shift in the demand curve of the given commodity. With decrease in price of substitute goods (coffee), demand for the given commodity (tea) also decreases. It shifts the demand curve of the given commodity towards left.
[22] A mixed economy refers to an economic system where -
A.
The economy functions with foreign collaboration
B.
Only t he private sector operates under government control
C.
Both the government and the private sectors operate sectors operate simultaneously
D.
No foreign investment is allowed
Ans:
Both the government and the private sectors operate sectors operate simultaneously
Explanation :
Mixed economy is an economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies. The basic idea of the mixed economy is that the means of production are mainly under private ownership: that markets remain the dominant form of economic coordination: and that the government wields indirect influence over the economy through fiscal arid monetary policies.
[23] A Black Market is a situation where in -
A.
Goods are loaded by the producers
B.
Goods are sold secretly
C.
Goods are sold at prices higher than what is fixed by the Government
D.
Goods are made available
Ans:
Goods are sold secretly
Explanation :
Black market is the market in which illegal goods are traded. Goods acquired illegally take one of two price levels: (i) they may be cheaper than legal market prices as the supplier does not have to pay for production costs or taxes; or (ii) they may be more expensive than legal market prices as the product is difficult to acquire or produce, dangerous to handle or not easily available legally. Black-market transactions typically occur as a way for participants to avoid government price controls or taxes, conducting transactions 'under the table.' So the most defining feature of black markets is that they have to be carried out secretly as they are illegal.
[24] Buoyancy of a tax is defined as -
A.
percentage increase in tax revenue/percentage increase in tax base
B.
increase in tax revenue/ percentage increase in tax coverage
C.
increase in tax revenue/increase in tax base
D.
percentage increase in tax revenue/ increase in tax coverage
Ans:
increase in tax revenue/increase in tax base
Explanation :
Buoyancy means the growth/increase in tax collections. This is in line with the GDP growth within the economy, the industry profile and the tax structure administered by the government. Tax buoyancy measures the total response of tax revenues to changes in national income. Total response takes into account both increases in income and discretionary changes (i.e., tax rates and bases) made by tax authorities in the system. The responsiveness of tax revenues to discretionary changes in the tax rate and in the tax base in relation to the GDP is termed the buoyancy of the tax system.
[25] What is referred to as "Depository Services"?
A.
A new scheme of fixed deposits
B.
A method of regulating stock exchanges
C.
An agency for safe-keeping of securities
D.
An advisory service to investors
Ans:
An agency for safe-keeping of securities
Explanation :
A Central Securities Depository (CSD) is an organization holding securities either in certificated or un- certificated (dematerialized) form, to enable book entry transfer of securities. In some cases these organizations also carry out centralized comparison, and transaction processing such as clearing and settlement of securities. The physical securities may be immobilized by the depository, or securities may be dematerialized (so that they exist only as electronic records). The following are depository services: Demat accounts; dematerialization; rematerialization; transfer of securities; and pledge services.
Explanation :
National Income Accounting is a set of principles and methods used to measure the income and production of a country. There are basically two ways of measuring national economic activity: as the money value of the total production of goods and services during a given period (usually a year) or as the total of incomes derived from economic activity after allowance has been made for capital consumption.
[4] In a business, raw materials, components, work in progress and finished goods are jointly regarded as -
A.
capital stock
B.
inventory
C.
investment
D.
net worth
Ans:
inventory
Explanation :
Inventory refers to raw materials, work-in-process goods and completely finished goods that are considered to be the portion of a business's assets that are ready or will be ready for sale. Inventory represents one of the most important assets that most businesses possess, because the turnover of inventory represents one of the primary sources of revenue generation and subsequent earnings for the company's shareholders/owners.
[5] The gradation and standardization of agricultural products are conducted through -
A.
Food Corporation of India
B.
Directorate of Marketing and Inspection
C.
Indian Standards Institution
D.
Central Statistical Organization
Ans:
Directorate of Marketing and Inspection
Explanation :
The Directorate of Marketing and Inspection (DMI) is an attached Office of the Ministry of Agriculture. It was set up in the year 1935 to implement the agricultural marketing policies and programmes of the Central Government. It aims at bringing integrated development of marketing of agricultural and allied produce in the country. It is entrusted with promotion of standardization and grading of agricultural and allied produce.
[6] According to the Employment Outlook 2007 reports of the Organisation for Economic Cooperation and Development (OECD), the number of new jobs created in India every year from 2000 to 2005 is -
A.
5 million
B.
8 million
C.
11 million
D.
13 million
Ans:
11 million
Explanation :
Over the period 2000-05, India generated 11.3 million net new jobs per year, on average. The figure was 7 million in China, 2.7 million in Brazil and 0.7 million jobs hi the Russian Federation, compared with an average of 3.7 million net new jobs generated in the OECD area as a whole each year over the same period.
[7] "Marginal Cost" equals -
A.
total cost minus total benefit for the last unit produced
B.
total cost divided by total benefit for the last unit produced
C.
total cost divided by quantity
D.
the change in total cost divided by the change in quantity
Ans:
the change in total cost divided by the change in quantity
Explanation :
Marginal cost is the change in the total cost that arises when the quantity produced has an increment by unity. That is, it is the cost of producing one more unit of a good. To illustrate marginal cost let's assume that the total cost of producing 10,000 units is Rs.50,000. If we produce a total of 10,001 units the total cost is Rs.50,002. That would mean the marginal cost—the cost of producing the next unit— was Rs.2.
[8] A low interest policy is also known as –
A.
cheap money policy
B.
income generating
C.
dear money policy
D.
investment policy
Ans:
cheap money policy
Explanation :
Cheap money policy involves loan or credit with a low interest rate, or the setting of low interest rates by the central bank of the country. Cheap money is good for borrowers, but bad for investors. Cheap money policy was one of the primary catalysts of the 2008 recession.
[9] Economics classifies the manmade instrument of production as:
A.
Organization
B.
Capital
C.
equipment
D.
labour
Ans:
Capital
Explanation :
Some economists have classified factors into two categories, land and labour (or nature and man) on the ground that they are the only original or primary factors. It is said that capital has no independent origin and is merely the outcome of combined efforts of land and labour. However, other economists include all man-made instruments for production in the category of Capital.
[10] A demand curve will not shift:
A.
When only income changes
B.
When only prices of substitute products change
C.
When there is a change in advertisement expenditure
D.
When only price of the commodity changes
Ans:
When only price of the commodity changes
Explanation :
In economics, the demand curve is the graph depicting the relationship between the price of a certain commodity and the amount of it that consumers are willing and able to purchase at that given price. A change in price of the commodity leads to a movement along the demand curve without shifting it. In simple words, the increase of decrease in price of a commodity only causes contraction or extension of demand (increase causes contraction while decrease cause extension). Increase or decrease in demand only occurs only when there is a change in other determinants of demand, other than price of the commodity.
[11] Which law states that with constant taste and preferences, the proportion of income spend on food stuff diminishes as income increases?
A.
Say's Law
B.
Griffin's Law
C.
Gresham's Law
D.
Engel's Law
Ans:
Engel's Law
Explanation :
According to Engel's Law, as disposable income of a consumer increases, the percentage of income spent for food decreases if all other factors remain constant. This happens even when the actual expenditure on food rises. The income elasticity of demand of food is less than 1. A lower Engel coefficient indicates a higher standard of living.
[12] Extreme forms of markets are -
A.
Perfect competition; Oligopoly
B.
Oligopoly; Monopoly
C.
Perfect competition; Monopoly
D.
Perfect competition; Monopolistic competition
Ans:
Perfect competition; Monopoly
Explanation :
There are two extreme forms of market structure: monopoly and, its opposite, perfect competition. Perfect competition is characterized by many buyers and sellers, many products that are similar in nature and, as a result, many substitutes. A monopoly is a market structure in which there is only one producer/ seller for a product.
[13] National Income include :
A.
Financial help to earthquake victims
B.
Pocket money of a child
C.
Winning of a lottery prize
D.
Construction of a new house
Ans:
Construction of a new house
Explanation :
National income is the total value a country’s final output of all new goods and services produced in one year. So construction of a new house is certainly output of goods. Transfer payments are not a part of the national income. So private sector transfers including charitable donations and prizes to lottery winners are excluded from it.
[14] Value of out put and value added can be distinguished if we know:
A.
the value of intermediate consumption
B.
the value of net indirect taxes
C.
the value of the sales
D.
the value of consumption of fixed capital
Ans:
the value of intermediate consumption
Explanation :
Intermediate consumption is an accounting flow which consists of the total monetary value of goods and services consumed or used up as inputs in production by enterprises, including raw materials, services and various other operating expenses. Intermediate consumption (unlike fixed assets) is not normally classified in national accounts by type of good or service, because the accounts will show net output by sector of activity. Because this value must be subtracted from Gross Output to arrive at GDP, how it is exactly defined and estimated will importantly affect the size of the GDP estimate.
[15] Who prepared the first estimate of National Income for the country?
A.
Central Statistical Organisation
B.
National Income Committee
C.
Dadabhai Naoroji
D.
National Sample Survey Organisation
Ans:
Dadabhai Naoroji
Explanation :
Dadabhai Naoroji prepared the first estimates of National income in 1876. He estimated the national income by first estimating the value of agricultural production and then adding a certain percentage as nonagricultural production. However, such method can only been called as a non-scientific method.
[16] 'Supply creates its own demand'. This statement is related to -
A.
Prof. J.B. Say
B.
John Robinson
C.
Adam Smith
D.
J.S. Mill
Ans:
Prof. J.B. Say
Explanation :
Jean Baptiste Say was a French economist. He is well known for Say’s Law (or Say’s Law of Markets), often summarized as: “Aggregate supply creates its own aggregate demand”; “Supply creates its own demand”, or “Supply constitutes its own demand”. He argued that production and sale of goods in an economy automatically produces an income for the producers of the same value, which would then be reinjected into the economy and create enough demand to buy the goods. Thus production is determined by the supply of goods rather than demand.
[17] Sectoral distribution of GDP index measures .
A.
Agriculture development of a country
B.
Economic development of a country
C.
Social development of a country
D.
Socio-Economic development of a Country
Ans:
Economic development of a country
Explanation :
The sectoral distribution of GDP index measures the development of a country across several economic activities. It the market value of all final goods and services produced in a period (quarterly or yearly).
[18] Which among the following statements is not true when there is an increase in interest rate in an economy?
A.
increase in saving
B.
decrease in loan
C.
increase in production cost
D.
increase in capital return
Ans:
increase in capital return
Explanation :
Interest rate increases the cost of borrowing, which results in lesser investment activity and the purchase of consumer durables. In a low interest-rate environment, shares become a more attractive buy, raising households' financial assets. This may also contribute to higher consumer spending, and makes companies' investment projects more attractive. Lower interest rates also tend to cause currencies to depreciate: Demand for domestic goods rises when imported goods become more expensive. All of these factors raise output and employment as well as investment and consumer spending.
[19] The difference between the GNP and the NNP is equal to the -
A.
consumer expenditure on durable goods
B.
direct tax revenue
C.
indirect tax revenue
D.
capital depreciation
Ans:
capital depreciation
Explanation :
Depreciation refers to two very different but related concepts: the decrease in value of assets (fair value depreciation), and the allocation of the cost of assets to periods in which the assets are used (depreciation with (he matching principle). The difference between the GNP and NNP is equal to capital depreciation. It is the wearing out, breaking down, or technological obsolescence.
[20] By whom was the autonomous investment separated from induced investment?
A.
Schumpeter
B.
Malthus
C.
Joan Robinson
D.
Adam Smith
Ans:
Schumpeter
Explanation :
Under his concept of creative destruction, Schunipeter distinguished between two types of investment that he called induced and autonomous. Induced investment arose from the discrepancy between sup- ply and demand and autonomous investment from resources and technology created by the entrepreneurs. He also introduced a concept of "saving up" which is different from saving in the neoclassical growth models. Saving up constituted the part of out-put that is withheld from investment and consumption.
[21] When price of a substitute of commodity falls, the demand for -
A.
falls
B.
remains unchanged
C.
increases at increasing rate
D.
rises
Ans:
falls
Explanation :
Cross Price Effect refers to effect on the demand for a given commodity due to a change in the price of a substitute commodity. A change (increase or decrease) in the price of substitutes directly affects the demand for a given commodity. When price of substitute goods (say, coffee) rises, demand for the given commodity (say, tea) also rises at its same price. It leads to a rightward shift in the demand curve of the given commodity. With decrease in price of substitute goods (coffee), demand for the given commodity (tea) also decreases. It shifts the demand curve of the given commodity towards left.
[22] A mixed economy refers to an economic system where -
A.
The economy functions with foreign collaboration
B.
Only t he private sector operates under government control
C.
Both the government and the private sectors operate sectors operate simultaneously
D.
No foreign investment is allowed
Ans:
Both the government and the private sectors operate sectors operate simultaneously
Explanation :
Mixed economy is an economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies. The basic idea of the mixed economy is that the means of production are mainly under private ownership: that markets remain the dominant form of economic coordination: and that the government wields indirect influence over the economy through fiscal arid monetary policies.
[23] A Black Market is a situation where in -
A.
Goods are loaded by the producers
B.
Goods are sold secretly
C.
Goods are sold at prices higher than what is fixed by the Government
D.
Goods are made available
Ans:
Goods are sold secretly
Explanation :
Black market is the market in which illegal goods are traded. Goods acquired illegally take one of two price levels: (i) they may be cheaper than legal market prices as the supplier does not have to pay for production costs or taxes; or (ii) they may be more expensive than legal market prices as the product is difficult to acquire or produce, dangerous to handle or not easily available legally. Black-market transactions typically occur as a way for participants to avoid government price controls or taxes, conducting transactions 'under the table.' So the most defining feature of black markets is that they have to be carried out secretly as they are illegal.
[24] Buoyancy of a tax is defined as -
A.
percentage increase in tax revenue/percentage increase in tax base
B.
increase in tax revenue/ percentage increase in tax coverage
C.
increase in tax revenue/increase in tax base
D.
percentage increase in tax revenue/ increase in tax coverage
Ans:
increase in tax revenue/increase in tax base
Explanation :
Buoyancy means the growth/increase in tax collections. This is in line with the GDP growth within the economy, the industry profile and the tax structure administered by the government. Tax buoyancy measures the total response of tax revenues to changes in national income. Total response takes into account both increases in income and discretionary changes (i.e., tax rates and bases) made by tax authorities in the system. The responsiveness of tax revenues to discretionary changes in the tax rate and in the tax base in relation to the GDP is termed the buoyancy of the tax system.
[25] What is referred to as "Depository Services"?
A.
A new scheme of fixed deposits
B.
A method of regulating stock exchanges
C.
An agency for safe-keeping of securities
D.
An advisory service to investors
Ans:
An agency for safe-keeping of securities
Explanation :
A Central Securities Depository (CSD) is an organization holding securities either in certificated or un- certificated (dematerialized) form, to enable book entry transfer of securities. In some cases these organizations also carry out centralized comparison, and transaction processing such as clearing and settlement of securities. The physical securities may be immobilized by the depository, or securities may be dematerialized (so that they exist only as electronic records). The following are depository services: Demat accounts; dematerialization; rematerialization; transfer of securities; and pledge services.
Explanation :
The Directorate of Marketing and Inspection (DMI) is an attached Office of the Ministry of Agriculture. It was set up in the year 1935 to implement the agricultural marketing policies and programmes of the Central Government. It aims at bringing integrated development of marketing of agricultural and allied produce in the country. It is entrusted with promotion of standardization and grading of agricultural and allied produce.
[6] According to the Employment Outlook 2007 reports of the Organisation for Economic Cooperation and Development (OECD), the number of new jobs created in India every year from 2000 to 2005 is -
A.
5 million
B.
8 million
C.
11 million
D.
13 million
Ans:
11 million
Explanation :
Over the period 2000-05, India generated 11.3 million net new jobs per year, on average. The figure was 7 million in China, 2.7 million in Brazil and 0.7 million jobs hi the Russian Federation, compared with an average of 3.7 million net new jobs generated in the OECD area as a whole each year over the same period.
[7] "Marginal Cost" equals -
A.
total cost minus total benefit for the last unit produced
B.
total cost divided by total benefit for the last unit produced
C.
total cost divided by quantity
D.
the change in total cost divided by the change in quantity
Ans:
the change in total cost divided by the change in quantity
Explanation :
Marginal cost is the change in the total cost that arises when the quantity produced has an increment by unity. That is, it is the cost of producing one more unit of a good. To illustrate marginal cost let's assume that the total cost of producing 10,000 units is Rs.50,000. If we produce a total of 10,001 units the total cost is Rs.50,002. That would mean the marginal cost—the cost of producing the next unit— was Rs.2.
[8] A low interest policy is also known as –
A.
cheap money policy
B.
income generating
C.
dear money policy
D.
investment policy
Ans:
cheap money policy
Explanation :
Cheap money policy involves loan or credit with a low interest rate, or the setting of low interest rates by the central bank of the country. Cheap money is good for borrowers, but bad for investors. Cheap money policy was one of the primary catalysts of the 2008 recession.
[9] Economics classifies the manmade instrument of production as:
A.
Organization
B.
Capital
C.
equipment
D.
labour
Ans:
Capital
Explanation :
Some economists have classified factors into two categories, land and labour (or nature and man) on the ground that they are the only original or primary factors. It is said that capital has no independent origin and is merely the outcome of combined efforts of land and labour. However, other economists include all man-made instruments for production in the category of Capital.
[10] A demand curve will not shift:
A.
When only income changes
B.
When only prices of substitute products change
C.
When there is a change in advertisement expenditure
D.
When only price of the commodity changes
Ans:
When only price of the commodity changes
Explanation :
In economics, the demand curve is the graph depicting the relationship between the price of a certain commodity and the amount of it that consumers are willing and able to purchase at that given price. A change in price of the commodity leads to a movement along the demand curve without shifting it. In simple words, the increase of decrease in price of a commodity only causes contraction or extension of demand (increase causes contraction while decrease cause extension). Increase or decrease in demand only occurs only when there is a change in other determinants of demand, other than price of the commodity.
[11] Which law states that with constant taste and preferences, the proportion of income spend on food stuff diminishes as income increases?
A.
Say's Law
B.
Griffin's Law
C.
Gresham's Law
D.
Engel's Law
Ans:
Engel's Law
Explanation :
According to Engel's Law, as disposable income of a consumer increases, the percentage of income spent for food decreases if all other factors remain constant. This happens even when the actual expenditure on food rises. The income elasticity of demand of food is less than 1. A lower Engel coefficient indicates a higher standard of living.
[12] Extreme forms of markets are -
A.
Perfect competition; Oligopoly
B.
Oligopoly; Monopoly
C.
Perfect competition; Monopoly
D.
Perfect competition; Monopolistic competition
Ans:
Perfect competition; Monopoly
Explanation :
There are two extreme forms of market structure: monopoly and, its opposite, perfect competition. Perfect competition is characterized by many buyers and sellers, many products that are similar in nature and, as a result, many substitutes. A monopoly is a market structure in which there is only one producer/ seller for a product.
[13] National Income include :
A.
Financial help to earthquake victims
B.
Pocket money of a child
C.
Winning of a lottery prize
D.
Construction of a new house
Ans:
Construction of a new house
Explanation :
National income is the total value a country’s final output of all new goods and services produced in one year. So construction of a new house is certainly output of goods. Transfer payments are not a part of the national income. So private sector transfers including charitable donations and prizes to lottery winners are excluded from it.
[14] Value of out put and value added can be distinguished if we know:
A.
the value of intermediate consumption
B.
the value of net indirect taxes
C.
the value of the sales
D.
the value of consumption of fixed capital
Ans:
the value of intermediate consumption
Explanation :
Intermediate consumption is an accounting flow which consists of the total monetary value of goods and services consumed or used up as inputs in production by enterprises, including raw materials, services and various other operating expenses. Intermediate consumption (unlike fixed assets) is not normally classified in national accounts by type of good or service, because the accounts will show net output by sector of activity. Because this value must be subtracted from Gross Output to arrive at GDP, how it is exactly defined and estimated will importantly affect the size of the GDP estimate.
[15] Who prepared the first estimate of National Income for the country?
A.
Central Statistical Organisation
B.
National Income Committee
C.
Dadabhai Naoroji
D.
National Sample Survey Organisation
Ans:
Dadabhai Naoroji
Explanation :
Dadabhai Naoroji prepared the first estimates of National income in 1876. He estimated the national income by first estimating the value of agricultural production and then adding a certain percentage as nonagricultural production. However, such method can only been called as a non-scientific method.
[16] 'Supply creates its own demand'. This statement is related to -
A.
Prof. J.B. Say
B.
John Robinson
C.
Adam Smith
D.
J.S. Mill
Ans:
Prof. J.B. Say
Explanation :
Jean Baptiste Say was a French economist. He is well known for Say’s Law (or Say’s Law of Markets), often summarized as: “Aggregate supply creates its own aggregate demand”; “Supply creates its own demand”, or “Supply constitutes its own demand”. He argued that production and sale of goods in an economy automatically produces an income for the producers of the same value, which would then be reinjected into the economy and create enough demand to buy the goods. Thus production is determined by the supply of goods rather than demand.
[17] Sectoral distribution of GDP index measures .
A.
Agriculture development of a country
B.
Economic development of a country
C.
Social development of a country
D.
Socio-Economic development of a Country
Ans:
Economic development of a country
Explanation :
The sectoral distribution of GDP index measures the development of a country across several economic activities. It the market value of all final goods and services produced in a period (quarterly or yearly).
[18] Which among the following statements is not true when there is an increase in interest rate in an economy?
A.
increase in saving
B.
decrease in loan
C.
increase in production cost
D.
increase in capital return
Ans:
increase in capital return
Explanation :
Interest rate increases the cost of borrowing, which results in lesser investment activity and the purchase of consumer durables. In a low interest-rate environment, shares become a more attractive buy, raising households' financial assets. This may also contribute to higher consumer spending, and makes companies' investment projects more attractive. Lower interest rates also tend to cause currencies to depreciate: Demand for domestic goods rises when imported goods become more expensive. All of these factors raise output and employment as well as investment and consumer spending.
[19] The difference between the GNP and the NNP is equal to the -
A.
consumer expenditure on durable goods
B.
direct tax revenue
C.
indirect tax revenue
D.
capital depreciation
Ans:
capital depreciation
Explanation :
Depreciation refers to two very different but related concepts: the decrease in value of assets (fair value depreciation), and the allocation of the cost of assets to periods in which the assets are used (depreciation with (he matching principle). The difference between the GNP and NNP is equal to capital depreciation. It is the wearing out, breaking down, or technological obsolescence.
[20] By whom was the autonomous investment separated from induced investment?
A.
Schumpeter
B.
Malthus
C.
Joan Robinson
D.
Adam Smith
Ans:
Schumpeter
Explanation :
Under his concept of creative destruction, Schunipeter distinguished between two types of investment that he called induced and autonomous. Induced investment arose from the discrepancy between sup- ply and demand and autonomous investment from resources and technology created by the entrepreneurs. He also introduced a concept of "saving up" which is different from saving in the neoclassical growth models. Saving up constituted the part of out-put that is withheld from investment and consumption.
[21] When price of a substitute of commodity falls, the demand for -
A.
falls
B.
remains unchanged
C.
increases at increasing rate
D.
rises
Ans:
falls
Explanation :
Cross Price Effect refers to effect on the demand for a given commodity due to a change in the price of a substitute commodity. A change (increase or decrease) in the price of substitutes directly affects the demand for a given commodity. When price of substitute goods (say, coffee) rises, demand for the given commodity (say, tea) also rises at its same price. It leads to a rightward shift in the demand curve of the given commodity. With decrease in price of substitute goods (coffee), demand for the given commodity (tea) also decreases. It shifts the demand curve of the given commodity towards left.
[22] A mixed economy refers to an economic system where -
A.
The economy functions with foreign collaboration
B.
Only t he private sector operates under government control
C.
Both the government and the private sectors operate sectors operate simultaneously
D.
No foreign investment is allowed
Ans:
Both the government and the private sectors operate sectors operate simultaneously
Explanation :
Mixed economy is an economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies. The basic idea of the mixed economy is that the means of production are mainly under private ownership: that markets remain the dominant form of economic coordination: and that the government wields indirect influence over the economy through fiscal arid monetary policies.
[23] A Black Market is a situation where in -
A.
Goods are loaded by the producers
B.
Goods are sold secretly
C.
Goods are sold at prices higher than what is fixed by the Government
D.
Goods are made available
Ans:
Goods are sold secretly
Explanation :
Black market is the market in which illegal goods are traded. Goods acquired illegally take one of two price levels: (i) they may be cheaper than legal market prices as the supplier does not have to pay for production costs or taxes; or (ii) they may be more expensive than legal market prices as the product is difficult to acquire or produce, dangerous to handle or not easily available legally. Black-market transactions typically occur as a way for participants to avoid government price controls or taxes, conducting transactions 'under the table.' So the most defining feature of black markets is that they have to be carried out secretly as they are illegal.
[24] Buoyancy of a tax is defined as -
A.
percentage increase in tax revenue/percentage increase in tax base
B.
increase in tax revenue/ percentage increase in tax coverage
C.
increase in tax revenue/increase in tax base
D.
percentage increase in tax revenue/ increase in tax coverage
Ans:
increase in tax revenue/increase in tax base
Explanation :
Buoyancy means the growth/increase in tax collections. This is in line with the GDP growth within the economy, the industry profile and the tax structure administered by the government. Tax buoyancy measures the total response of tax revenues to changes in national income. Total response takes into account both increases in income and discretionary changes (i.e., tax rates and bases) made by tax authorities in the system. The responsiveness of tax revenues to discretionary changes in the tax rate and in the tax base in relation to the GDP is termed the buoyancy of the tax system.
[25] What is referred to as "Depository Services"?
A.
A new scheme of fixed deposits
B.
A method of regulating stock exchanges
C.
An agency for safe-keeping of securities
D.
An advisory service to investors
Ans:
An agency for safe-keeping of securities
Explanation :
A Central Securities Depository (CSD) is an organization holding securities either in certificated or un- certificated (dematerialized) form, to enable book entry transfer of securities. In some cases these organizations also carry out centralized comparison, and transaction processing such as clearing and settlement of securities. The physical securities may be immobilized by the depository, or securities may be dematerialized (so that they exist only as electronic records). The following are depository services: Demat accounts; dematerialization; rematerialization; transfer of securities; and pledge services.
Explanation :
Marginal cost is the change in the total cost that arises when the quantity produced has an increment by unity. That is, it is the cost of producing one more unit of a good. To illustrate marginal cost let's assume that the total cost of producing 10,000 units is Rs.50,000. If we produce a total of 10,001 units the total cost is Rs.50,002. That would mean the marginal cost—the cost of producing the next unit— was Rs.2.
[8] A low interest policy is also known as –
A.
cheap money policy
B.
income generating
C.
dear money policy
D.
investment policy
Ans:
cheap money policy
Explanation :
Cheap money policy involves loan or credit with a low interest rate, or the setting of low interest rates by the central bank of the country. Cheap money is good for borrowers, but bad for investors. Cheap money policy was one of the primary catalysts of the 2008 recession.
[9] Economics classifies the manmade instrument of production as:
A.
Organization
B.
Capital
C.
equipment
D.
labour
Ans:
Capital
Explanation :
Some economists have classified factors into two categories, land and labour (or nature and man) on the ground that they are the only original or primary factors. It is said that capital has no independent origin and is merely the outcome of combined efforts of land and labour. However, other economists include all man-made instruments for production in the category of Capital.
[10] A demand curve will not shift:
A.
When only income changes
B.
When only prices of substitute products change
C.
When there is a change in advertisement expenditure
D.
When only price of the commodity changes
Ans:
When only price of the commodity changes
Explanation :
In economics, the demand curve is the graph depicting the relationship between the price of a certain commodity and the amount of it that consumers are willing and able to purchase at that given price. A change in price of the commodity leads to a movement along the demand curve without shifting it. In simple words, the increase of decrease in price of a commodity only causes contraction or extension of demand (increase causes contraction while decrease cause extension). Increase or decrease in demand only occurs only when there is a change in other determinants of demand, other than price of the commodity.
[11] Which law states that with constant taste and preferences, the proportion of income spend on food stuff diminishes as income increases?
A.
Say's Law
B.
Griffin's Law
C.
Gresham's Law
D.
Engel's Law
Ans:
Engel's Law
Explanation :
According to Engel's Law, as disposable income of a consumer increases, the percentage of income spent for food decreases if all other factors remain constant. This happens even when the actual expenditure on food rises. The income elasticity of demand of food is less than 1. A lower Engel coefficient indicates a higher standard of living.
[12] Extreme forms of markets are -
A.
Perfect competition; Oligopoly
B.
Oligopoly; Monopoly
C.
Perfect competition; Monopoly
D.
Perfect competition; Monopolistic competition
Ans:
Perfect competition; Monopoly
Explanation :
There are two extreme forms of market structure: monopoly and, its opposite, perfect competition. Perfect competition is characterized by many buyers and sellers, many products that are similar in nature and, as a result, many substitutes. A monopoly is a market structure in which there is only one producer/ seller for a product.
[13] National Income include :
A.
Financial help to earthquake victims
B.
Pocket money of a child
C.
Winning of a lottery prize
D.
Construction of a new house
Ans:
Construction of a new house
Explanation :
National income is the total value a country’s final output of all new goods and services produced in one year. So construction of a new house is certainly output of goods. Transfer payments are not a part of the national income. So private sector transfers including charitable donations and prizes to lottery winners are excluded from it.
[14] Value of out put and value added can be distinguished if we know:
A.
the value of intermediate consumption
B.
the value of net indirect taxes
C.
the value of the sales
D.
the value of consumption of fixed capital
Ans:
the value of intermediate consumption
Explanation :
Intermediate consumption is an accounting flow which consists of the total monetary value of goods and services consumed or used up as inputs in production by enterprises, including raw materials, services and various other operating expenses. Intermediate consumption (unlike fixed assets) is not normally classified in national accounts by type of good or service, because the accounts will show net output by sector of activity. Because this value must be subtracted from Gross Output to arrive at GDP, how it is exactly defined and estimated will importantly affect the size of the GDP estimate.
[15] Who prepared the first estimate of National Income for the country?
A.
Central Statistical Organisation
B.
National Income Committee
C.
Dadabhai Naoroji
D.
National Sample Survey Organisation
Ans:
Dadabhai Naoroji
Explanation :
Dadabhai Naoroji prepared the first estimates of National income in 1876. He estimated the national income by first estimating the value of agricultural production and then adding a certain percentage as nonagricultural production. However, such method can only been called as a non-scientific method.
[16] 'Supply creates its own demand'. This statement is related to -
A.
Prof. J.B. Say
B.
John Robinson
C.
Adam Smith
D.
J.S. Mill
Ans:
Prof. J.B. Say
Explanation :
Jean Baptiste Say was a French economist. He is well known for Say’s Law (or Say’s Law of Markets), often summarized as: “Aggregate supply creates its own aggregate demand”; “Supply creates its own demand”, or “Supply constitutes its own demand”. He argued that production and sale of goods in an economy automatically produces an income for the producers of the same value, which would then be reinjected into the economy and create enough demand to buy the goods. Thus production is determined by the supply of goods rather than demand.
[17] Sectoral distribution of GDP index measures .
A.
Agriculture development of a country
B.
Economic development of a country
C.
Social development of a country
D.
Socio-Economic development of a Country
Ans:
Economic development of a country
Explanation :
The sectoral distribution of GDP index measures the development of a country across several economic activities. It the market value of all final goods and services produced in a period (quarterly or yearly).
[18] Which among the following statements is not true when there is an increase in interest rate in an economy?
A.
increase in saving
B.
decrease in loan
C.
increase in production cost
D.
increase in capital return
Ans:
increase in capital return
Explanation :
Interest rate increases the cost of borrowing, which results in lesser investment activity and the purchase of consumer durables. In a low interest-rate environment, shares become a more attractive buy, raising households' financial assets. This may also contribute to higher consumer spending, and makes companies' investment projects more attractive. Lower interest rates also tend to cause currencies to depreciate: Demand for domestic goods rises when imported goods become more expensive. All of these factors raise output and employment as well as investment and consumer spending.
[19] The difference between the GNP and the NNP is equal to the -
A.
consumer expenditure on durable goods
B.
direct tax revenue
C.
indirect tax revenue
D.
capital depreciation
Ans:
capital depreciation
Explanation :
Depreciation refers to two very different but related concepts: the decrease in value of assets (fair value depreciation), and the allocation of the cost of assets to periods in which the assets are used (depreciation with (he matching principle). The difference between the GNP and NNP is equal to capital depreciation. It is the wearing out, breaking down, or technological obsolescence.
[20] By whom was the autonomous investment separated from induced investment?
A.
Schumpeter
B.
Malthus
C.
Joan Robinson
D.
Adam Smith
Ans:
Schumpeter
Explanation :
Under his concept of creative destruction, Schunipeter distinguished between two types of investment that he called induced and autonomous. Induced investment arose from the discrepancy between sup- ply and demand and autonomous investment from resources and technology created by the entrepreneurs. He also introduced a concept of "saving up" which is different from saving in the neoclassical growth models. Saving up constituted the part of out-put that is withheld from investment and consumption.
[21] When price of a substitute of commodity falls, the demand for -
A.
falls
B.
remains unchanged
C.
increases at increasing rate
D.
rises
Ans:
falls
Explanation :
Cross Price Effect refers to effect on the demand for a given commodity due to a change in the price of a substitute commodity. A change (increase or decrease) in the price of substitutes directly affects the demand for a given commodity. When price of substitute goods (say, coffee) rises, demand for the given commodity (say, tea) also rises at its same price. It leads to a rightward shift in the demand curve of the given commodity. With decrease in price of substitute goods (coffee), demand for the given commodity (tea) also decreases. It shifts the demand curve of the given commodity towards left.
[22] A mixed economy refers to an economic system where -
A.
The economy functions with foreign collaboration
B.
Only t he private sector operates under government control
C.
Both the government and the private sectors operate sectors operate simultaneously
D.
No foreign investment is allowed
Ans:
Both the government and the private sectors operate sectors operate simultaneously
Explanation :
Mixed economy is an economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies. The basic idea of the mixed economy is that the means of production are mainly under private ownership: that markets remain the dominant form of economic coordination: and that the government wields indirect influence over the economy through fiscal arid monetary policies.
[23] A Black Market is a situation where in -
A.
Goods are loaded by the producers
B.
Goods are sold secretly
C.
Goods are sold at prices higher than what is fixed by the Government
D.
Goods are made available
Ans:
Goods are sold secretly
Explanation :
Black market is the market in which illegal goods are traded. Goods acquired illegally take one of two price levels: (i) they may be cheaper than legal market prices as the supplier does not have to pay for production costs or taxes; or (ii) they may be more expensive than legal market prices as the product is difficult to acquire or produce, dangerous to handle or not easily available legally. Black-market transactions typically occur as a way for participants to avoid government price controls or taxes, conducting transactions 'under the table.' So the most defining feature of black markets is that they have to be carried out secretly as they are illegal.
[24] Buoyancy of a tax is defined as -
A.
percentage increase in tax revenue/percentage increase in tax base
B.
increase in tax revenue/ percentage increase in tax coverage
C.
increase in tax revenue/increase in tax base
D.
percentage increase in tax revenue/ increase in tax coverage
Ans:
increase in tax revenue/increase in tax base
Explanation :
Buoyancy means the growth/increase in tax collections. This is in line with the GDP growth within the economy, the industry profile and the tax structure administered by the government. Tax buoyancy measures the total response of tax revenues to changes in national income. Total response takes into account both increases in income and discretionary changes (i.e., tax rates and bases) made by tax authorities in the system. The responsiveness of tax revenues to discretionary changes in the tax rate and in the tax base in relation to the GDP is termed the buoyancy of the tax system.
[25] What is referred to as "Depository Services"?
A.
A new scheme of fixed deposits
B.
A method of regulating stock exchanges
C.
An agency for safe-keeping of securities
D.
An advisory service to investors
Ans:
An agency for safe-keeping of securities
Explanation :
A Central Securities Depository (CSD) is an organization holding securities either in certificated or un- certificated (dematerialized) form, to enable book entry transfer of securities. In some cases these organizations also carry out centralized comparison, and transaction processing such as clearing and settlement of securities. The physical securities may be immobilized by the depository, or securities may be dematerialized (so that they exist only as electronic records). The following are depository services: Demat accounts; dematerialization; rematerialization; transfer of securities; and pledge services.
Explanation :
Some economists have classified factors into two categories, land and labour (or nature and man) on the ground that they are the only original or primary factors. It is said that capital has no independent origin and is merely the outcome of combined efforts of land and labour. However, other economists include all man-made instruments for production in the category of Capital.
[10] A demand curve will not shift:
A.
When only income changes
B.
When only prices of substitute products change
C.
When there is a change in advertisement expenditure
D.
When only price of the commodity changes
Ans:
When only price of the commodity changes
Explanation :
In economics, the demand curve is the graph depicting the relationship between the price of a certain commodity and the amount of it that consumers are willing and able to purchase at that given price. A change in price of the commodity leads to a movement along the demand curve without shifting it. In simple words, the increase of decrease in price of a commodity only causes contraction or extension of demand (increase causes contraction while decrease cause extension). Increase or decrease in demand only occurs only when there is a change in other determinants of demand, other than price of the commodity.
[11] Which law states that with constant taste and preferences, the proportion of income spend on food stuff diminishes as income increases?
A.
Say's Law
B.
Griffin's Law
C.
Gresham's Law
D.
Engel's Law
Ans:
Engel's Law
Explanation :
According to Engel's Law, as disposable income of a consumer increases, the percentage of income spent for food decreases if all other factors remain constant. This happens even when the actual expenditure on food rises. The income elasticity of demand of food is less than 1. A lower Engel coefficient indicates a higher standard of living.
[12] Extreme forms of markets are -
A.
Perfect competition; Oligopoly
B.
Oligopoly; Monopoly
C.
Perfect competition; Monopoly
D.
Perfect competition; Monopolistic competition
Ans:
Perfect competition; Monopoly
Explanation :
There are two extreme forms of market structure: monopoly and, its opposite, perfect competition. Perfect competition is characterized by many buyers and sellers, many products that are similar in nature and, as a result, many substitutes. A monopoly is a market structure in which there is only one producer/ seller for a product.
[13] National Income include :
A.
Financial help to earthquake victims
B.
Pocket money of a child
C.
Winning of a lottery prize
D.
Construction of a new house
Ans:
Construction of a new house
Explanation :
National income is the total value a country’s final output of all new goods and services produced in one year. So construction of a new house is certainly output of goods. Transfer payments are not a part of the national income. So private sector transfers including charitable donations and prizes to lottery winners are excluded from it.
[14] Value of out put and value added can be distinguished if we know:
A.
the value of intermediate consumption
B.
the value of net indirect taxes
C.
the value of the sales
D.
the value of consumption of fixed capital
Ans:
the value of intermediate consumption
Explanation :
Intermediate consumption is an accounting flow which consists of the total monetary value of goods and services consumed or used up as inputs in production by enterprises, including raw materials, services and various other operating expenses. Intermediate consumption (unlike fixed assets) is not normally classified in national accounts by type of good or service, because the accounts will show net output by sector of activity. Because this value must be subtracted from Gross Output to arrive at GDP, how it is exactly defined and estimated will importantly affect the size of the GDP estimate.
[15] Who prepared the first estimate of National Income for the country?
A.
Central Statistical Organisation
B.
National Income Committee
C.
Dadabhai Naoroji
D.
National Sample Survey Organisation
Ans:
Dadabhai Naoroji
Explanation :
Dadabhai Naoroji prepared the first estimates of National income in 1876. He estimated the national income by first estimating the value of agricultural production and then adding a certain percentage as nonagricultural production. However, such method can only been called as a non-scientific method.
[16] 'Supply creates its own demand'. This statement is related to -
A.
Prof. J.B. Say
B.
John Robinson
C.
Adam Smith
D.
J.S. Mill
Ans:
Prof. J.B. Say
Explanation :
Jean Baptiste Say was a French economist. He is well known for Say’s Law (or Say’s Law of Markets), often summarized as: “Aggregate supply creates its own aggregate demand”; “Supply creates its own demand”, or “Supply constitutes its own demand”. He argued that production and sale of goods in an economy automatically produces an income for the producers of the same value, which would then be reinjected into the economy and create enough demand to buy the goods. Thus production is determined by the supply of goods rather than demand.
[17] Sectoral distribution of GDP index measures .
A.
Agriculture development of a country
B.
Economic development of a country
C.
Social development of a country
D.
Socio-Economic development of a Country
Ans:
Economic development of a country
Explanation :
The sectoral distribution of GDP index measures the development of a country across several economic activities. It the market value of all final goods and services produced in a period (quarterly or yearly).
[18] Which among the following statements is not true when there is an increase in interest rate in an economy?
A.
increase in saving
B.
decrease in loan
C.
increase in production cost
D.
increase in capital return
Ans:
increase in capital return
Explanation :
Interest rate increases the cost of borrowing, which results in lesser investment activity and the purchase of consumer durables. In a low interest-rate environment, shares become a more attractive buy, raising households' financial assets. This may also contribute to higher consumer spending, and makes companies' investment projects more attractive. Lower interest rates also tend to cause currencies to depreciate: Demand for domestic goods rises when imported goods become more expensive. All of these factors raise output and employment as well as investment and consumer spending.
[19] The difference between the GNP and the NNP is equal to the -
A.
consumer expenditure on durable goods
B.
direct tax revenue
C.
indirect tax revenue
D.
capital depreciation
Ans:
capital depreciation
Explanation :
Depreciation refers to two very different but related concepts: the decrease in value of assets (fair value depreciation), and the allocation of the cost of assets to periods in which the assets are used (depreciation with (he matching principle). The difference between the GNP and NNP is equal to capital depreciation. It is the wearing out, breaking down, or technological obsolescence.
[20] By whom was the autonomous investment separated from induced investment?
A.
Schumpeter
B.
Malthus
C.
Joan Robinson
D.
Adam Smith
Ans:
Schumpeter
Explanation :
Under his concept of creative destruction, Schunipeter distinguished between two types of investment that he called induced and autonomous. Induced investment arose from the discrepancy between sup- ply and demand and autonomous investment from resources and technology created by the entrepreneurs. He also introduced a concept of "saving up" which is different from saving in the neoclassical growth models. Saving up constituted the part of out-put that is withheld from investment and consumption.
[21] When price of a substitute of commodity falls, the demand for -
A.
falls
B.
remains unchanged
C.
increases at increasing rate
D.
rises
Ans:
falls
Explanation :
Cross Price Effect refers to effect on the demand for a given commodity due to a change in the price of a substitute commodity. A change (increase or decrease) in the price of substitutes directly affects the demand for a given commodity. When price of substitute goods (say, coffee) rises, demand for the given commodity (say, tea) also rises at its same price. It leads to a rightward shift in the demand curve of the given commodity. With decrease in price of substitute goods (coffee), demand for the given commodity (tea) also decreases. It shifts the demand curve of the given commodity towards left.
[22] A mixed economy refers to an economic system where -
A.
The economy functions with foreign collaboration
B.
Only t he private sector operates under government control
C.
Both the government and the private sectors operate sectors operate simultaneously
D.
No foreign investment is allowed
Ans:
Both the government and the private sectors operate sectors operate simultaneously
Explanation :
Mixed economy is an economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies. The basic idea of the mixed economy is that the means of production are mainly under private ownership: that markets remain the dominant form of economic coordination: and that the government wields indirect influence over the economy through fiscal arid monetary policies.
[23] A Black Market is a situation where in -
A.
Goods are loaded by the producers
B.
Goods are sold secretly
C.
Goods are sold at prices higher than what is fixed by the Government
D.
Goods are made available
Ans:
Goods are sold secretly
Explanation :
Black market is the market in which illegal goods are traded. Goods acquired illegally take one of two price levels: (i) they may be cheaper than legal market prices as the supplier does not have to pay for production costs or taxes; or (ii) they may be more expensive than legal market prices as the product is difficult to acquire or produce, dangerous to handle or not easily available legally. Black-market transactions typically occur as a way for participants to avoid government price controls or taxes, conducting transactions 'under the table.' So the most defining feature of black markets is that they have to be carried out secretly as they are illegal.
[24] Buoyancy of a tax is defined as -
A.
percentage increase in tax revenue/percentage increase in tax base
B.
increase in tax revenue/ percentage increase in tax coverage
C.
increase in tax revenue/increase in tax base
D.
percentage increase in tax revenue/ increase in tax coverage
Ans:
increase in tax revenue/increase in tax base
Explanation :
Buoyancy means the growth/increase in tax collections. This is in line with the GDP growth within the economy, the industry profile and the tax structure administered by the government. Tax buoyancy measures the total response of tax revenues to changes in national income. Total response takes into account both increases in income and discretionary changes (i.e., tax rates and bases) made by tax authorities in the system. The responsiveness of tax revenues to discretionary changes in the tax rate and in the tax base in relation to the GDP is termed the buoyancy of the tax system.
[25] What is referred to as "Depository Services"?
A.
A new scheme of fixed deposits
B.
A method of regulating stock exchanges
C.
An agency for safe-keeping of securities
D.
An advisory service to investors
Ans:
An agency for safe-keeping of securities
Explanation :
A Central Securities Depository (CSD) is an organization holding securities either in certificated or un- certificated (dematerialized) form, to enable book entry transfer of securities. In some cases these organizations also carry out centralized comparison, and transaction processing such as clearing and settlement of securities. The physical securities may be immobilized by the depository, or securities may be dematerialized (so that they exist only as electronic records). The following are depository services: Demat accounts; dematerialization; rematerialization; transfer of securities; and pledge services.
Explanation :
According to Engel's Law, as disposable income of a consumer increases, the percentage of income spent for food decreases if all other factors remain constant. This happens even when the actual expenditure on food rises. The income elasticity of demand of food is less than 1. A lower Engel coefficient indicates a higher standard of living.
[12] Extreme forms of markets are -
A.
Perfect competition; Oligopoly
B.
Oligopoly; Monopoly
C.
Perfect competition; Monopoly
D.
Perfect competition; Monopolistic competition
Ans:
Perfect competition; Monopoly
Explanation :
There are two extreme forms of market structure: monopoly and, its opposite, perfect competition. Perfect competition is characterized by many buyers and sellers, many products that are similar in nature and, as a result, many substitutes. A monopoly is a market structure in which there is only one producer/ seller for a product.
[13] National Income include :
A.
Financial help to earthquake victims
B.
Pocket money of a child
C.
Winning of a lottery prize
D.
Construction of a new house
Ans:
Construction of a new house
Explanation :
National income is the total value a country’s final output of all new goods and services produced in one year. So construction of a new house is certainly output of goods. Transfer payments are not a part of the national income. So private sector transfers including charitable donations and prizes to lottery winners are excluded from it.
[14] Value of out put and value added can be distinguished if we know:
A.
the value of intermediate consumption
B.
the value of net indirect taxes
C.
the value of the sales
D.
the value of consumption of fixed capital
Ans:
the value of intermediate consumption
Explanation :
Intermediate consumption is an accounting flow which consists of the total monetary value of goods and services consumed or used up as inputs in production by enterprises, including raw materials, services and various other operating expenses. Intermediate consumption (unlike fixed assets) is not normally classified in national accounts by type of good or service, because the accounts will show net output by sector of activity. Because this value must be subtracted from Gross Output to arrive at GDP, how it is exactly defined and estimated will importantly affect the size of the GDP estimate.
[15] Who prepared the first estimate of National Income for the country?
A.
Central Statistical Organisation
B.
National Income Committee
C.
Dadabhai Naoroji
D.
National Sample Survey Organisation
Ans:
Dadabhai Naoroji
Explanation :
Dadabhai Naoroji prepared the first estimates of National income in 1876. He estimated the national income by first estimating the value of agricultural production and then adding a certain percentage as nonagricultural production. However, such method can only been called as a non-scientific method.
[16] 'Supply creates its own demand'. This statement is related to -
A.
Prof. J.B. Say
B.
John Robinson
C.
Adam Smith
D.
J.S. Mill
Ans:
Prof. J.B. Say
Explanation :
Jean Baptiste Say was a French economist. He is well known for Say’s Law (or Say’s Law of Markets), often summarized as: “Aggregate supply creates its own aggregate demand”; “Supply creates its own demand”, or “Supply constitutes its own demand”. He argued that production and sale of goods in an economy automatically produces an income for the producers of the same value, which would then be reinjected into the economy and create enough demand to buy the goods. Thus production is determined by the supply of goods rather than demand.
[17] Sectoral distribution of GDP index measures .
A.
Agriculture development of a country
B.
Economic development of a country
C.
Social development of a country
D.
Socio-Economic development of a Country
Ans:
Economic development of a country
Explanation :
The sectoral distribution of GDP index measures the development of a country across several economic activities. It the market value of all final goods and services produced in a period (quarterly or yearly).
[18] Which among the following statements is not true when there is an increase in interest rate in an economy?
A.
increase in saving
B.
decrease in loan
C.
increase in production cost
D.
increase in capital return
Ans:
increase in capital return
Explanation :
Interest rate increases the cost of borrowing, which results in lesser investment activity and the purchase of consumer durables. In a low interest-rate environment, shares become a more attractive buy, raising households' financial assets. This may also contribute to higher consumer spending, and makes companies' investment projects more attractive. Lower interest rates also tend to cause currencies to depreciate: Demand for domestic goods rises when imported goods become more expensive. All of these factors raise output and employment as well as investment and consumer spending.
[19] The difference between the GNP and the NNP is equal to the -
A.
consumer expenditure on durable goods
B.
direct tax revenue
C.
indirect tax revenue
D.
capital depreciation
Ans:
capital depreciation
Explanation :
Depreciation refers to two very different but related concepts: the decrease in value of assets (fair value depreciation), and the allocation of the cost of assets to periods in which the assets are used (depreciation with (he matching principle). The difference between the GNP and NNP is equal to capital depreciation. It is the wearing out, breaking down, or technological obsolescence.
[20] By whom was the autonomous investment separated from induced investment?
A.
Schumpeter
B.
Malthus
C.
Joan Robinson
D.
Adam Smith
Ans:
Schumpeter
Explanation :
Under his concept of creative destruction, Schunipeter distinguished between two types of investment that he called induced and autonomous. Induced investment arose from the discrepancy between sup- ply and demand and autonomous investment from resources and technology created by the entrepreneurs. He also introduced a concept of "saving up" which is different from saving in the neoclassical growth models. Saving up constituted the part of out-put that is withheld from investment and consumption.
[21] When price of a substitute of commodity falls, the demand for -
A.
falls
B.
remains unchanged
C.
increases at increasing rate
D.
rises
Ans:
falls
Explanation :
Cross Price Effect refers to effect on the demand for a given commodity due to a change in the price of a substitute commodity. A change (increase or decrease) in the price of substitutes directly affects the demand for a given commodity. When price of substitute goods (say, coffee) rises, demand for the given commodity (say, tea) also rises at its same price. It leads to a rightward shift in the demand curve of the given commodity. With decrease in price of substitute goods (coffee), demand for the given commodity (tea) also decreases. It shifts the demand curve of the given commodity towards left.
[22] A mixed economy refers to an economic system where -
A.
The economy functions with foreign collaboration
B.
Only t he private sector operates under government control
C.
Both the government and the private sectors operate sectors operate simultaneously
D.
No foreign investment is allowed
Ans:
Both the government and the private sectors operate sectors operate simultaneously
Explanation :
Mixed economy is an economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies. The basic idea of the mixed economy is that the means of production are mainly under private ownership: that markets remain the dominant form of economic coordination: and that the government wields indirect influence over the economy through fiscal arid monetary policies.
[23] A Black Market is a situation where in -
A.
Goods are loaded by the producers
B.
Goods are sold secretly
C.
Goods are sold at prices higher than what is fixed by the Government
D.
Goods are made available
Ans:
Goods are sold secretly
Explanation :
Black market is the market in which illegal goods are traded. Goods acquired illegally take one of two price levels: (i) they may be cheaper than legal market prices as the supplier does not have to pay for production costs or taxes; or (ii) they may be more expensive than legal market prices as the product is difficult to acquire or produce, dangerous to handle or not easily available legally. Black-market transactions typically occur as a way for participants to avoid government price controls or taxes, conducting transactions 'under the table.' So the most defining feature of black markets is that they have to be carried out secretly as they are illegal.
[24] Buoyancy of a tax is defined as -
A.
percentage increase in tax revenue/percentage increase in tax base
B.
increase in tax revenue/ percentage increase in tax coverage
C.
increase in tax revenue/increase in tax base
D.
percentage increase in tax revenue/ increase in tax coverage
Ans:
increase in tax revenue/increase in tax base
Explanation :
Buoyancy means the growth/increase in tax collections. This is in line with the GDP growth within the economy, the industry profile and the tax structure administered by the government. Tax buoyancy measures the total response of tax revenues to changes in national income. Total response takes into account both increases in income and discretionary changes (i.e., tax rates and bases) made by tax authorities in the system. The responsiveness of tax revenues to discretionary changes in the tax rate and in the tax base in relation to the GDP is termed the buoyancy of the tax system.
[25] What is referred to as "Depository Services"?
A.
A new scheme of fixed deposits
B.
A method of regulating stock exchanges
C.
An agency for safe-keeping of securities
D.
An advisory service to investors
Ans:
An agency for safe-keeping of securities
Explanation :
A Central Securities Depository (CSD) is an organization holding securities either in certificated or un- certificated (dematerialized) form, to enable book entry transfer of securities. In some cases these organizations also carry out centralized comparison, and transaction processing such as clearing and settlement of securities. The physical securities may be immobilized by the depository, or securities may be dematerialized (so that they exist only as electronic records). The following are depository services: Demat accounts; dematerialization; rematerialization; transfer of securities; and pledge services.
Explanation :
National income is the total value a country’s final output of all new goods and services produced in one year. So construction of a new house is certainly output of goods. Transfer payments are not a part of the national income. So private sector transfers including charitable donations and prizes to lottery winners are excluded from it.
[14] Value of out put and value added can be distinguished if we know:
A.
the value of intermediate consumption
B.
the value of net indirect taxes
C.
the value of the sales
D.
the value of consumption of fixed capital
Ans:
the value of intermediate consumption
Explanation :
Intermediate consumption is an accounting flow which consists of the total monetary value of goods and services consumed or used up as inputs in production by enterprises, including raw materials, services and various other operating expenses. Intermediate consumption (unlike fixed assets) is not normally classified in national accounts by type of good or service, because the accounts will show net output by sector of activity. Because this value must be subtracted from Gross Output to arrive at GDP, how it is exactly defined and estimated will importantly affect the size of the GDP estimate.
[15] Who prepared the first estimate of National Income for the country?
A.
Central Statistical Organisation
B.
National Income Committee
C.
Dadabhai Naoroji
D.
National Sample Survey Organisation
Ans:
Dadabhai Naoroji
Explanation :
Dadabhai Naoroji prepared the first estimates of National income in 1876. He estimated the national income by first estimating the value of agricultural production and then adding a certain percentage as nonagricultural production. However, such method can only been called as a non-scientific method.
[16] 'Supply creates its own demand'. This statement is related to -
A.
Prof. J.B. Say
B.
John Robinson
C.
Adam Smith
D.
J.S. Mill
Ans:
Prof. J.B. Say
Explanation :
Jean Baptiste Say was a French economist. He is well known for Say’s Law (or Say’s Law of Markets), often summarized as: “Aggregate supply creates its own aggregate demand”; “Supply creates its own demand”, or “Supply constitutes its own demand”. He argued that production and sale of goods in an economy automatically produces an income for the producers of the same value, which would then be reinjected into the economy and create enough demand to buy the goods. Thus production is determined by the supply of goods rather than demand.
[17] Sectoral distribution of GDP index measures .
A.
Agriculture development of a country
B.
Economic development of a country
C.
Social development of a country
D.
Socio-Economic development of a Country
Ans:
Economic development of a country
Explanation :
The sectoral distribution of GDP index measures the development of a country across several economic activities. It the market value of all final goods and services produced in a period (quarterly or yearly).
[18] Which among the following statements is not true when there is an increase in interest rate in an economy?
A.
increase in saving
B.
decrease in loan
C.
increase in production cost
D.
increase in capital return
Ans:
increase in capital return
Explanation :
Interest rate increases the cost of borrowing, which results in lesser investment activity and the purchase of consumer durables. In a low interest-rate environment, shares become a more attractive buy, raising households' financial assets. This may also contribute to higher consumer spending, and makes companies' investment projects more attractive. Lower interest rates also tend to cause currencies to depreciate: Demand for domestic goods rises when imported goods become more expensive. All of these factors raise output and employment as well as investment and consumer spending.
[19] The difference between the GNP and the NNP is equal to the -
A.
consumer expenditure on durable goods
B.
direct tax revenue
C.
indirect tax revenue
D.
capital depreciation
Ans:
capital depreciation
Explanation :
Depreciation refers to two very different but related concepts: the decrease in value of assets (fair value depreciation), and the allocation of the cost of assets to periods in which the assets are used (depreciation with (he matching principle). The difference between the GNP and NNP is equal to capital depreciation. It is the wearing out, breaking down, or technological obsolescence.
[20] By whom was the autonomous investment separated from induced investment?
A.
Schumpeter
B.
Malthus
C.
Joan Robinson
D.
Adam Smith
Ans:
Schumpeter
Explanation :
Under his concept of creative destruction, Schunipeter distinguished between two types of investment that he called induced and autonomous. Induced investment arose from the discrepancy between sup- ply and demand and autonomous investment from resources and technology created by the entrepreneurs. He also introduced a concept of "saving up" which is different from saving in the neoclassical growth models. Saving up constituted the part of out-put that is withheld from investment and consumption.
[21] When price of a substitute of commodity falls, the demand for -
A.
falls
B.
remains unchanged
C.
increases at increasing rate
D.
rises
Ans:
falls
Explanation :
Cross Price Effect refers to effect on the demand for a given commodity due to a change in the price of a substitute commodity. A change (increase or decrease) in the price of substitutes directly affects the demand for a given commodity. When price of substitute goods (say, coffee) rises, demand for the given commodity (say, tea) also rises at its same price. It leads to a rightward shift in the demand curve of the given commodity. With decrease in price of substitute goods (coffee), demand for the given commodity (tea) also decreases. It shifts the demand curve of the given commodity towards left.
[22] A mixed economy refers to an economic system where -
A.
The economy functions with foreign collaboration
B.
Only t he private sector operates under government control
C.
Both the government and the private sectors operate sectors operate simultaneously
D.
No foreign investment is allowed
Ans:
Both the government and the private sectors operate sectors operate simultaneously
Explanation :
Mixed economy is an economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies. The basic idea of the mixed economy is that the means of production are mainly under private ownership: that markets remain the dominant form of economic coordination: and that the government wields indirect influence over the economy through fiscal arid monetary policies.
[23] A Black Market is a situation where in -
A.
Goods are loaded by the producers
B.
Goods are sold secretly
C.
Goods are sold at prices higher than what is fixed by the Government
D.
Goods are made available
Ans:
Goods are sold secretly
Explanation :
Black market is the market in which illegal goods are traded. Goods acquired illegally take one of two price levels: (i) they may be cheaper than legal market prices as the supplier does not have to pay for production costs or taxes; or (ii) they may be more expensive than legal market prices as the product is difficult to acquire or produce, dangerous to handle or not easily available legally. Black-market transactions typically occur as a way for participants to avoid government price controls or taxes, conducting transactions 'under the table.' So the most defining feature of black markets is that they have to be carried out secretly as they are illegal.
[24] Buoyancy of a tax is defined as -
A.
percentage increase in tax revenue/percentage increase in tax base
B.
increase in tax revenue/ percentage increase in tax coverage
C.
increase in tax revenue/increase in tax base
D.
percentage increase in tax revenue/ increase in tax coverage
Ans:
increase in tax revenue/increase in tax base
Explanation :
Buoyancy means the growth/increase in tax collections. This is in line with the GDP growth within the economy, the industry profile and the tax structure administered by the government. Tax buoyancy measures the total response of tax revenues to changes in national income. Total response takes into account both increases in income and discretionary changes (i.e., tax rates and bases) made by tax authorities in the system. The responsiveness of tax revenues to discretionary changes in the tax rate and in the tax base in relation to the GDP is termed the buoyancy of the tax system.
[25] What is referred to as "Depository Services"?
A.
A new scheme of fixed deposits
B.
A method of regulating stock exchanges
C.
An agency for safe-keeping of securities
D.
An advisory service to investors
Ans:
An agency for safe-keeping of securities
Explanation :
A Central Securities Depository (CSD) is an organization holding securities either in certificated or un- certificated (dematerialized) form, to enable book entry transfer of securities. In some cases these organizations also carry out centralized comparison, and transaction processing such as clearing and settlement of securities. The physical securities may be immobilized by the depository, or securities may be dematerialized (so that they exist only as electronic records). The following are depository services: Demat accounts; dematerialization; rematerialization; transfer of securities; and pledge services.
Explanation :
Dadabhai Naoroji prepared the first estimates of National income in 1876. He estimated the national income by first estimating the value of agricultural production and then adding a certain percentage as nonagricultural production. However, such method can only been called as a non-scientific method.
[16] 'Supply creates its own demand'. This statement is related to -
A.
Prof. J.B. Say
B.
John Robinson
C.
Adam Smith
D.
J.S. Mill
Ans:
Prof. J.B. Say
Explanation :
Jean Baptiste Say was a French economist. He is well known for Say’s Law (or Say’s Law of Markets), often summarized as: “Aggregate supply creates its own aggregate demand”; “Supply creates its own demand”, or “Supply constitutes its own demand”. He argued that production and sale of goods in an economy automatically produces an income for the producers of the same value, which would then be reinjected into the economy and create enough demand to buy the goods. Thus production is determined by the supply of goods rather than demand.
[17] Sectoral distribution of GDP index measures .
A.
Agriculture development of a country
B.
Economic development of a country
C.
Social development of a country
D.
Socio-Economic development of a Country
Ans:
Economic development of a country
Explanation :
The sectoral distribution of GDP index measures the development of a country across several economic activities. It the market value of all final goods and services produced in a period (quarterly or yearly).
[18] Which among the following statements is not true when there is an increase in interest rate in an economy?
A.
increase in saving
B.
decrease in loan
C.
increase in production cost
D.
increase in capital return
Ans:
increase in capital return
Explanation :
Interest rate increases the cost of borrowing, which results in lesser investment activity and the purchase of consumer durables. In a low interest-rate environment, shares become a more attractive buy, raising households' financial assets. This may also contribute to higher consumer spending, and makes companies' investment projects more attractive. Lower interest rates also tend to cause currencies to depreciate: Demand for domestic goods rises when imported goods become more expensive. All of these factors raise output and employment as well as investment and consumer spending.
[19] The difference between the GNP and the NNP is equal to the -
A.
consumer expenditure on durable goods
B.
direct tax revenue
C.
indirect tax revenue
D.
capital depreciation
Ans:
capital depreciation
Explanation :
Depreciation refers to two very different but related concepts: the decrease in value of assets (fair value depreciation), and the allocation of the cost of assets to periods in which the assets are used (depreciation with (he matching principle). The difference between the GNP and NNP is equal to capital depreciation. It is the wearing out, breaking down, or technological obsolescence.
[20] By whom was the autonomous investment separated from induced investment?
A.
Schumpeter
B.
Malthus
C.
Joan Robinson
D.
Adam Smith
Ans:
Schumpeter
Explanation :
Under his concept of creative destruction, Schunipeter distinguished between two types of investment that he called induced and autonomous. Induced investment arose from the discrepancy between sup- ply and demand and autonomous investment from resources and technology created by the entrepreneurs. He also introduced a concept of "saving up" which is different from saving in the neoclassical growth models. Saving up constituted the part of out-put that is withheld from investment and consumption.
[21] When price of a substitute of commodity falls, the demand for -
A.
falls
B.
remains unchanged
C.
increases at increasing rate
D.
rises
Ans:
falls
Explanation :
Cross Price Effect refers to effect on the demand for a given commodity due to a change in the price of a substitute commodity. A change (increase or decrease) in the price of substitutes directly affects the demand for a given commodity. When price of substitute goods (say, coffee) rises, demand for the given commodity (say, tea) also rises at its same price. It leads to a rightward shift in the demand curve of the given commodity. With decrease in price of substitute goods (coffee), demand for the given commodity (tea) also decreases. It shifts the demand curve of the given commodity towards left.
[22] A mixed economy refers to an economic system where -
A.
The economy functions with foreign collaboration
B.
Only t he private sector operates under government control
C.
Both the government and the private sectors operate sectors operate simultaneously
D.
No foreign investment is allowed
Ans:
Both the government and the private sectors operate sectors operate simultaneously
Explanation :
Mixed economy is an economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies. The basic idea of the mixed economy is that the means of production are mainly under private ownership: that markets remain the dominant form of economic coordination: and that the government wields indirect influence over the economy through fiscal arid monetary policies.
[23] A Black Market is a situation where in -
A.
Goods are loaded by the producers
B.
Goods are sold secretly
C.
Goods are sold at prices higher than what is fixed by the Government
D.
Goods are made available
Ans:
Goods are sold secretly
Explanation :
Black market is the market in which illegal goods are traded. Goods acquired illegally take one of two price levels: (i) they may be cheaper than legal market prices as the supplier does not have to pay for production costs or taxes; or (ii) they may be more expensive than legal market prices as the product is difficult to acquire or produce, dangerous to handle or not easily available legally. Black-market transactions typically occur as a way for participants to avoid government price controls or taxes, conducting transactions 'under the table.' So the most defining feature of black markets is that they have to be carried out secretly as they are illegal.
[24] Buoyancy of a tax is defined as -
A.
percentage increase in tax revenue/percentage increase in tax base
B.
increase in tax revenue/ percentage increase in tax coverage
C.
increase in tax revenue/increase in tax base
D.
percentage increase in tax revenue/ increase in tax coverage
Ans:
increase in tax revenue/increase in tax base
Explanation :
Buoyancy means the growth/increase in tax collections. This is in line with the GDP growth within the economy, the industry profile and the tax structure administered by the government. Tax buoyancy measures the total response of tax revenues to changes in national income. Total response takes into account both increases in income and discretionary changes (i.e., tax rates and bases) made by tax authorities in the system. The responsiveness of tax revenues to discretionary changes in the tax rate and in the tax base in relation to the GDP is termed the buoyancy of the tax system.
[25] What is referred to as "Depository Services"?
A.
A new scheme of fixed deposits
B.
A method of regulating stock exchanges
C.
An agency for safe-keeping of securities
D.
An advisory service to investors
Ans:
An agency for safe-keeping of securities
Explanation :
A Central Securities Depository (CSD) is an organization holding securities either in certificated or un- certificated (dematerialized) form, to enable book entry transfer of securities. In some cases these organizations also carry out centralized comparison, and transaction processing such as clearing and settlement of securities. The physical securities may be immobilized by the depository, or securities may be dematerialized (so that they exist only as electronic records). The following are depository services: Demat accounts; dematerialization; rematerialization; transfer of securities; and pledge services.
Explanation :
The sectoral distribution of GDP index measures the development of a country across several economic activities. It the market value of all final goods and services produced in a period (quarterly or yearly).
[18] Which among the following statements is not true when there is an increase in interest rate in an economy?
A.
increase in saving
B.
decrease in loan
C.
increase in production cost
D.
increase in capital return
Ans:
increase in capital return
Explanation :
Interest rate increases the cost of borrowing, which results in lesser investment activity and the purchase of consumer durables. In a low interest-rate environment, shares become a more attractive buy, raising households' financial assets. This may also contribute to higher consumer spending, and makes companies' investment projects more attractive. Lower interest rates also tend to cause currencies to depreciate: Demand for domestic goods rises when imported goods become more expensive. All of these factors raise output and employment as well as investment and consumer spending.
[19] The difference between the GNP and the NNP is equal to the -
A.
consumer expenditure on durable goods
B.
direct tax revenue
C.
indirect tax revenue
D.
capital depreciation
Ans:
capital depreciation
Explanation :
Depreciation refers to two very different but related concepts: the decrease in value of assets (fair value depreciation), and the allocation of the cost of assets to periods in which the assets are used (depreciation with (he matching principle). The difference between the GNP and NNP is equal to capital depreciation. It is the wearing out, breaking down, or technological obsolescence.
[20] By whom was the autonomous investment separated from induced investment?
A.
Schumpeter
B.
Malthus
C.
Joan Robinson
D.
Adam Smith
Ans:
Schumpeter
Explanation :
Under his concept of creative destruction, Schunipeter distinguished between two types of investment that he called induced and autonomous. Induced investment arose from the discrepancy between sup- ply and demand and autonomous investment from resources and technology created by the entrepreneurs. He also introduced a concept of "saving up" which is different from saving in the neoclassical growth models. Saving up constituted the part of out-put that is withheld from investment and consumption.
[21] When price of a substitute of commodity falls, the demand for -
A.
falls
B.
remains unchanged
C.
increases at increasing rate
D.
rises
Ans:
falls
Explanation :
Cross Price Effect refers to effect on the demand for a given commodity due to a change in the price of a substitute commodity. A change (increase or decrease) in the price of substitutes directly affects the demand for a given commodity. When price of substitute goods (say, coffee) rises, demand for the given commodity (say, tea) also rises at its same price. It leads to a rightward shift in the demand curve of the given commodity. With decrease in price of substitute goods (coffee), demand for the given commodity (tea) also decreases. It shifts the demand curve of the given commodity towards left.
[22] A mixed economy refers to an economic system where -
A.
The economy functions with foreign collaboration
B.
Only t he private sector operates under government control
C.
Both the government and the private sectors operate sectors operate simultaneously
D.
No foreign investment is allowed
Ans:
Both the government and the private sectors operate sectors operate simultaneously
Explanation :
Mixed economy is an economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies. The basic idea of the mixed economy is that the means of production are mainly under private ownership: that markets remain the dominant form of economic coordination: and that the government wields indirect influence over the economy through fiscal arid monetary policies.
[23] A Black Market is a situation where in -
A.
Goods are loaded by the producers
B.
Goods are sold secretly
C.
Goods are sold at prices higher than what is fixed by the Government
D.
Goods are made available
Ans:
Goods are sold secretly
Explanation :
Black market is the market in which illegal goods are traded. Goods acquired illegally take one of two price levels: (i) they may be cheaper than legal market prices as the supplier does not have to pay for production costs or taxes; or (ii) they may be more expensive than legal market prices as the product is difficult to acquire or produce, dangerous to handle or not easily available legally. Black-market transactions typically occur as a way for participants to avoid government price controls or taxes, conducting transactions 'under the table.' So the most defining feature of black markets is that they have to be carried out secretly as they are illegal.
[24] Buoyancy of a tax is defined as -
A.
percentage increase in tax revenue/percentage increase in tax base
B.
increase in tax revenue/ percentage increase in tax coverage
C.
increase in tax revenue/increase in tax base
D.
percentage increase in tax revenue/ increase in tax coverage
Ans:
increase in tax revenue/increase in tax base
Explanation :
Buoyancy means the growth/increase in tax collections. This is in line with the GDP growth within the economy, the industry profile and the tax structure administered by the government. Tax buoyancy measures the total response of tax revenues to changes in national income. Total response takes into account both increases in income and discretionary changes (i.e., tax rates and bases) made by tax authorities in the system. The responsiveness of tax revenues to discretionary changes in the tax rate and in the tax base in relation to the GDP is termed the buoyancy of the tax system.
[25] What is referred to as "Depository Services"?
A.
A new scheme of fixed deposits
B.
A method of regulating stock exchanges
C.
An agency for safe-keeping of securities
D.
An advisory service to investors
Ans:
An agency for safe-keeping of securities
Explanation :
A Central Securities Depository (CSD) is an organization holding securities either in certificated or un- certificated (dematerialized) form, to enable book entry transfer of securities. In some cases these organizations also carry out centralized comparison, and transaction processing such as clearing and settlement of securities. The physical securities may be immobilized by the depository, or securities may be dematerialized (so that they exist only as electronic records). The following are depository services: Demat accounts; dematerialization; rematerialization; transfer of securities; and pledge services.
Explanation :
Depreciation refers to two very different but related concepts: the decrease in value of assets (fair value depreciation), and the allocation of the cost of assets to periods in which the assets are used (depreciation with (he matching principle). The difference between the GNP and NNP is equal to capital depreciation. It is the wearing out, breaking down, or technological obsolescence.
[20] By whom was the autonomous investment separated from induced investment?
A.
Schumpeter
B.
Malthus
C.
Joan Robinson
D.
Adam Smith
Ans:
Schumpeter
Explanation :
Under his concept of creative destruction, Schunipeter distinguished between two types of investment that he called induced and autonomous. Induced investment arose from the discrepancy between sup- ply and demand and autonomous investment from resources and technology created by the entrepreneurs. He also introduced a concept of "saving up" which is different from saving in the neoclassical growth models. Saving up constituted the part of out-put that is withheld from investment and consumption.
[21] When price of a substitute of commodity falls, the demand for -
A.
falls
B.
remains unchanged
C.
increases at increasing rate
D.
rises
Ans:
falls
Explanation :
Cross Price Effect refers to effect on the demand for a given commodity due to a change in the price of a substitute commodity. A change (increase or decrease) in the price of substitutes directly affects the demand for a given commodity. When price of substitute goods (say, coffee) rises, demand for the given commodity (say, tea) also rises at its same price. It leads to a rightward shift in the demand curve of the given commodity. With decrease in price of substitute goods (coffee), demand for the given commodity (tea) also decreases. It shifts the demand curve of the given commodity towards left.
[22] A mixed economy refers to an economic system where -
A.
The economy functions with foreign collaboration
B.
Only t he private sector operates under government control
C.
Both the government and the private sectors operate sectors operate simultaneously
D.
No foreign investment is allowed
Ans:
Both the government and the private sectors operate sectors operate simultaneously
Explanation :
Mixed economy is an economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies. The basic idea of the mixed economy is that the means of production are mainly under private ownership: that markets remain the dominant form of economic coordination: and that the government wields indirect influence over the economy through fiscal arid monetary policies.
[23] A Black Market is a situation where in -
A.
Goods are loaded by the producers
B.
Goods are sold secretly
C.
Goods are sold at prices higher than what is fixed by the Government
D.
Goods are made available
Ans:
Goods are sold secretly
Explanation :
Black market is the market in which illegal goods are traded. Goods acquired illegally take one of two price levels: (i) they may be cheaper than legal market prices as the supplier does not have to pay for production costs or taxes; or (ii) they may be more expensive than legal market prices as the product is difficult to acquire or produce, dangerous to handle or not easily available legally. Black-market transactions typically occur as a way for participants to avoid government price controls or taxes, conducting transactions 'under the table.' So the most defining feature of black markets is that they have to be carried out secretly as they are illegal.
[24] Buoyancy of a tax is defined as -
A.
percentage increase in tax revenue/percentage increase in tax base
B.
increase in tax revenue/ percentage increase in tax coverage
C.
increase in tax revenue/increase in tax base
D.
percentage increase in tax revenue/ increase in tax coverage
Ans:
increase in tax revenue/increase in tax base
Explanation :
Buoyancy means the growth/increase in tax collections. This is in line with the GDP growth within the economy, the industry profile and the tax structure administered by the government. Tax buoyancy measures the total response of tax revenues to changes in national income. Total response takes into account both increases in income and discretionary changes (i.e., tax rates and bases) made by tax authorities in the system. The responsiveness of tax revenues to discretionary changes in the tax rate and in the tax base in relation to the GDP is termed the buoyancy of the tax system.
[25] What is referred to as "Depository Services"?
A.
A new scheme of fixed deposits
B.
A method of regulating stock exchanges
C.
An agency for safe-keeping of securities
D.
An advisory service to investors
Ans:
An agency for safe-keeping of securities
Explanation :
A Central Securities Depository (CSD) is an organization holding securities either in certificated or un- certificated (dematerialized) form, to enable book entry transfer of securities. In some cases these organizations also carry out centralized comparison, and transaction processing such as clearing and settlement of securities. The physical securities may be immobilized by the depository, or securities may be dematerialized (so that they exist only as electronic records). The following are depository services: Demat accounts; dematerialization; rematerialization; transfer of securities; and pledge services.
Explanation :
Cross Price Effect refers to effect on the demand for a given commodity due to a change in the price of a substitute commodity. A change (increase or decrease) in the price of substitutes directly affects the demand for a given commodity. When price of substitute goods (say, coffee) rises, demand for the given commodity (say, tea) also rises at its same price. It leads to a rightward shift in the demand curve of the given commodity. With decrease in price of substitute goods (coffee), demand for the given commodity (tea) also decreases. It shifts the demand curve of the given commodity towards left.
[22] A mixed economy refers to an economic system where -
A.
The economy functions with foreign collaboration
B.
Only t he private sector operates under government control
C.
Both the government and the private sectors operate sectors operate simultaneously
D.
No foreign investment is allowed
Ans:
Both the government and the private sectors operate sectors operate simultaneously
Explanation :
Mixed economy is an economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies. The basic idea of the mixed economy is that the means of production are mainly under private ownership: that markets remain the dominant form of economic coordination: and that the government wields indirect influence over the economy through fiscal arid monetary policies.
[23] A Black Market is a situation where in -
A.
Goods are loaded by the producers
B.
Goods are sold secretly
C.
Goods are sold at prices higher than what is fixed by the Government
D.
Goods are made available
Ans:
Goods are sold secretly
Explanation :
Black market is the market in which illegal goods are traded. Goods acquired illegally take one of two price levels: (i) they may be cheaper than legal market prices as the supplier does not have to pay for production costs or taxes; or (ii) they may be more expensive than legal market prices as the product is difficult to acquire or produce, dangerous to handle or not easily available legally. Black-market transactions typically occur as a way for participants to avoid government price controls or taxes, conducting transactions 'under the table.' So the most defining feature of black markets is that they have to be carried out secretly as they are illegal.
[24] Buoyancy of a tax is defined as -
A.
percentage increase in tax revenue/percentage increase in tax base
B.
increase in tax revenue/ percentage increase in tax coverage
C.
increase in tax revenue/increase in tax base
D.
percentage increase in tax revenue/ increase in tax coverage
Ans:
increase in tax revenue/increase in tax base
Explanation :
Buoyancy means the growth/increase in tax collections. This is in line with the GDP growth within the economy, the industry profile and the tax structure administered by the government. Tax buoyancy measures the total response of tax revenues to changes in national income. Total response takes into account both increases in income and discretionary changes (i.e., tax rates and bases) made by tax authorities in the system. The responsiveness of tax revenues to discretionary changes in the tax rate and in the tax base in relation to the GDP is termed the buoyancy of the tax system.
[25] What is referred to as "Depository Services"?
A.
A new scheme of fixed deposits
B.
A method of regulating stock exchanges
C.
An agency for safe-keeping of securities
D.
An advisory service to investors
Ans:
An agency for safe-keeping of securities
Explanation :
A Central Securities Depository (CSD) is an organization holding securities either in certificated or un- certificated (dematerialized) form, to enable book entry transfer of securities. In some cases these organizations also carry out centralized comparison, and transaction processing such as clearing and settlement of securities. The physical securities may be immobilized by the depository, or securities may be dematerialized (so that they exist only as electronic records). The following are depository services: Demat accounts; dematerialization; rematerialization; transfer of securities; and pledge services.
Explanation :
Black market is the market in which illegal goods are traded. Goods acquired illegally take one of two price levels: (i) they may be cheaper than legal market prices as the supplier does not have to pay for production costs or taxes; or (ii) they may be more expensive than legal market prices as the product is difficult to acquire or produce, dangerous to handle or not easily available legally. Black-market transactions typically occur as a way for participants to avoid government price controls or taxes, conducting transactions 'under the table.' So the most defining feature of black markets is that they have to be carried out secretly as they are illegal.
[24] Buoyancy of a tax is defined as -
A.
percentage increase in tax revenue/percentage increase in tax base
B.
increase in tax revenue/ percentage increase in tax coverage
C.
increase in tax revenue/increase in tax base
D.
percentage increase in tax revenue/ increase in tax coverage
Ans:
increase in tax revenue/increase in tax base
Explanation :
Buoyancy means the growth/increase in tax collections. This is in line with the GDP growth within the economy, the industry profile and the tax structure administered by the government. Tax buoyancy measures the total response of tax revenues to changes in national income. Total response takes into account both increases in income and discretionary changes (i.e., tax rates and bases) made by tax authorities in the system. The responsiveness of tax revenues to discretionary changes in the tax rate and in the tax base in relation to the GDP is termed the buoyancy of the tax system.
[25] What is referred to as "Depository Services"?
A.
A new scheme of fixed deposits
B.
A method of regulating stock exchanges
C.
An agency for safe-keeping of securities
D.
An advisory service to investors
Ans:
An agency for safe-keeping of securities
Explanation :
A Central Securities Depository (CSD) is an organization holding securities either in certificated or un- certificated (dematerialized) form, to enable book entry transfer of securities. In some cases these organizations also carry out centralized comparison, and transaction processing such as clearing and settlement of securities. The physical securities may be immobilized by the depository, or securities may be dematerialized (so that they exist only as electronic records). The following are depository services: Demat accounts; dematerialization; rematerialization; transfer of securities; and pledge services.
Explanation :
A Central Securities Depository (CSD) is an organization holding securities either in certificated or un- certificated (dematerialized) form, to enable book entry transfer of securities. In some cases these organizations also carry out centralized comparison, and transaction processing such as clearing and settlement of securities. The physical securities may be immobilized by the depository, or securities may be dematerialized (so that they exist only as electronic records). The following are depository services: Demat accounts; dematerialization; rematerialization; transfer of securities; and pledge services.