[1] Who is authorized to issue coins in India?
A.
Reserve Bank of India
B.
Ministry of Finance
C.
State Bank of India
D.
Indian Overseas Bank
Ans:
Ministry of Finance
Explanation :
Coins may be coined at the Mint for issue under the authority of the Central Government, (of such denominations not higher than one hundred rupees), such dimensions and designs, and of such metals or of mixed metals of such composition as the Central Government may, by notification in the official Gazette, determine.) Paper Currency in India consists of notes of various denominations which are issued by the RBI and the Government of India. The one rupee note is issued by the Ministry of Finance and bears the signature of the secretary. All currency notes are legal tender.
[2] Reserve Bank of India was nationalized in -
A.
1948
B.
1947
C.
1949
D.
1950
Ans:
1949
Explanation :
The Reserve Bank of India was nationalised with effect from 1st January, 1949 on the basis of the Reserve Bank of India (Transfer to Public Ownership) Act, 1948. All shares in the capital of the Bank were deemed transferred to the Central Government on payment of a suitable compensation. The Reserve Bank of India (RBI) is India's central banking institution.
[3] Scheduled Banks have to be registered with -
A.
SEBI
B.
RBI
C.
Finance Ministry
D.
SBI
Ans:
RBI
Explanation :
The scheduled primary (urban) cooperative banks are required to maintain with the Reserve Bank of India an average daily balance, the amount of which should not be less than 5 per cent of their net demand and time liabilities in India in terms of Section 42 of the Reserve Bank of India Act, 1934. Non- scheduled (urban) cooperative banks, under the provision of Section 18 of Banking Regulation. Act, 1949 (As Applicable to Cooperative Societies) should maintain a sum equivalent to at least 3 per cent of their total demand and time liabilities in India on clay-to-day basis.
[4] The difference between visible exports and visible imports is defined as -
A.
Balance of trade
B.
Balance of payment
C.
Balanced terms of trade
D.
Gains from trade
Ans:
Balance of trade
Explanation :
The balance of trade (or net exports, sometimes symbolized as NX) is the difference between the monetary value of exports and imports of output in an economy over a certain period. It is the relationship between a nation's imports and exports.
[5] A commercial bank law creates credit only if it has -
A.
Cash in the vault
B.
Excess reserves
C.
Permission of Reserve Bank of India
D.
Cooperation of other banks
Ans:
Cash in the vault
Explanation :
A commercial bank is a profit-seeking business, dealing in money and credit. It is a financial institution dealing in money in the sense that it accepts deposits of money from the public to keep them in its custody for safety. So also, it deals in credit, i.e., it creates credit by making advances out of the funds received as the deposits to needy people. So it creates credit from the cash deposits with it.
[6] "Dear Money" means -
A.
low rate of interest
B.
high rate of interest
C.
depression
D.
inflation
Ans:
high rate of interest
Explanation :
Dear Money, also known as tight money, is money which has to be borrowed at a high interest rate, and so restricts expenditure by companies. This situation can be a result of a restricted money supply, causing interest rates to be pushed up due to the forces of supply and demand. Businesses may have a tough time raising capital during a period of dear money.
[7] Commercial banks create credit -
A.
on the basis of their securities
B.
on the basis of their assets
C.
on the basis of their reserve fund
D.
on the basis of their deposits
Ans:
on the basis of their deposits
Explanation :
Commercial banks create credit on the basis of their deposits. Credit creation is the multiple expansions of banks demand deposits. Whenever, customer deposits sum of money, a part of that money is kept by the commercial banks with the credit bank of the country which is obligatory by the law. The amount of credit that can be created by the bank will depend on the primary deposits and also on the amounts of minimum legal resource requirement.
[8] Bank money refers to -
A.
currency notes
B.
coins
C.
gold bullions
D.
cheques
Ans:
cheques
Explanation :
There are two types of money in a fractional-reserve banking system, currency originally issued by the central bank, and hank deposits at commercial banks: (1) central bank money (all money created by the central bank regardless of its form, e.g. banknotes, coins, electronic money): and (2) commercial bank money (money created in the banking system through borrowing and lending) - sometimes referred to as chequebook money.
[9] A financial instrument is called a 'primary security' if ii represents the liability of :
A.
some ultimate borrower
B.
the Government of India
C.
a primary cooperative bank
D.
a commercial bank
Ans:
some ultimate borrower
Explanation :
Instruments (certificates) issued by the ultimate borrower are called primary securities. Instruments issued by intermediaries on behalf of the ultimate borrower are called indirect securities. The market for instruments (also called securities) issued for the first time, is called the primary market. Primary security is the asset created out of the credit facility extended to the borrower and / or which are directly associated with the business / project of the borrower for which the credit facility has been extended.
[10] Founded in the year 1886 by a pharmacist named John Pemberton, this product is the second most widely understood term in the world after "OK". What is its name?
A.
Aspirin
B.
ENO
C.
CocaCola
D.
Pepsi
Ans:
CocaCola
Explanation :
Coca-Cola is the second most widely understood term in the world after "Ok". It was originally intended as a patent medicine when it was invented in the late 19th century by John Pemberton. Coca Cola is the world's largest soft drinks company. It is rated as the most recognized trade mark and third most valuable brand in the world.
[11] Which of the following is done at a Stock Exchange?
A.
Commodities are bought and sold at wholesale price
B.
Commodities are bought and sold at retail price
C.
Securities are bought and sold
D.
None of these
Ans:
Securities are bought and sold
Explanation :
A stock exchange or bourse is an exchange where stock brokers and traders can buy and/or sell stocks (also called shares), bonds, and other securities. Stock exchanges may also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and dividends.
[12] Indirect tax means :
A.
There is not direct relationship between the tax payer and the government.
B.
Direct relationship between tax payer and the government.
C.
Tax base is income
D.
The incidence and impact are on the same person on whom tax is imposed.
Ans:
There is not direct relationship between the tax payer and the government.
Explanation :
The term indirect tax has more than one meaning. In the colloquial sense, an indirect tax (such as sales tax, a specific tax, value added tax (VAT), or goods and services tax (GST)) is a tax collected by an intermediary (such as a retail store) from the person who bears the ultimate economic burden of the tax (such as the consumer). The intermediary later files a tax return and forwards the tax proceeds to government with the return. In this sense, the term indirect tax is contrasted with a direct tax which is collected directly by government from the persons (legal or natural) on which it is imposed.
[13] A short-term government security paper is called -
A.
Share
B.
Debenture
C.
Mutual fund
D.
Treasury bill
Ans:
Treasury bill
Explanation :
Treasury bills are instrument of short-term borrowing by the Government of India, issued as promissory notes under discount. The interest received on them is the discount which is the difference between the price at which they are issued and their redemption value. They have assured yield and negligible risk of default.
[14] The existence of a parallel economy or Black Money -
A.
makes the economy more competitive
B.
makes the monetary policies less effective
C.
ensures a better distribution of income and wealth
D.
ensures increasing productive investment
Ans:
makes the monetary policies less effective
Explanation :
The existence of black money is injurious not just for tax revenues. It distorts the systematic resource allocation process and upsets the accuracy of economic forecasts. Inflation is both a cause as well as a consequence of the black money in our economy. Black money results in the social injustice and fallacy in the economy. The rich gets richer and the poor gets poorer. So the existence of black money erodes the very rationale of growth behind monetary policies.
[15] The non-expenditure costs which arise when the producing firm itself owns and supplies certain factors of production are -
A.
Explicit costs
B.
Original costs
C.
Implicit costs
D.
Replacement costs
Ans:
Implicit costs
Explanation :
In economics, an implicit is the opportunity cost equal to what a firm must give up in order to use factors which it neither purchases nor hires. It is the opposite of an explicit cost, which is borne directly. In other words, an implicit cost is any cost that results from using an asset instead of renting, selling or lending it. These are costs a business incurs without actually spending money.
[16] Which of the following subjects does not figure in the Concurrent List of our Constitution?
A.
Stock Exchanges and futures markets
B.
Protection of wild animals and birds
C.
Forests
D.
Trade unions
Ans:
Stock Exchanges and futures markets
Explanation :
The Concurrent List or List-III is a list of 47 items given in Part XI of the Constitution of India, concerned with relations between the Union and States. Stock exchanges and futures markets come under the Union List.
[17] The method of calculating the national income by the product method is otherwise known as :
A.
Income method
B.
Value added method
C.
Expenditure method
D.
Net output method
Ans:
Net output method
Explanation :
Primarily there are three methods of measuring national income. Which method is to be employed depends on the availability of data and purpose. The methods are product method, income method and expenditure method. According to product method, the total value of final goods and services produced in a country during a year is calculated at market prices. According to this method only the final goods and services are included and the intermediary goods and services are not taken into account. In this method, National Output = National Expenditure (Aggregate Demand) = National Income.
[18] The best measure to assess a country's economic growth is -
A.
per capita income at constant prices
B.
per capita income at current prices
C.
gross domestic product at current prices
D.
gross national product at current prices
Ans:
per capita income at constant prices
Explanation :
Gross domestic product (GDP) is the market value of all officially recognized final goods and services produced within a country in a given period of time. Per capita income or average income or income per person is the mean income within an economic aggregate, such as a country or city. It is calculated by taking a measure of all sources of income in the aggregate (such as GDP or Gross National Income) and dividing it by the total population.
[19] Rate of interest is determined by -
A.
The rate of return on the capital invested
B.
Central Government
C.
Liquidity preference
D.
Commercial Banks
Ans:
Commercial Banks
Explanation :
Bank Rate is determined by the Reserve Bank of India. The rate of interest is determined by the commercial banks in India. As per RBI notification, banks are free to determine rates of interest subject to BPLR and spread guidelines.
[20] The total value of goods and services produced in a country during a given period is -
A.
Disposable income
B.
National income
C.
Per capita income
D.
Net national income
Ans:
National income
Explanation :
National income is the total value a country's final output of all new goods and services produced in one year. Understanding how national income is created is the starting point for macroeconomics.
[21] Income and consumption are :
A.
inversely related
B.
directly related
C.
partially related
D.
unrelated.
Ans:
directly related
Explanation :
Consumption and income arc directly or positively related. An increase in income is associated with an increase in income; a decrease in consumption accompanies a decrease in income.
[22] Which of the following is deducted from GNP to arrive at NNP?
A.
Depreciation
B.
Interest
C.
Tax
D.
Subsidy
Ans:
Depreciation
Explanation :
If we subtract the depreciation charges from the gross national product, we get net national product at market price. Net national product at market price=Gross national product at market price- Depreciation.
[23] Regarding money supply situation in India it can be said that the :
A.
Currency with the public is inconvertible only.
B.
Currency with the public is less than the deposits with the banks.
C.
Currency with the public is more than the deposits with the banks.
D.
Currency with the public is almost equal to the deposits with banks.
Ans:
Currency with the public is less than the deposits with the banks.
Explanation :
Money supply in India includes the following: (i) Currency with the public: (ii) Demand deposits and time deposits with banks: (iii) Deposits with reserve Bank of India: and (iv) Deposits in Post Office. The currency with public is less than the total currency issued by RBI. This is because of cash reserves with banks, i.e., a part of currency issued remains with banks. As far as deposits are concerned, during the last four decades, the proportion of demand deposits, time deposits and other with banks in relation to total supply of money has been increasing with reciprocal diminution in currency held by the public.
[24] The equilibrium price of a commodity will definitely rise if there is a/an:
A.
increase in supply combined with a decrease in demand.
B.
increase in both demand and supply.
C.
decrease in both demand and supply.
D.
increase in demand accompanied by a decrease in supply.
Ans:
increase in demand accompanied by a decrease in supply.
Explanation :
Price of a commodity is always determined by the forces of demand and supply in the market. The price at which the amount demanded and amount supplied are equal is known as 'equilibrium price.' The equilibrium price definitely increases when there is an in-crease in demand combined with the decrease in supply.
[25] Short term contractions and expansions in economic activity are called .
A.
Expansions
B.
Recession
C.
Deficits
D.
The business cycle
Ans:
The business cycle
Explanation :
The business cycle is the fluctuation in economic activity that an economy experiences over a period of time. It is basically defined in terms of periods of expansion or recession. During expansions, the economy grows in real terms (i.e. excluding inflation), as evidenced by increases in indicators like employment, industrial production, sales and personal incomes. During recessions, the economy contracts, as measured by decreases in the above indicators.
Explanation :
Coins may be coined at the Mint for issue under the authority of the Central Government, (of such denominations not higher than one hundred rupees), such dimensions and designs, and of such metals or of mixed metals of such composition as the Central Government may, by notification in the official Gazette, determine.) Paper Currency in India consists of notes of various denominations which are issued by the RBI and the Government of India. The one rupee note is issued by the Ministry of Finance and bears the signature of the secretary. All currency notes are legal tender.
[2] Reserve Bank of India was nationalized in -
A.
1948
B.
1947
C.
1949
D.
1950
Ans:
1949
Explanation :
The Reserve Bank of India was nationalised with effect from 1st January, 1949 on the basis of the Reserve Bank of India (Transfer to Public Ownership) Act, 1948. All shares in the capital of the Bank were deemed transferred to the Central Government on payment of a suitable compensation. The Reserve Bank of India (RBI) is India's central banking institution.
[3] Scheduled Banks have to be registered with -
A.
SEBI
B.
RBI
C.
Finance Ministry
D.
SBI
Ans:
RBI
Explanation :
The scheduled primary (urban) cooperative banks are required to maintain with the Reserve Bank of India an average daily balance, the amount of which should not be less than 5 per cent of their net demand and time liabilities in India in terms of Section 42 of the Reserve Bank of India Act, 1934. Non- scheduled (urban) cooperative banks, under the provision of Section 18 of Banking Regulation. Act, 1949 (As Applicable to Cooperative Societies) should maintain a sum equivalent to at least 3 per cent of their total demand and time liabilities in India on clay-to-day basis.
[4] The difference between visible exports and visible imports is defined as -
A.
Balance of trade
B.
Balance of payment
C.
Balanced terms of trade
D.
Gains from trade
Ans:
Balance of trade
Explanation :
The balance of trade (or net exports, sometimes symbolized as NX) is the difference between the monetary value of exports and imports of output in an economy over a certain period. It is the relationship between a nation's imports and exports.
[5] A commercial bank law creates credit only if it has -
A.
Cash in the vault
B.
Excess reserves
C.
Permission of Reserve Bank of India
D.
Cooperation of other banks
Ans:
Cash in the vault
Explanation :
A commercial bank is a profit-seeking business, dealing in money and credit. It is a financial institution dealing in money in the sense that it accepts deposits of money from the public to keep them in its custody for safety. So also, it deals in credit, i.e., it creates credit by making advances out of the funds received as the deposits to needy people. So it creates credit from the cash deposits with it.
[6] "Dear Money" means -
A.
low rate of interest
B.
high rate of interest
C.
depression
D.
inflation
Ans:
high rate of interest
Explanation :
Dear Money, also known as tight money, is money which has to be borrowed at a high interest rate, and so restricts expenditure by companies. This situation can be a result of a restricted money supply, causing interest rates to be pushed up due to the forces of supply and demand. Businesses may have a tough time raising capital during a period of dear money.
[7] Commercial banks create credit -
A.
on the basis of their securities
B.
on the basis of their assets
C.
on the basis of their reserve fund
D.
on the basis of their deposits
Ans:
on the basis of their deposits
Explanation :
Commercial banks create credit on the basis of their deposits. Credit creation is the multiple expansions of banks demand deposits. Whenever, customer deposits sum of money, a part of that money is kept by the commercial banks with the credit bank of the country which is obligatory by the law. The amount of credit that can be created by the bank will depend on the primary deposits and also on the amounts of minimum legal resource requirement.
[8] Bank money refers to -
A.
currency notes
B.
coins
C.
gold bullions
D.
cheques
Ans:
cheques
Explanation :
There are two types of money in a fractional-reserve banking system, currency originally issued by the central bank, and hank deposits at commercial banks: (1) central bank money (all money created by the central bank regardless of its form, e.g. banknotes, coins, electronic money): and (2) commercial bank money (money created in the banking system through borrowing and lending) - sometimes referred to as chequebook money.
[9] A financial instrument is called a 'primary security' if ii represents the liability of :
A.
some ultimate borrower
B.
the Government of India
C.
a primary cooperative bank
D.
a commercial bank
Ans:
some ultimate borrower
Explanation :
Instruments (certificates) issued by the ultimate borrower are called primary securities. Instruments issued by intermediaries on behalf of the ultimate borrower are called indirect securities. The market for instruments (also called securities) issued for the first time, is called the primary market. Primary security is the asset created out of the credit facility extended to the borrower and / or which are directly associated with the business / project of the borrower for which the credit facility has been extended.
[10] Founded in the year 1886 by a pharmacist named John Pemberton, this product is the second most widely understood term in the world after "OK". What is its name?
A.
Aspirin
B.
ENO
C.
CocaCola
D.
Pepsi
Ans:
CocaCola
Explanation :
Coca-Cola is the second most widely understood term in the world after "Ok". It was originally intended as a patent medicine when it was invented in the late 19th century by John Pemberton. Coca Cola is the world's largest soft drinks company. It is rated as the most recognized trade mark and third most valuable brand in the world.
[11] Which of the following is done at a Stock Exchange?
A.
Commodities are bought and sold at wholesale price
B.
Commodities are bought and sold at retail price
C.
Securities are bought and sold
D.
None of these
Ans:
Securities are bought and sold
Explanation :
A stock exchange or bourse is an exchange where stock brokers and traders can buy and/or sell stocks (also called shares), bonds, and other securities. Stock exchanges may also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and dividends.
[12] Indirect tax means :
A.
There is not direct relationship between the tax payer and the government.
B.
Direct relationship between tax payer and the government.
C.
Tax base is income
D.
The incidence and impact are on the same person on whom tax is imposed.
Ans:
There is not direct relationship between the tax payer and the government.
Explanation :
The term indirect tax has more than one meaning. In the colloquial sense, an indirect tax (such as sales tax, a specific tax, value added tax (VAT), or goods and services tax (GST)) is a tax collected by an intermediary (such as a retail store) from the person who bears the ultimate economic burden of the tax (such as the consumer). The intermediary later files a tax return and forwards the tax proceeds to government with the return. In this sense, the term indirect tax is contrasted with a direct tax which is collected directly by government from the persons (legal or natural) on which it is imposed.
[13] A short-term government security paper is called -
A.
Share
B.
Debenture
C.
Mutual fund
D.
Treasury bill
Ans:
Treasury bill
Explanation :
Treasury bills are instrument of short-term borrowing by the Government of India, issued as promissory notes under discount. The interest received on them is the discount which is the difference between the price at which they are issued and their redemption value. They have assured yield and negligible risk of default.
[14] The existence of a parallel economy or Black Money -
A.
makes the economy more competitive
B.
makes the monetary policies less effective
C.
ensures a better distribution of income and wealth
D.
ensures increasing productive investment
Ans:
makes the monetary policies less effective
Explanation :
The existence of black money is injurious not just for tax revenues. It distorts the systematic resource allocation process and upsets the accuracy of economic forecasts. Inflation is both a cause as well as a consequence of the black money in our economy. Black money results in the social injustice and fallacy in the economy. The rich gets richer and the poor gets poorer. So the existence of black money erodes the very rationale of growth behind monetary policies.
[15] The non-expenditure costs which arise when the producing firm itself owns and supplies certain factors of production are -
A.
Explicit costs
B.
Original costs
C.
Implicit costs
D.
Replacement costs
Ans:
Implicit costs
Explanation :
In economics, an implicit is the opportunity cost equal to what a firm must give up in order to use factors which it neither purchases nor hires. It is the opposite of an explicit cost, which is borne directly. In other words, an implicit cost is any cost that results from using an asset instead of renting, selling or lending it. These are costs a business incurs without actually spending money.
[16] Which of the following subjects does not figure in the Concurrent List of our Constitution?
A.
Stock Exchanges and futures markets
B.
Protection of wild animals and birds
C.
Forests
D.
Trade unions
Ans:
Stock Exchanges and futures markets
Explanation :
The Concurrent List or List-III is a list of 47 items given in Part XI of the Constitution of India, concerned with relations between the Union and States. Stock exchanges and futures markets come under the Union List.
[17] The method of calculating the national income by the product method is otherwise known as :
A.
Income method
B.
Value added method
C.
Expenditure method
D.
Net output method
Ans:
Net output method
Explanation :
Primarily there are three methods of measuring national income. Which method is to be employed depends on the availability of data and purpose. The methods are product method, income method and expenditure method. According to product method, the total value of final goods and services produced in a country during a year is calculated at market prices. According to this method only the final goods and services are included and the intermediary goods and services are not taken into account. In this method, National Output = National Expenditure (Aggregate Demand) = National Income.
[18] The best measure to assess a country's economic growth is -
A.
per capita income at constant prices
B.
per capita income at current prices
C.
gross domestic product at current prices
D.
gross national product at current prices
Ans:
per capita income at constant prices
Explanation :
Gross domestic product (GDP) is the market value of all officially recognized final goods and services produced within a country in a given period of time. Per capita income or average income or income per person is the mean income within an economic aggregate, such as a country or city. It is calculated by taking a measure of all sources of income in the aggregate (such as GDP or Gross National Income) and dividing it by the total population.
[19] Rate of interest is determined by -
A.
The rate of return on the capital invested
B.
Central Government
C.
Liquidity preference
D.
Commercial Banks
Ans:
Commercial Banks
Explanation :
Bank Rate is determined by the Reserve Bank of India. The rate of interest is determined by the commercial banks in India. As per RBI notification, banks are free to determine rates of interest subject to BPLR and spread guidelines.
[20] The total value of goods and services produced in a country during a given period is -
A.
Disposable income
B.
National income
C.
Per capita income
D.
Net national income
Ans:
National income
Explanation :
National income is the total value a country's final output of all new goods and services produced in one year. Understanding how national income is created is the starting point for macroeconomics.
[21] Income and consumption are :
A.
inversely related
B.
directly related
C.
partially related
D.
unrelated.
Ans:
directly related
Explanation :
Consumption and income arc directly or positively related. An increase in income is associated with an increase in income; a decrease in consumption accompanies a decrease in income.
[22] Which of the following is deducted from GNP to arrive at NNP?
A.
Depreciation
B.
Interest
C.
Tax
D.
Subsidy
Ans:
Depreciation
Explanation :
If we subtract the depreciation charges from the gross national product, we get net national product at market price. Net national product at market price=Gross national product at market price- Depreciation.
[23] Regarding money supply situation in India it can be said that the :
A.
Currency with the public is inconvertible only.
B.
Currency with the public is less than the deposits with the banks.
C.
Currency with the public is more than the deposits with the banks.
D.
Currency with the public is almost equal to the deposits with banks.
Ans:
Currency with the public is less than the deposits with the banks.
Explanation :
Money supply in India includes the following: (i) Currency with the public: (ii) Demand deposits and time deposits with banks: (iii) Deposits with reserve Bank of India: and (iv) Deposits in Post Office. The currency with public is less than the total currency issued by RBI. This is because of cash reserves with banks, i.e., a part of currency issued remains with banks. As far as deposits are concerned, during the last four decades, the proportion of demand deposits, time deposits and other with banks in relation to total supply of money has been increasing with reciprocal diminution in currency held by the public.
[24] The equilibrium price of a commodity will definitely rise if there is a/an:
A.
increase in supply combined with a decrease in demand.
B.
increase in both demand and supply.
C.
decrease in both demand and supply.
D.
increase in demand accompanied by a decrease in supply.
Ans:
increase in demand accompanied by a decrease in supply.
Explanation :
Price of a commodity is always determined by the forces of demand and supply in the market. The price at which the amount demanded and amount supplied are equal is known as 'equilibrium price.' The equilibrium price definitely increases when there is an in-crease in demand combined with the decrease in supply.
[25] Short term contractions and expansions in economic activity are called .
A.
Expansions
B.
Recession
C.
Deficits
D.
The business cycle
Ans:
The business cycle
Explanation :
The business cycle is the fluctuation in economic activity that an economy experiences over a period of time. It is basically defined in terms of periods of expansion or recession. During expansions, the economy grows in real terms (i.e. excluding inflation), as evidenced by increases in indicators like employment, industrial production, sales and personal incomes. During recessions, the economy contracts, as measured by decreases in the above indicators.
Explanation :
The scheduled primary (urban) cooperative banks are required to maintain with the Reserve Bank of India an average daily balance, the amount of which should not be less than 5 per cent of their net demand and time liabilities in India in terms of Section 42 of the Reserve Bank of India Act, 1934. Non- scheduled (urban) cooperative banks, under the provision of Section 18 of Banking Regulation. Act, 1949 (As Applicable to Cooperative Societies) should maintain a sum equivalent to at least 3 per cent of their total demand and time liabilities in India on clay-to-day basis.
[4] The difference between visible exports and visible imports is defined as -
A.
Balance of trade
B.
Balance of payment
C.
Balanced terms of trade
D.
Gains from trade
Ans:
Balance of trade
Explanation :
The balance of trade (or net exports, sometimes symbolized as NX) is the difference between the monetary value of exports and imports of output in an economy over a certain period. It is the relationship between a nation's imports and exports.
[5] A commercial bank law creates credit only if it has -
A.
Cash in the vault
B.
Excess reserves
C.
Permission of Reserve Bank of India
D.
Cooperation of other banks
Ans:
Cash in the vault
Explanation :
A commercial bank is a profit-seeking business, dealing in money and credit. It is a financial institution dealing in money in the sense that it accepts deposits of money from the public to keep them in its custody for safety. So also, it deals in credit, i.e., it creates credit by making advances out of the funds received as the deposits to needy people. So it creates credit from the cash deposits with it.
[6] "Dear Money" means -
A.
low rate of interest
B.
high rate of interest
C.
depression
D.
inflation
Ans:
high rate of interest
Explanation :
Dear Money, also known as tight money, is money which has to be borrowed at a high interest rate, and so restricts expenditure by companies. This situation can be a result of a restricted money supply, causing interest rates to be pushed up due to the forces of supply and demand. Businesses may have a tough time raising capital during a period of dear money.
[7] Commercial banks create credit -
A.
on the basis of their securities
B.
on the basis of their assets
C.
on the basis of their reserve fund
D.
on the basis of their deposits
Ans:
on the basis of their deposits
Explanation :
Commercial banks create credit on the basis of their deposits. Credit creation is the multiple expansions of banks demand deposits. Whenever, customer deposits sum of money, a part of that money is kept by the commercial banks with the credit bank of the country which is obligatory by the law. The amount of credit that can be created by the bank will depend on the primary deposits and also on the amounts of minimum legal resource requirement.
[8] Bank money refers to -
A.
currency notes
B.
coins
C.
gold bullions
D.
cheques
Ans:
cheques
Explanation :
There are two types of money in a fractional-reserve banking system, currency originally issued by the central bank, and hank deposits at commercial banks: (1) central bank money (all money created by the central bank regardless of its form, e.g. banknotes, coins, electronic money): and (2) commercial bank money (money created in the banking system through borrowing and lending) - sometimes referred to as chequebook money.
[9] A financial instrument is called a 'primary security' if ii represents the liability of :
A.
some ultimate borrower
B.
the Government of India
C.
a primary cooperative bank
D.
a commercial bank
Ans:
some ultimate borrower
Explanation :
Instruments (certificates) issued by the ultimate borrower are called primary securities. Instruments issued by intermediaries on behalf of the ultimate borrower are called indirect securities. The market for instruments (also called securities) issued for the first time, is called the primary market. Primary security is the asset created out of the credit facility extended to the borrower and / or which are directly associated with the business / project of the borrower for which the credit facility has been extended.
[10] Founded in the year 1886 by a pharmacist named John Pemberton, this product is the second most widely understood term in the world after "OK". What is its name?
A.
Aspirin
B.
ENO
C.
CocaCola
D.
Pepsi
Ans:
CocaCola
Explanation :
Coca-Cola is the second most widely understood term in the world after "Ok". It was originally intended as a patent medicine when it was invented in the late 19th century by John Pemberton. Coca Cola is the world's largest soft drinks company. It is rated as the most recognized trade mark and third most valuable brand in the world.
[11] Which of the following is done at a Stock Exchange?
A.
Commodities are bought and sold at wholesale price
B.
Commodities are bought and sold at retail price
C.
Securities are bought and sold
D.
None of these
Ans:
Securities are bought and sold
Explanation :
A stock exchange or bourse is an exchange where stock brokers and traders can buy and/or sell stocks (also called shares), bonds, and other securities. Stock exchanges may also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and dividends.
[12] Indirect tax means :
A.
There is not direct relationship between the tax payer and the government.
B.
Direct relationship between tax payer and the government.
C.
Tax base is income
D.
The incidence and impact are on the same person on whom tax is imposed.
Ans:
There is not direct relationship between the tax payer and the government.
Explanation :
The term indirect tax has more than one meaning. In the colloquial sense, an indirect tax (such as sales tax, a specific tax, value added tax (VAT), or goods and services tax (GST)) is a tax collected by an intermediary (such as a retail store) from the person who bears the ultimate economic burden of the tax (such as the consumer). The intermediary later files a tax return and forwards the tax proceeds to government with the return. In this sense, the term indirect tax is contrasted with a direct tax which is collected directly by government from the persons (legal or natural) on which it is imposed.
[13] A short-term government security paper is called -
A.
Share
B.
Debenture
C.
Mutual fund
D.
Treasury bill
Ans:
Treasury bill
Explanation :
Treasury bills are instrument of short-term borrowing by the Government of India, issued as promissory notes under discount. The interest received on them is the discount which is the difference between the price at which they are issued and their redemption value. They have assured yield and negligible risk of default.
[14] The existence of a parallel economy or Black Money -
A.
makes the economy more competitive
B.
makes the monetary policies less effective
C.
ensures a better distribution of income and wealth
D.
ensures increasing productive investment
Ans:
makes the monetary policies less effective
Explanation :
The existence of black money is injurious not just for tax revenues. It distorts the systematic resource allocation process and upsets the accuracy of economic forecasts. Inflation is both a cause as well as a consequence of the black money in our economy. Black money results in the social injustice and fallacy in the economy. The rich gets richer and the poor gets poorer. So the existence of black money erodes the very rationale of growth behind monetary policies.
[15] The non-expenditure costs which arise when the producing firm itself owns and supplies certain factors of production are -
A.
Explicit costs
B.
Original costs
C.
Implicit costs
D.
Replacement costs
Ans:
Implicit costs
Explanation :
In economics, an implicit is the opportunity cost equal to what a firm must give up in order to use factors which it neither purchases nor hires. It is the opposite of an explicit cost, which is borne directly. In other words, an implicit cost is any cost that results from using an asset instead of renting, selling or lending it. These are costs a business incurs without actually spending money.
[16] Which of the following subjects does not figure in the Concurrent List of our Constitution?
A.
Stock Exchanges and futures markets
B.
Protection of wild animals and birds
C.
Forests
D.
Trade unions
Ans:
Stock Exchanges and futures markets
Explanation :
The Concurrent List or List-III is a list of 47 items given in Part XI of the Constitution of India, concerned with relations between the Union and States. Stock exchanges and futures markets come under the Union List.
[17] The method of calculating the national income by the product method is otherwise known as :
A.
Income method
B.
Value added method
C.
Expenditure method
D.
Net output method
Ans:
Net output method
Explanation :
Primarily there are three methods of measuring national income. Which method is to be employed depends on the availability of data and purpose. The methods are product method, income method and expenditure method. According to product method, the total value of final goods and services produced in a country during a year is calculated at market prices. According to this method only the final goods and services are included and the intermediary goods and services are not taken into account. In this method, National Output = National Expenditure (Aggregate Demand) = National Income.
[18] The best measure to assess a country's economic growth is -
A.
per capita income at constant prices
B.
per capita income at current prices
C.
gross domestic product at current prices
D.
gross national product at current prices
Ans:
per capita income at constant prices
Explanation :
Gross domestic product (GDP) is the market value of all officially recognized final goods and services produced within a country in a given period of time. Per capita income or average income or income per person is the mean income within an economic aggregate, such as a country or city. It is calculated by taking a measure of all sources of income in the aggregate (such as GDP or Gross National Income) and dividing it by the total population.
[19] Rate of interest is determined by -
A.
The rate of return on the capital invested
B.
Central Government
C.
Liquidity preference
D.
Commercial Banks
Ans:
Commercial Banks
Explanation :
Bank Rate is determined by the Reserve Bank of India. The rate of interest is determined by the commercial banks in India. As per RBI notification, banks are free to determine rates of interest subject to BPLR and spread guidelines.
[20] The total value of goods and services produced in a country during a given period is -
A.
Disposable income
B.
National income
C.
Per capita income
D.
Net national income
Ans:
National income
Explanation :
National income is the total value a country's final output of all new goods and services produced in one year. Understanding how national income is created is the starting point for macroeconomics.
[21] Income and consumption are :
A.
inversely related
B.
directly related
C.
partially related
D.
unrelated.
Ans:
directly related
Explanation :
Consumption and income arc directly or positively related. An increase in income is associated with an increase in income; a decrease in consumption accompanies a decrease in income.
[22] Which of the following is deducted from GNP to arrive at NNP?
A.
Depreciation
B.
Interest
C.
Tax
D.
Subsidy
Ans:
Depreciation
Explanation :
If we subtract the depreciation charges from the gross national product, we get net national product at market price. Net national product at market price=Gross national product at market price- Depreciation.
[23] Regarding money supply situation in India it can be said that the :
A.
Currency with the public is inconvertible only.
B.
Currency with the public is less than the deposits with the banks.
C.
Currency with the public is more than the deposits with the banks.
D.
Currency with the public is almost equal to the deposits with banks.
Ans:
Currency with the public is less than the deposits with the banks.
Explanation :
Money supply in India includes the following: (i) Currency with the public: (ii) Demand deposits and time deposits with banks: (iii) Deposits with reserve Bank of India: and (iv) Deposits in Post Office. The currency with public is less than the total currency issued by RBI. This is because of cash reserves with banks, i.e., a part of currency issued remains with banks. As far as deposits are concerned, during the last four decades, the proportion of demand deposits, time deposits and other with banks in relation to total supply of money has been increasing with reciprocal diminution in currency held by the public.
[24] The equilibrium price of a commodity will definitely rise if there is a/an:
A.
increase in supply combined with a decrease in demand.
B.
increase in both demand and supply.
C.
decrease in both demand and supply.
D.
increase in demand accompanied by a decrease in supply.
Ans:
increase in demand accompanied by a decrease in supply.
Explanation :
Price of a commodity is always determined by the forces of demand and supply in the market. The price at which the amount demanded and amount supplied are equal is known as 'equilibrium price.' The equilibrium price definitely increases when there is an in-crease in demand combined with the decrease in supply.
[25] Short term contractions and expansions in economic activity are called .
A.
Expansions
B.
Recession
C.
Deficits
D.
The business cycle
Ans:
The business cycle
Explanation :
The business cycle is the fluctuation in economic activity that an economy experiences over a period of time. It is basically defined in terms of periods of expansion or recession. During expansions, the economy grows in real terms (i.e. excluding inflation), as evidenced by increases in indicators like employment, industrial production, sales and personal incomes. During recessions, the economy contracts, as measured by decreases in the above indicators.
Explanation :
A commercial bank is a profit-seeking business, dealing in money and credit. It is a financial institution dealing in money in the sense that it accepts deposits of money from the public to keep them in its custody for safety. So also, it deals in credit, i.e., it creates credit by making advances out of the funds received as the deposits to needy people. So it creates credit from the cash deposits with it.
[6] "Dear Money" means -
A.
low rate of interest
B.
high rate of interest
C.
depression
D.
inflation
Ans:
high rate of interest
Explanation :
Dear Money, also known as tight money, is money which has to be borrowed at a high interest rate, and so restricts expenditure by companies. This situation can be a result of a restricted money supply, causing interest rates to be pushed up due to the forces of supply and demand. Businesses may have a tough time raising capital during a period of dear money.
[7] Commercial banks create credit -
A.
on the basis of their securities
B.
on the basis of their assets
C.
on the basis of their reserve fund
D.
on the basis of their deposits
Ans:
on the basis of their deposits
Explanation :
Commercial banks create credit on the basis of their deposits. Credit creation is the multiple expansions of banks demand deposits. Whenever, customer deposits sum of money, a part of that money is kept by the commercial banks with the credit bank of the country which is obligatory by the law. The amount of credit that can be created by the bank will depend on the primary deposits and also on the amounts of minimum legal resource requirement.
[8] Bank money refers to -
A.
currency notes
B.
coins
C.
gold bullions
D.
cheques
Ans:
cheques
Explanation :
There are two types of money in a fractional-reserve banking system, currency originally issued by the central bank, and hank deposits at commercial banks: (1) central bank money (all money created by the central bank regardless of its form, e.g. banknotes, coins, electronic money): and (2) commercial bank money (money created in the banking system through borrowing and lending) - sometimes referred to as chequebook money.
[9] A financial instrument is called a 'primary security' if ii represents the liability of :
A.
some ultimate borrower
B.
the Government of India
C.
a primary cooperative bank
D.
a commercial bank
Ans:
some ultimate borrower
Explanation :
Instruments (certificates) issued by the ultimate borrower are called primary securities. Instruments issued by intermediaries on behalf of the ultimate borrower are called indirect securities. The market for instruments (also called securities) issued for the first time, is called the primary market. Primary security is the asset created out of the credit facility extended to the borrower and / or which are directly associated with the business / project of the borrower for which the credit facility has been extended.
[10] Founded in the year 1886 by a pharmacist named John Pemberton, this product is the second most widely understood term in the world after "OK". What is its name?
A.
Aspirin
B.
ENO
C.
CocaCola
D.
Pepsi
Ans:
CocaCola
Explanation :
Coca-Cola is the second most widely understood term in the world after "Ok". It was originally intended as a patent medicine when it was invented in the late 19th century by John Pemberton. Coca Cola is the world's largest soft drinks company. It is rated as the most recognized trade mark and third most valuable brand in the world.
[11] Which of the following is done at a Stock Exchange?
A.
Commodities are bought and sold at wholesale price
B.
Commodities are bought and sold at retail price
C.
Securities are bought and sold
D.
None of these
Ans:
Securities are bought and sold
Explanation :
A stock exchange or bourse is an exchange where stock brokers and traders can buy and/or sell stocks (also called shares), bonds, and other securities. Stock exchanges may also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and dividends.
[12] Indirect tax means :
A.
There is not direct relationship between the tax payer and the government.
B.
Direct relationship between tax payer and the government.
C.
Tax base is income
D.
The incidence and impact are on the same person on whom tax is imposed.
Ans:
There is not direct relationship between the tax payer and the government.
Explanation :
The term indirect tax has more than one meaning. In the colloquial sense, an indirect tax (such as sales tax, a specific tax, value added tax (VAT), or goods and services tax (GST)) is a tax collected by an intermediary (such as a retail store) from the person who bears the ultimate economic burden of the tax (such as the consumer). The intermediary later files a tax return and forwards the tax proceeds to government with the return. In this sense, the term indirect tax is contrasted with a direct tax which is collected directly by government from the persons (legal or natural) on which it is imposed.
[13] A short-term government security paper is called -
A.
Share
B.
Debenture
C.
Mutual fund
D.
Treasury bill
Ans:
Treasury bill
Explanation :
Treasury bills are instrument of short-term borrowing by the Government of India, issued as promissory notes under discount. The interest received on them is the discount which is the difference between the price at which they are issued and their redemption value. They have assured yield and negligible risk of default.
[14] The existence of a parallel economy or Black Money -
A.
makes the economy more competitive
B.
makes the monetary policies less effective
C.
ensures a better distribution of income and wealth
D.
ensures increasing productive investment
Ans:
makes the monetary policies less effective
Explanation :
The existence of black money is injurious not just for tax revenues. It distorts the systematic resource allocation process and upsets the accuracy of economic forecasts. Inflation is both a cause as well as a consequence of the black money in our economy. Black money results in the social injustice and fallacy in the economy. The rich gets richer and the poor gets poorer. So the existence of black money erodes the very rationale of growth behind monetary policies.
[15] The non-expenditure costs which arise when the producing firm itself owns and supplies certain factors of production are -
A.
Explicit costs
B.
Original costs
C.
Implicit costs
D.
Replacement costs
Ans:
Implicit costs
Explanation :
In economics, an implicit is the opportunity cost equal to what a firm must give up in order to use factors which it neither purchases nor hires. It is the opposite of an explicit cost, which is borne directly. In other words, an implicit cost is any cost that results from using an asset instead of renting, selling or lending it. These are costs a business incurs without actually spending money.
[16] Which of the following subjects does not figure in the Concurrent List of our Constitution?
A.
Stock Exchanges and futures markets
B.
Protection of wild animals and birds
C.
Forests
D.
Trade unions
Ans:
Stock Exchanges and futures markets
Explanation :
The Concurrent List or List-III is a list of 47 items given in Part XI of the Constitution of India, concerned with relations between the Union and States. Stock exchanges and futures markets come under the Union List.
[17] The method of calculating the national income by the product method is otherwise known as :
A.
Income method
B.
Value added method
C.
Expenditure method
D.
Net output method
Ans:
Net output method
Explanation :
Primarily there are three methods of measuring national income. Which method is to be employed depends on the availability of data and purpose. The methods are product method, income method and expenditure method. According to product method, the total value of final goods and services produced in a country during a year is calculated at market prices. According to this method only the final goods and services are included and the intermediary goods and services are not taken into account. In this method, National Output = National Expenditure (Aggregate Demand) = National Income.
[18] The best measure to assess a country's economic growth is -
A.
per capita income at constant prices
B.
per capita income at current prices
C.
gross domestic product at current prices
D.
gross national product at current prices
Ans:
per capita income at constant prices
Explanation :
Gross domestic product (GDP) is the market value of all officially recognized final goods and services produced within a country in a given period of time. Per capita income or average income or income per person is the mean income within an economic aggregate, such as a country or city. It is calculated by taking a measure of all sources of income in the aggregate (such as GDP or Gross National Income) and dividing it by the total population.
[19] Rate of interest is determined by -
A.
The rate of return on the capital invested
B.
Central Government
C.
Liquidity preference
D.
Commercial Banks
Ans:
Commercial Banks
Explanation :
Bank Rate is determined by the Reserve Bank of India. The rate of interest is determined by the commercial banks in India. As per RBI notification, banks are free to determine rates of interest subject to BPLR and spread guidelines.
[20] The total value of goods and services produced in a country during a given period is -
A.
Disposable income
B.
National income
C.
Per capita income
D.
Net national income
Ans:
National income
Explanation :
National income is the total value a country's final output of all new goods and services produced in one year. Understanding how national income is created is the starting point for macroeconomics.
[21] Income and consumption are :
A.
inversely related
B.
directly related
C.
partially related
D.
unrelated.
Ans:
directly related
Explanation :
Consumption and income arc directly or positively related. An increase in income is associated with an increase in income; a decrease in consumption accompanies a decrease in income.
[22] Which of the following is deducted from GNP to arrive at NNP?
A.
Depreciation
B.
Interest
C.
Tax
D.
Subsidy
Ans:
Depreciation
Explanation :
If we subtract the depreciation charges from the gross national product, we get net national product at market price. Net national product at market price=Gross national product at market price- Depreciation.
[23] Regarding money supply situation in India it can be said that the :
A.
Currency with the public is inconvertible only.
B.
Currency with the public is less than the deposits with the banks.
C.
Currency with the public is more than the deposits with the banks.
D.
Currency with the public is almost equal to the deposits with banks.
Ans:
Currency with the public is less than the deposits with the banks.
Explanation :
Money supply in India includes the following: (i) Currency with the public: (ii) Demand deposits and time deposits with banks: (iii) Deposits with reserve Bank of India: and (iv) Deposits in Post Office. The currency with public is less than the total currency issued by RBI. This is because of cash reserves with banks, i.e., a part of currency issued remains with banks. As far as deposits are concerned, during the last four decades, the proportion of demand deposits, time deposits and other with banks in relation to total supply of money has been increasing with reciprocal diminution in currency held by the public.
[24] The equilibrium price of a commodity will definitely rise if there is a/an:
A.
increase in supply combined with a decrease in demand.
B.
increase in both demand and supply.
C.
decrease in both demand and supply.
D.
increase in demand accompanied by a decrease in supply.
Ans:
increase in demand accompanied by a decrease in supply.
Explanation :
Price of a commodity is always determined by the forces of demand and supply in the market. The price at which the amount demanded and amount supplied are equal is known as 'equilibrium price.' The equilibrium price definitely increases when there is an in-crease in demand combined with the decrease in supply.
[25] Short term contractions and expansions in economic activity are called .
A.
Expansions
B.
Recession
C.
Deficits
D.
The business cycle
Ans:
The business cycle
Explanation :
The business cycle is the fluctuation in economic activity that an economy experiences over a period of time. It is basically defined in terms of periods of expansion or recession. During expansions, the economy grows in real terms (i.e. excluding inflation), as evidenced by increases in indicators like employment, industrial production, sales and personal incomes. During recessions, the economy contracts, as measured by decreases in the above indicators.
Explanation :
Commercial banks create credit on the basis of their deposits. Credit creation is the multiple expansions of banks demand deposits. Whenever, customer deposits sum of money, a part of that money is kept by the commercial banks with the credit bank of the country which is obligatory by the law. The amount of credit that can be created by the bank will depend on the primary deposits and also on the amounts of minimum legal resource requirement.
[8] Bank money refers to -
A.
currency notes
B.
coins
C.
gold bullions
D.
cheques
Ans:
cheques
Explanation :
There are two types of money in a fractional-reserve banking system, currency originally issued by the central bank, and hank deposits at commercial banks: (1) central bank money (all money created by the central bank regardless of its form, e.g. banknotes, coins, electronic money): and (2) commercial bank money (money created in the banking system through borrowing and lending) - sometimes referred to as chequebook money.
[9] A financial instrument is called a 'primary security' if ii represents the liability of :
A.
some ultimate borrower
B.
the Government of India
C.
a primary cooperative bank
D.
a commercial bank
Ans:
some ultimate borrower
Explanation :
Instruments (certificates) issued by the ultimate borrower are called primary securities. Instruments issued by intermediaries on behalf of the ultimate borrower are called indirect securities. The market for instruments (also called securities) issued for the first time, is called the primary market. Primary security is the asset created out of the credit facility extended to the borrower and / or which are directly associated with the business / project of the borrower for which the credit facility has been extended.
[10] Founded in the year 1886 by a pharmacist named John Pemberton, this product is the second most widely understood term in the world after "OK". What is its name?
A.
Aspirin
B.
ENO
C.
CocaCola
D.
Pepsi
Ans:
CocaCola
Explanation :
Coca-Cola is the second most widely understood term in the world after "Ok". It was originally intended as a patent medicine when it was invented in the late 19th century by John Pemberton. Coca Cola is the world's largest soft drinks company. It is rated as the most recognized trade mark and third most valuable brand in the world.
[11] Which of the following is done at a Stock Exchange?
A.
Commodities are bought and sold at wholesale price
B.
Commodities are bought and sold at retail price
C.
Securities are bought and sold
D.
None of these
Ans:
Securities are bought and sold
Explanation :
A stock exchange or bourse is an exchange where stock brokers and traders can buy and/or sell stocks (also called shares), bonds, and other securities. Stock exchanges may also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and dividends.
[12] Indirect tax means :
A.
There is not direct relationship between the tax payer and the government.
B.
Direct relationship between tax payer and the government.
C.
Tax base is income
D.
The incidence and impact are on the same person on whom tax is imposed.
Ans:
There is not direct relationship between the tax payer and the government.
Explanation :
The term indirect tax has more than one meaning. In the colloquial sense, an indirect tax (such as sales tax, a specific tax, value added tax (VAT), or goods and services tax (GST)) is a tax collected by an intermediary (such as a retail store) from the person who bears the ultimate economic burden of the tax (such as the consumer). The intermediary later files a tax return and forwards the tax proceeds to government with the return. In this sense, the term indirect tax is contrasted with a direct tax which is collected directly by government from the persons (legal or natural) on which it is imposed.
[13] A short-term government security paper is called -
A.
Share
B.
Debenture
C.
Mutual fund
D.
Treasury bill
Ans:
Treasury bill
Explanation :
Treasury bills are instrument of short-term borrowing by the Government of India, issued as promissory notes under discount. The interest received on them is the discount which is the difference between the price at which they are issued and their redemption value. They have assured yield and negligible risk of default.
[14] The existence of a parallel economy or Black Money -
A.
makes the economy more competitive
B.
makes the monetary policies less effective
C.
ensures a better distribution of income and wealth
D.
ensures increasing productive investment
Ans:
makes the monetary policies less effective
Explanation :
The existence of black money is injurious not just for tax revenues. It distorts the systematic resource allocation process and upsets the accuracy of economic forecasts. Inflation is both a cause as well as a consequence of the black money in our economy. Black money results in the social injustice and fallacy in the economy. The rich gets richer and the poor gets poorer. So the existence of black money erodes the very rationale of growth behind monetary policies.
[15] The non-expenditure costs which arise when the producing firm itself owns and supplies certain factors of production are -
A.
Explicit costs
B.
Original costs
C.
Implicit costs
D.
Replacement costs
Ans:
Implicit costs
Explanation :
In economics, an implicit is the opportunity cost equal to what a firm must give up in order to use factors which it neither purchases nor hires. It is the opposite of an explicit cost, which is borne directly. In other words, an implicit cost is any cost that results from using an asset instead of renting, selling or lending it. These are costs a business incurs without actually spending money.
[16] Which of the following subjects does not figure in the Concurrent List of our Constitution?
A.
Stock Exchanges and futures markets
B.
Protection of wild animals and birds
C.
Forests
D.
Trade unions
Ans:
Stock Exchanges and futures markets
Explanation :
The Concurrent List or List-III is a list of 47 items given in Part XI of the Constitution of India, concerned with relations between the Union and States. Stock exchanges and futures markets come under the Union List.
[17] The method of calculating the national income by the product method is otherwise known as :
A.
Income method
B.
Value added method
C.
Expenditure method
D.
Net output method
Ans:
Net output method
Explanation :
Primarily there are three methods of measuring national income. Which method is to be employed depends on the availability of data and purpose. The methods are product method, income method and expenditure method. According to product method, the total value of final goods and services produced in a country during a year is calculated at market prices. According to this method only the final goods and services are included and the intermediary goods and services are not taken into account. In this method, National Output = National Expenditure (Aggregate Demand) = National Income.
[18] The best measure to assess a country's economic growth is -
A.
per capita income at constant prices
B.
per capita income at current prices
C.
gross domestic product at current prices
D.
gross national product at current prices
Ans:
per capita income at constant prices
Explanation :
Gross domestic product (GDP) is the market value of all officially recognized final goods and services produced within a country in a given period of time. Per capita income or average income or income per person is the mean income within an economic aggregate, such as a country or city. It is calculated by taking a measure of all sources of income in the aggregate (such as GDP or Gross National Income) and dividing it by the total population.
[19] Rate of interest is determined by -
A.
The rate of return on the capital invested
B.
Central Government
C.
Liquidity preference
D.
Commercial Banks
Ans:
Commercial Banks
Explanation :
Bank Rate is determined by the Reserve Bank of India. The rate of interest is determined by the commercial banks in India. As per RBI notification, banks are free to determine rates of interest subject to BPLR and spread guidelines.
[20] The total value of goods and services produced in a country during a given period is -
A.
Disposable income
B.
National income
C.
Per capita income
D.
Net national income
Ans:
National income
Explanation :
National income is the total value a country's final output of all new goods and services produced in one year. Understanding how national income is created is the starting point for macroeconomics.
[21] Income and consumption are :
A.
inversely related
B.
directly related
C.
partially related
D.
unrelated.
Ans:
directly related
Explanation :
Consumption and income arc directly or positively related. An increase in income is associated with an increase in income; a decrease in consumption accompanies a decrease in income.
[22] Which of the following is deducted from GNP to arrive at NNP?
A.
Depreciation
B.
Interest
C.
Tax
D.
Subsidy
Ans:
Depreciation
Explanation :
If we subtract the depreciation charges from the gross national product, we get net national product at market price. Net national product at market price=Gross national product at market price- Depreciation.
[23] Regarding money supply situation in India it can be said that the :
A.
Currency with the public is inconvertible only.
B.
Currency with the public is less than the deposits with the banks.
C.
Currency with the public is more than the deposits with the banks.
D.
Currency with the public is almost equal to the deposits with banks.
Ans:
Currency with the public is less than the deposits with the banks.
Explanation :
Money supply in India includes the following: (i) Currency with the public: (ii) Demand deposits and time deposits with banks: (iii) Deposits with reserve Bank of India: and (iv) Deposits in Post Office. The currency with public is less than the total currency issued by RBI. This is because of cash reserves with banks, i.e., a part of currency issued remains with banks. As far as deposits are concerned, during the last four decades, the proportion of demand deposits, time deposits and other with banks in relation to total supply of money has been increasing with reciprocal diminution in currency held by the public.
[24] The equilibrium price of a commodity will definitely rise if there is a/an:
A.
increase in supply combined with a decrease in demand.
B.
increase in both demand and supply.
C.
decrease in both demand and supply.
D.
increase in demand accompanied by a decrease in supply.
Ans:
increase in demand accompanied by a decrease in supply.
Explanation :
Price of a commodity is always determined by the forces of demand and supply in the market. The price at which the amount demanded and amount supplied are equal is known as 'equilibrium price.' The equilibrium price definitely increases when there is an in-crease in demand combined with the decrease in supply.
[25] Short term contractions and expansions in economic activity are called .
A.
Expansions
B.
Recession
C.
Deficits
D.
The business cycle
Ans:
The business cycle
Explanation :
The business cycle is the fluctuation in economic activity that an economy experiences over a period of time. It is basically defined in terms of periods of expansion or recession. During expansions, the economy grows in real terms (i.e. excluding inflation), as evidenced by increases in indicators like employment, industrial production, sales and personal incomes. During recessions, the economy contracts, as measured by decreases in the above indicators.
Explanation :
Instruments (certificates) issued by the ultimate borrower are called primary securities. Instruments issued by intermediaries on behalf of the ultimate borrower are called indirect securities. The market for instruments (also called securities) issued for the first time, is called the primary market. Primary security is the asset created out of the credit facility extended to the borrower and / or which are directly associated with the business / project of the borrower for which the credit facility has been extended.
[10] Founded in the year 1886 by a pharmacist named John Pemberton, this product is the second most widely understood term in the world after "OK". What is its name?
A.
Aspirin
B.
ENO
C.
CocaCola
D.
Pepsi
Ans:
CocaCola
Explanation :
Coca-Cola is the second most widely understood term in the world after "Ok". It was originally intended as a patent medicine when it was invented in the late 19th century by John Pemberton. Coca Cola is the world's largest soft drinks company. It is rated as the most recognized trade mark and third most valuable brand in the world.
[11] Which of the following is done at a Stock Exchange?
A.
Commodities are bought and sold at wholesale price
B.
Commodities are bought and sold at retail price
C.
Securities are bought and sold
D.
None of these
Ans:
Securities are bought and sold
Explanation :
A stock exchange or bourse is an exchange where stock brokers and traders can buy and/or sell stocks (also called shares), bonds, and other securities. Stock exchanges may also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and dividends.
[12] Indirect tax means :
A.
There is not direct relationship between the tax payer and the government.
B.
Direct relationship between tax payer and the government.
C.
Tax base is income
D.
The incidence and impact are on the same person on whom tax is imposed.
Ans:
There is not direct relationship between the tax payer and the government.
Explanation :
The term indirect tax has more than one meaning. In the colloquial sense, an indirect tax (such as sales tax, a specific tax, value added tax (VAT), or goods and services tax (GST)) is a tax collected by an intermediary (such as a retail store) from the person who bears the ultimate economic burden of the tax (such as the consumer). The intermediary later files a tax return and forwards the tax proceeds to government with the return. In this sense, the term indirect tax is contrasted with a direct tax which is collected directly by government from the persons (legal or natural) on which it is imposed.
[13] A short-term government security paper is called -
A.
Share
B.
Debenture
C.
Mutual fund
D.
Treasury bill
Ans:
Treasury bill
Explanation :
Treasury bills are instrument of short-term borrowing by the Government of India, issued as promissory notes under discount. The interest received on them is the discount which is the difference between the price at which they are issued and their redemption value. They have assured yield and negligible risk of default.
[14] The existence of a parallel economy or Black Money -
A.
makes the economy more competitive
B.
makes the monetary policies less effective
C.
ensures a better distribution of income and wealth
D.
ensures increasing productive investment
Ans:
makes the monetary policies less effective
Explanation :
The existence of black money is injurious not just for tax revenues. It distorts the systematic resource allocation process and upsets the accuracy of economic forecasts. Inflation is both a cause as well as a consequence of the black money in our economy. Black money results in the social injustice and fallacy in the economy. The rich gets richer and the poor gets poorer. So the existence of black money erodes the very rationale of growth behind monetary policies.
[15] The non-expenditure costs which arise when the producing firm itself owns and supplies certain factors of production are -
A.
Explicit costs
B.
Original costs
C.
Implicit costs
D.
Replacement costs
Ans:
Implicit costs
Explanation :
In economics, an implicit is the opportunity cost equal to what a firm must give up in order to use factors which it neither purchases nor hires. It is the opposite of an explicit cost, which is borne directly. In other words, an implicit cost is any cost that results from using an asset instead of renting, selling or lending it. These are costs a business incurs without actually spending money.
[16] Which of the following subjects does not figure in the Concurrent List of our Constitution?
A.
Stock Exchanges and futures markets
B.
Protection of wild animals and birds
C.
Forests
D.
Trade unions
Ans:
Stock Exchanges and futures markets
Explanation :
The Concurrent List or List-III is a list of 47 items given in Part XI of the Constitution of India, concerned with relations between the Union and States. Stock exchanges and futures markets come under the Union List.
[17] The method of calculating the national income by the product method is otherwise known as :
A.
Income method
B.
Value added method
C.
Expenditure method
D.
Net output method
Ans:
Net output method
Explanation :
Primarily there are three methods of measuring national income. Which method is to be employed depends on the availability of data and purpose. The methods are product method, income method and expenditure method. According to product method, the total value of final goods and services produced in a country during a year is calculated at market prices. According to this method only the final goods and services are included and the intermediary goods and services are not taken into account. In this method, National Output = National Expenditure (Aggregate Demand) = National Income.
[18] The best measure to assess a country's economic growth is -
A.
per capita income at constant prices
B.
per capita income at current prices
C.
gross domestic product at current prices
D.
gross national product at current prices
Ans:
per capita income at constant prices
Explanation :
Gross domestic product (GDP) is the market value of all officially recognized final goods and services produced within a country in a given period of time. Per capita income or average income or income per person is the mean income within an economic aggregate, such as a country or city. It is calculated by taking a measure of all sources of income in the aggregate (such as GDP or Gross National Income) and dividing it by the total population.
[19] Rate of interest is determined by -
A.
The rate of return on the capital invested
B.
Central Government
C.
Liquidity preference
D.
Commercial Banks
Ans:
Commercial Banks
Explanation :
Bank Rate is determined by the Reserve Bank of India. The rate of interest is determined by the commercial banks in India. As per RBI notification, banks are free to determine rates of interest subject to BPLR and spread guidelines.
[20] The total value of goods and services produced in a country during a given period is -
A.
Disposable income
B.
National income
C.
Per capita income
D.
Net national income
Ans:
National income
Explanation :
National income is the total value a country's final output of all new goods and services produced in one year. Understanding how national income is created is the starting point for macroeconomics.
[21] Income and consumption are :
A.
inversely related
B.
directly related
C.
partially related
D.
unrelated.
Ans:
directly related
Explanation :
Consumption and income arc directly or positively related. An increase in income is associated with an increase in income; a decrease in consumption accompanies a decrease in income.
[22] Which of the following is deducted from GNP to arrive at NNP?
A.
Depreciation
B.
Interest
C.
Tax
D.
Subsidy
Ans:
Depreciation
Explanation :
If we subtract the depreciation charges from the gross national product, we get net national product at market price. Net national product at market price=Gross national product at market price- Depreciation.
[23] Regarding money supply situation in India it can be said that the :
A.
Currency with the public is inconvertible only.
B.
Currency with the public is less than the deposits with the banks.
C.
Currency with the public is more than the deposits with the banks.
D.
Currency with the public is almost equal to the deposits with banks.
Ans:
Currency with the public is less than the deposits with the banks.
Explanation :
Money supply in India includes the following: (i) Currency with the public: (ii) Demand deposits and time deposits with banks: (iii) Deposits with reserve Bank of India: and (iv) Deposits in Post Office. The currency with public is less than the total currency issued by RBI. This is because of cash reserves with banks, i.e., a part of currency issued remains with banks. As far as deposits are concerned, during the last four decades, the proportion of demand deposits, time deposits and other with banks in relation to total supply of money has been increasing with reciprocal diminution in currency held by the public.
[24] The equilibrium price of a commodity will definitely rise if there is a/an:
A.
increase in supply combined with a decrease in demand.
B.
increase in both demand and supply.
C.
decrease in both demand and supply.
D.
increase in demand accompanied by a decrease in supply.
Ans:
increase in demand accompanied by a decrease in supply.
Explanation :
Price of a commodity is always determined by the forces of demand and supply in the market. The price at which the amount demanded and amount supplied are equal is known as 'equilibrium price.' The equilibrium price definitely increases when there is an in-crease in demand combined with the decrease in supply.
[25] Short term contractions and expansions in economic activity are called .
A.
Expansions
B.
Recession
C.
Deficits
D.
The business cycle
Ans:
The business cycle
Explanation :
The business cycle is the fluctuation in economic activity that an economy experiences over a period of time. It is basically defined in terms of periods of expansion or recession. During expansions, the economy grows in real terms (i.e. excluding inflation), as evidenced by increases in indicators like employment, industrial production, sales and personal incomes. During recessions, the economy contracts, as measured by decreases in the above indicators.
Explanation :
A stock exchange or bourse is an exchange where stock brokers and traders can buy and/or sell stocks (also called shares), bonds, and other securities. Stock exchanges may also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and dividends.
[12] Indirect tax means :
A.
There is not direct relationship between the tax payer and the government.
B.
Direct relationship between tax payer and the government.
C.
Tax base is income
D.
The incidence and impact are on the same person on whom tax is imposed.
Ans:
There is not direct relationship between the tax payer and the government.
Explanation :
The term indirect tax has more than one meaning. In the colloquial sense, an indirect tax (such as sales tax, a specific tax, value added tax (VAT), or goods and services tax (GST)) is a tax collected by an intermediary (such as a retail store) from the person who bears the ultimate economic burden of the tax (such as the consumer). The intermediary later files a tax return and forwards the tax proceeds to government with the return. In this sense, the term indirect tax is contrasted with a direct tax which is collected directly by government from the persons (legal or natural) on which it is imposed.
[13] A short-term government security paper is called -
A.
Share
B.
Debenture
C.
Mutual fund
D.
Treasury bill
Ans:
Treasury bill
Explanation :
Treasury bills are instrument of short-term borrowing by the Government of India, issued as promissory notes under discount. The interest received on them is the discount which is the difference between the price at which they are issued and their redemption value. They have assured yield and negligible risk of default.
[14] The existence of a parallel economy or Black Money -
A.
makes the economy more competitive
B.
makes the monetary policies less effective
C.
ensures a better distribution of income and wealth
D.
ensures increasing productive investment
Ans:
makes the monetary policies less effective
Explanation :
The existence of black money is injurious not just for tax revenues. It distorts the systematic resource allocation process and upsets the accuracy of economic forecasts. Inflation is both a cause as well as a consequence of the black money in our economy. Black money results in the social injustice and fallacy in the economy. The rich gets richer and the poor gets poorer. So the existence of black money erodes the very rationale of growth behind monetary policies.
[15] The non-expenditure costs which arise when the producing firm itself owns and supplies certain factors of production are -
A.
Explicit costs
B.
Original costs
C.
Implicit costs
D.
Replacement costs
Ans:
Implicit costs
Explanation :
In economics, an implicit is the opportunity cost equal to what a firm must give up in order to use factors which it neither purchases nor hires. It is the opposite of an explicit cost, which is borne directly. In other words, an implicit cost is any cost that results from using an asset instead of renting, selling or lending it. These are costs a business incurs without actually spending money.
[16] Which of the following subjects does not figure in the Concurrent List of our Constitution?
A.
Stock Exchanges and futures markets
B.
Protection of wild animals and birds
C.
Forests
D.
Trade unions
Ans:
Stock Exchanges and futures markets
Explanation :
The Concurrent List or List-III is a list of 47 items given in Part XI of the Constitution of India, concerned with relations between the Union and States. Stock exchanges and futures markets come under the Union List.
[17] The method of calculating the national income by the product method is otherwise known as :
A.
Income method
B.
Value added method
C.
Expenditure method
D.
Net output method
Ans:
Net output method
Explanation :
Primarily there are three methods of measuring national income. Which method is to be employed depends on the availability of data and purpose. The methods are product method, income method and expenditure method. According to product method, the total value of final goods and services produced in a country during a year is calculated at market prices. According to this method only the final goods and services are included and the intermediary goods and services are not taken into account. In this method, National Output = National Expenditure (Aggregate Demand) = National Income.
[18] The best measure to assess a country's economic growth is -
A.
per capita income at constant prices
B.
per capita income at current prices
C.
gross domestic product at current prices
D.
gross national product at current prices
Ans:
per capita income at constant prices
Explanation :
Gross domestic product (GDP) is the market value of all officially recognized final goods and services produced within a country in a given period of time. Per capita income or average income or income per person is the mean income within an economic aggregate, such as a country or city. It is calculated by taking a measure of all sources of income in the aggregate (such as GDP or Gross National Income) and dividing it by the total population.
[19] Rate of interest is determined by -
A.
The rate of return on the capital invested
B.
Central Government
C.
Liquidity preference
D.
Commercial Banks
Ans:
Commercial Banks
Explanation :
Bank Rate is determined by the Reserve Bank of India. The rate of interest is determined by the commercial banks in India. As per RBI notification, banks are free to determine rates of interest subject to BPLR and spread guidelines.
[20] The total value of goods and services produced in a country during a given period is -
A.
Disposable income
B.
National income
C.
Per capita income
D.
Net national income
Ans:
National income
Explanation :
National income is the total value a country's final output of all new goods and services produced in one year. Understanding how national income is created is the starting point for macroeconomics.
[21] Income and consumption are :
A.
inversely related
B.
directly related
C.
partially related
D.
unrelated.
Ans:
directly related
Explanation :
Consumption and income arc directly or positively related. An increase in income is associated with an increase in income; a decrease in consumption accompanies a decrease in income.
[22] Which of the following is deducted from GNP to arrive at NNP?
A.
Depreciation
B.
Interest
C.
Tax
D.
Subsidy
Ans:
Depreciation
Explanation :
If we subtract the depreciation charges from the gross national product, we get net national product at market price. Net national product at market price=Gross national product at market price- Depreciation.
[23] Regarding money supply situation in India it can be said that the :
A.
Currency with the public is inconvertible only.
B.
Currency with the public is less than the deposits with the banks.
C.
Currency with the public is more than the deposits with the banks.
D.
Currency with the public is almost equal to the deposits with banks.
Ans:
Currency with the public is less than the deposits with the banks.
Explanation :
Money supply in India includes the following: (i) Currency with the public: (ii) Demand deposits and time deposits with banks: (iii) Deposits with reserve Bank of India: and (iv) Deposits in Post Office. The currency with public is less than the total currency issued by RBI. This is because of cash reserves with banks, i.e., a part of currency issued remains with banks. As far as deposits are concerned, during the last four decades, the proportion of demand deposits, time deposits and other with banks in relation to total supply of money has been increasing with reciprocal diminution in currency held by the public.
[24] The equilibrium price of a commodity will definitely rise if there is a/an:
A.
increase in supply combined with a decrease in demand.
B.
increase in both demand and supply.
C.
decrease in both demand and supply.
D.
increase in demand accompanied by a decrease in supply.
Ans:
increase in demand accompanied by a decrease in supply.
Explanation :
Price of a commodity is always determined by the forces of demand and supply in the market. The price at which the amount demanded and amount supplied are equal is known as 'equilibrium price.' The equilibrium price definitely increases when there is an in-crease in demand combined with the decrease in supply.
[25] Short term contractions and expansions in economic activity are called .
A.
Expansions
B.
Recession
C.
Deficits
D.
The business cycle
Ans:
The business cycle
Explanation :
The business cycle is the fluctuation in economic activity that an economy experiences over a period of time. It is basically defined in terms of periods of expansion or recession. During expansions, the economy grows in real terms (i.e. excluding inflation), as evidenced by increases in indicators like employment, industrial production, sales and personal incomes. During recessions, the economy contracts, as measured by decreases in the above indicators.
Explanation :
Treasury bills are instrument of short-term borrowing by the Government of India, issued as promissory notes under discount. The interest received on them is the discount which is the difference between the price at which they are issued and their redemption value. They have assured yield and negligible risk of default.
[14] The existence of a parallel economy or Black Money -
A.
makes the economy more competitive
B.
makes the monetary policies less effective
C.
ensures a better distribution of income and wealth
D.
ensures increasing productive investment
Ans:
makes the monetary policies less effective
Explanation :
The existence of black money is injurious not just for tax revenues. It distorts the systematic resource allocation process and upsets the accuracy of economic forecasts. Inflation is both a cause as well as a consequence of the black money in our economy. Black money results in the social injustice and fallacy in the economy. The rich gets richer and the poor gets poorer. So the existence of black money erodes the very rationale of growth behind monetary policies.
[15] The non-expenditure costs which arise when the producing firm itself owns and supplies certain factors of production are -
A.
Explicit costs
B.
Original costs
C.
Implicit costs
D.
Replacement costs
Ans:
Implicit costs
Explanation :
In economics, an implicit is the opportunity cost equal to what a firm must give up in order to use factors which it neither purchases nor hires. It is the opposite of an explicit cost, which is borne directly. In other words, an implicit cost is any cost that results from using an asset instead of renting, selling or lending it. These are costs a business incurs without actually spending money.
[16] Which of the following subjects does not figure in the Concurrent List of our Constitution?
A.
Stock Exchanges and futures markets
B.
Protection of wild animals and birds
C.
Forests
D.
Trade unions
Ans:
Stock Exchanges and futures markets
Explanation :
The Concurrent List or List-III is a list of 47 items given in Part XI of the Constitution of India, concerned with relations between the Union and States. Stock exchanges and futures markets come under the Union List.
[17] The method of calculating the national income by the product method is otherwise known as :
A.
Income method
B.
Value added method
C.
Expenditure method
D.
Net output method
Ans:
Net output method
Explanation :
Primarily there are three methods of measuring national income. Which method is to be employed depends on the availability of data and purpose. The methods are product method, income method and expenditure method. According to product method, the total value of final goods and services produced in a country during a year is calculated at market prices. According to this method only the final goods and services are included and the intermediary goods and services are not taken into account. In this method, National Output = National Expenditure (Aggregate Demand) = National Income.
[18] The best measure to assess a country's economic growth is -
A.
per capita income at constant prices
B.
per capita income at current prices
C.
gross domestic product at current prices
D.
gross national product at current prices
Ans:
per capita income at constant prices
Explanation :
Gross domestic product (GDP) is the market value of all officially recognized final goods and services produced within a country in a given period of time. Per capita income or average income or income per person is the mean income within an economic aggregate, such as a country or city. It is calculated by taking a measure of all sources of income in the aggregate (such as GDP or Gross National Income) and dividing it by the total population.
[19] Rate of interest is determined by -
A.
The rate of return on the capital invested
B.
Central Government
C.
Liquidity preference
D.
Commercial Banks
Ans:
Commercial Banks
Explanation :
Bank Rate is determined by the Reserve Bank of India. The rate of interest is determined by the commercial banks in India. As per RBI notification, banks are free to determine rates of interest subject to BPLR and spread guidelines.
[20] The total value of goods and services produced in a country during a given period is -
A.
Disposable income
B.
National income
C.
Per capita income
D.
Net national income
Ans:
National income
Explanation :
National income is the total value a country's final output of all new goods and services produced in one year. Understanding how national income is created is the starting point for macroeconomics.
[21] Income and consumption are :
A.
inversely related
B.
directly related
C.
partially related
D.
unrelated.
Ans:
directly related
Explanation :
Consumption and income arc directly or positively related. An increase in income is associated with an increase in income; a decrease in consumption accompanies a decrease in income.
[22] Which of the following is deducted from GNP to arrive at NNP?
A.
Depreciation
B.
Interest
C.
Tax
D.
Subsidy
Ans:
Depreciation
Explanation :
If we subtract the depreciation charges from the gross national product, we get net national product at market price. Net national product at market price=Gross national product at market price- Depreciation.
[23] Regarding money supply situation in India it can be said that the :
A.
Currency with the public is inconvertible only.
B.
Currency with the public is less than the deposits with the banks.
C.
Currency with the public is more than the deposits with the banks.
D.
Currency with the public is almost equal to the deposits with banks.
Ans:
Currency with the public is less than the deposits with the banks.
Explanation :
Money supply in India includes the following: (i) Currency with the public: (ii) Demand deposits and time deposits with banks: (iii) Deposits with reserve Bank of India: and (iv) Deposits in Post Office. The currency with public is less than the total currency issued by RBI. This is because of cash reserves with banks, i.e., a part of currency issued remains with banks. As far as deposits are concerned, during the last four decades, the proportion of demand deposits, time deposits and other with banks in relation to total supply of money has been increasing with reciprocal diminution in currency held by the public.
[24] The equilibrium price of a commodity will definitely rise if there is a/an:
A.
increase in supply combined with a decrease in demand.
B.
increase in both demand and supply.
C.
decrease in both demand and supply.
D.
increase in demand accompanied by a decrease in supply.
Ans:
increase in demand accompanied by a decrease in supply.
Explanation :
Price of a commodity is always determined by the forces of demand and supply in the market. The price at which the amount demanded and amount supplied are equal is known as 'equilibrium price.' The equilibrium price definitely increases when there is an in-crease in demand combined with the decrease in supply.
[25] Short term contractions and expansions in economic activity are called .
A.
Expansions
B.
Recession
C.
Deficits
D.
The business cycle
Ans:
The business cycle
Explanation :
The business cycle is the fluctuation in economic activity that an economy experiences over a period of time. It is basically defined in terms of periods of expansion or recession. During expansions, the economy grows in real terms (i.e. excluding inflation), as evidenced by increases in indicators like employment, industrial production, sales and personal incomes. During recessions, the economy contracts, as measured by decreases in the above indicators.
Explanation :
In economics, an implicit is the opportunity cost equal to what a firm must give up in order to use factors which it neither purchases nor hires. It is the opposite of an explicit cost, which is borne directly. In other words, an implicit cost is any cost that results from using an asset instead of renting, selling or lending it. These are costs a business incurs without actually spending money.
[16] Which of the following subjects does not figure in the Concurrent List of our Constitution?
A.
Stock Exchanges and futures markets
B.
Protection of wild animals and birds
C.
Forests
D.
Trade unions
Ans:
Stock Exchanges and futures markets
Explanation :
The Concurrent List or List-III is a list of 47 items given in Part XI of the Constitution of India, concerned with relations between the Union and States. Stock exchanges and futures markets come under the Union List.
[17] The method of calculating the national income by the product method is otherwise known as :
A.
Income method
B.
Value added method
C.
Expenditure method
D.
Net output method
Ans:
Net output method
Explanation :
Primarily there are three methods of measuring national income. Which method is to be employed depends on the availability of data and purpose. The methods are product method, income method and expenditure method. According to product method, the total value of final goods and services produced in a country during a year is calculated at market prices. According to this method only the final goods and services are included and the intermediary goods and services are not taken into account. In this method, National Output = National Expenditure (Aggregate Demand) = National Income.
[18] The best measure to assess a country's economic growth is -
A.
per capita income at constant prices
B.
per capita income at current prices
C.
gross domestic product at current prices
D.
gross national product at current prices
Ans:
per capita income at constant prices
Explanation :
Gross domestic product (GDP) is the market value of all officially recognized final goods and services produced within a country in a given period of time. Per capita income or average income or income per person is the mean income within an economic aggregate, such as a country or city. It is calculated by taking a measure of all sources of income in the aggregate (such as GDP or Gross National Income) and dividing it by the total population.
[19] Rate of interest is determined by -
A.
The rate of return on the capital invested
B.
Central Government
C.
Liquidity preference
D.
Commercial Banks
Ans:
Commercial Banks
Explanation :
Bank Rate is determined by the Reserve Bank of India. The rate of interest is determined by the commercial banks in India. As per RBI notification, banks are free to determine rates of interest subject to BPLR and spread guidelines.
[20] The total value of goods and services produced in a country during a given period is -
A.
Disposable income
B.
National income
C.
Per capita income
D.
Net national income
Ans:
National income
Explanation :
National income is the total value a country's final output of all new goods and services produced in one year. Understanding how national income is created is the starting point for macroeconomics.
[21] Income and consumption are :
A.
inversely related
B.
directly related
C.
partially related
D.
unrelated.
Ans:
directly related
Explanation :
Consumption and income arc directly or positively related. An increase in income is associated with an increase in income; a decrease in consumption accompanies a decrease in income.
[22] Which of the following is deducted from GNP to arrive at NNP?
A.
Depreciation
B.
Interest
C.
Tax
D.
Subsidy
Ans:
Depreciation
Explanation :
If we subtract the depreciation charges from the gross national product, we get net national product at market price. Net national product at market price=Gross national product at market price- Depreciation.
[23] Regarding money supply situation in India it can be said that the :
A.
Currency with the public is inconvertible only.
B.
Currency with the public is less than the deposits with the banks.
C.
Currency with the public is more than the deposits with the banks.
D.
Currency with the public is almost equal to the deposits with banks.
Ans:
Currency with the public is less than the deposits with the banks.
Explanation :
Money supply in India includes the following: (i) Currency with the public: (ii) Demand deposits and time deposits with banks: (iii) Deposits with reserve Bank of India: and (iv) Deposits in Post Office. The currency with public is less than the total currency issued by RBI. This is because of cash reserves with banks, i.e., a part of currency issued remains with banks. As far as deposits are concerned, during the last four decades, the proportion of demand deposits, time deposits and other with banks in relation to total supply of money has been increasing with reciprocal diminution in currency held by the public.
[24] The equilibrium price of a commodity will definitely rise if there is a/an:
A.
increase in supply combined with a decrease in demand.
B.
increase in both demand and supply.
C.
decrease in both demand and supply.
D.
increase in demand accompanied by a decrease in supply.
Ans:
increase in demand accompanied by a decrease in supply.
Explanation :
Price of a commodity is always determined by the forces of demand and supply in the market. The price at which the amount demanded and amount supplied are equal is known as 'equilibrium price.' The equilibrium price definitely increases when there is an in-crease in demand combined with the decrease in supply.
[25] Short term contractions and expansions in economic activity are called .
A.
Expansions
B.
Recession
C.
Deficits
D.
The business cycle
Ans:
The business cycle
Explanation :
The business cycle is the fluctuation in economic activity that an economy experiences over a period of time. It is basically defined in terms of periods of expansion or recession. During expansions, the economy grows in real terms (i.e. excluding inflation), as evidenced by increases in indicators like employment, industrial production, sales and personal incomes. During recessions, the economy contracts, as measured by decreases in the above indicators.
Explanation :
Primarily there are three methods of measuring national income. Which method is to be employed depends on the availability of data and purpose. The methods are product method, income method and expenditure method. According to product method, the total value of final goods and services produced in a country during a year is calculated at market prices. According to this method only the final goods and services are included and the intermediary goods and services are not taken into account. In this method, National Output = National Expenditure (Aggregate Demand) = National Income.
[18] The best measure to assess a country's economic growth is -
A.
per capita income at constant prices
B.
per capita income at current prices
C.
gross domestic product at current prices
D.
gross national product at current prices
Ans:
per capita income at constant prices
Explanation :
Gross domestic product (GDP) is the market value of all officially recognized final goods and services produced within a country in a given period of time. Per capita income or average income or income per person is the mean income within an economic aggregate, such as a country or city. It is calculated by taking a measure of all sources of income in the aggregate (such as GDP or Gross National Income) and dividing it by the total population.
[19] Rate of interest is determined by -
A.
The rate of return on the capital invested
B.
Central Government
C.
Liquidity preference
D.
Commercial Banks
Ans:
Commercial Banks
Explanation :
Bank Rate is determined by the Reserve Bank of India. The rate of interest is determined by the commercial banks in India. As per RBI notification, banks are free to determine rates of interest subject to BPLR and spread guidelines.
[20] The total value of goods and services produced in a country during a given period is -
A.
Disposable income
B.
National income
C.
Per capita income
D.
Net national income
Ans:
National income
Explanation :
National income is the total value a country's final output of all new goods and services produced in one year. Understanding how national income is created is the starting point for macroeconomics.
[21] Income and consumption are :
A.
inversely related
B.
directly related
C.
partially related
D.
unrelated.
Ans:
directly related
Explanation :
Consumption and income arc directly or positively related. An increase in income is associated with an increase in income; a decrease in consumption accompanies a decrease in income.
[22] Which of the following is deducted from GNP to arrive at NNP?
A.
Depreciation
B.
Interest
C.
Tax
D.
Subsidy
Ans:
Depreciation
Explanation :
If we subtract the depreciation charges from the gross national product, we get net national product at market price. Net national product at market price=Gross national product at market price- Depreciation.
[23] Regarding money supply situation in India it can be said that the :
A.
Currency with the public is inconvertible only.
B.
Currency with the public is less than the deposits with the banks.
C.
Currency with the public is more than the deposits with the banks.
D.
Currency with the public is almost equal to the deposits with banks.
Ans:
Currency with the public is less than the deposits with the banks.
Explanation :
Money supply in India includes the following: (i) Currency with the public: (ii) Demand deposits and time deposits with banks: (iii) Deposits with reserve Bank of India: and (iv) Deposits in Post Office. The currency with public is less than the total currency issued by RBI. This is because of cash reserves with banks, i.e., a part of currency issued remains with banks. As far as deposits are concerned, during the last four decades, the proportion of demand deposits, time deposits and other with banks in relation to total supply of money has been increasing with reciprocal diminution in currency held by the public.
[24] The equilibrium price of a commodity will definitely rise if there is a/an:
A.
increase in supply combined with a decrease in demand.
B.
increase in both demand and supply.
C.
decrease in both demand and supply.
D.
increase in demand accompanied by a decrease in supply.
Ans:
increase in demand accompanied by a decrease in supply.
Explanation :
Price of a commodity is always determined by the forces of demand and supply in the market. The price at which the amount demanded and amount supplied are equal is known as 'equilibrium price.' The equilibrium price definitely increases when there is an in-crease in demand combined with the decrease in supply.
[25] Short term contractions and expansions in economic activity are called .
A.
Expansions
B.
Recession
C.
Deficits
D.
The business cycle
Ans:
The business cycle
Explanation :
The business cycle is the fluctuation in economic activity that an economy experiences over a period of time. It is basically defined in terms of periods of expansion or recession. During expansions, the economy grows in real terms (i.e. excluding inflation), as evidenced by increases in indicators like employment, industrial production, sales and personal incomes. During recessions, the economy contracts, as measured by decreases in the above indicators.
Explanation :
Bank Rate is determined by the Reserve Bank of India. The rate of interest is determined by the commercial banks in India. As per RBI notification, banks are free to determine rates of interest subject to BPLR and spread guidelines.
[20] The total value of goods and services produced in a country during a given period is -
A.
Disposable income
B.
National income
C.
Per capita income
D.
Net national income
Ans:
National income
Explanation :
National income is the total value a country's final output of all new goods and services produced in one year. Understanding how national income is created is the starting point for macroeconomics.
[21] Income and consumption are :
A.
inversely related
B.
directly related
C.
partially related
D.
unrelated.
Ans:
directly related
Explanation :
Consumption and income arc directly or positively related. An increase in income is associated with an increase in income; a decrease in consumption accompanies a decrease in income.
[22] Which of the following is deducted from GNP to arrive at NNP?
A.
Depreciation
B.
Interest
C.
Tax
D.
Subsidy
Ans:
Depreciation
Explanation :
If we subtract the depreciation charges from the gross national product, we get net national product at market price. Net national product at market price=Gross national product at market price- Depreciation.
[23] Regarding money supply situation in India it can be said that the :
A.
Currency with the public is inconvertible only.
B.
Currency with the public is less than the deposits with the banks.
C.
Currency with the public is more than the deposits with the banks.
D.
Currency with the public is almost equal to the deposits with banks.
Ans:
Currency with the public is less than the deposits with the banks.
Explanation :
Money supply in India includes the following: (i) Currency with the public: (ii) Demand deposits and time deposits with banks: (iii) Deposits with reserve Bank of India: and (iv) Deposits in Post Office. The currency with public is less than the total currency issued by RBI. This is because of cash reserves with banks, i.e., a part of currency issued remains with banks. As far as deposits are concerned, during the last four decades, the proportion of demand deposits, time deposits and other with banks in relation to total supply of money has been increasing with reciprocal diminution in currency held by the public.
[24] The equilibrium price of a commodity will definitely rise if there is a/an:
A.
increase in supply combined with a decrease in demand.
B.
increase in both demand and supply.
C.
decrease in both demand and supply.
D.
increase in demand accompanied by a decrease in supply.
Ans:
increase in demand accompanied by a decrease in supply.
Explanation :
Price of a commodity is always determined by the forces of demand and supply in the market. The price at which the amount demanded and amount supplied are equal is known as 'equilibrium price.' The equilibrium price definitely increases when there is an in-crease in demand combined with the decrease in supply.
[25] Short term contractions and expansions in economic activity are called .
A.
Expansions
B.
Recession
C.
Deficits
D.
The business cycle
Ans:
The business cycle
Explanation :
The business cycle is the fluctuation in economic activity that an economy experiences over a period of time. It is basically defined in terms of periods of expansion or recession. During expansions, the economy grows in real terms (i.e. excluding inflation), as evidenced by increases in indicators like employment, industrial production, sales and personal incomes. During recessions, the economy contracts, as measured by decreases in the above indicators.
Explanation :
Consumption and income arc directly or positively related. An increase in income is associated with an increase in income; a decrease in consumption accompanies a decrease in income.
[22] Which of the following is deducted from GNP to arrive at NNP?
A.
Depreciation
B.
Interest
C.
Tax
D.
Subsidy
Ans:
Depreciation
Explanation :
If we subtract the depreciation charges from the gross national product, we get net national product at market price. Net national product at market price=Gross national product at market price- Depreciation.
[23] Regarding money supply situation in India it can be said that the :
A.
Currency with the public is inconvertible only.
B.
Currency with the public is less than the deposits with the banks.
C.
Currency with the public is more than the deposits with the banks.
D.
Currency with the public is almost equal to the deposits with banks.
Ans:
Currency with the public is less than the deposits with the banks.
Explanation :
Money supply in India includes the following: (i) Currency with the public: (ii) Demand deposits and time deposits with banks: (iii) Deposits with reserve Bank of India: and (iv) Deposits in Post Office. The currency with public is less than the total currency issued by RBI. This is because of cash reserves with banks, i.e., a part of currency issued remains with banks. As far as deposits are concerned, during the last four decades, the proportion of demand deposits, time deposits and other with banks in relation to total supply of money has been increasing with reciprocal diminution in currency held by the public.
[24] The equilibrium price of a commodity will definitely rise if there is a/an:
A.
increase in supply combined with a decrease in demand.
B.
increase in both demand and supply.
C.
decrease in both demand and supply.
D.
increase in demand accompanied by a decrease in supply.
Ans:
increase in demand accompanied by a decrease in supply.
Explanation :
Price of a commodity is always determined by the forces of demand and supply in the market. The price at which the amount demanded and amount supplied are equal is known as 'equilibrium price.' The equilibrium price definitely increases when there is an in-crease in demand combined with the decrease in supply.
[25] Short term contractions and expansions in economic activity are called .
A.
Expansions
B.
Recession
C.
Deficits
D.
The business cycle
Ans:
The business cycle
Explanation :
The business cycle is the fluctuation in economic activity that an economy experiences over a period of time. It is basically defined in terms of periods of expansion or recession. During expansions, the economy grows in real terms (i.e. excluding inflation), as evidenced by increases in indicators like employment, industrial production, sales and personal incomes. During recessions, the economy contracts, as measured by decreases in the above indicators.
Explanation :
Money supply in India includes the following: (i) Currency with the public: (ii) Demand deposits and time deposits with banks: (iii) Deposits with reserve Bank of India: and (iv) Deposits in Post Office. The currency with public is less than the total currency issued by RBI. This is because of cash reserves with banks, i.e., a part of currency issued remains with banks. As far as deposits are concerned, during the last four decades, the proportion of demand deposits, time deposits and other with banks in relation to total supply of money has been increasing with reciprocal diminution in currency held by the public.
[24] The equilibrium price of a commodity will definitely rise if there is a/an:
A.
increase in supply combined with a decrease in demand.
B.
increase in both demand and supply.
C.
decrease in both demand and supply.
D.
increase in demand accompanied by a decrease in supply.
Ans:
increase in demand accompanied by a decrease in supply.
Explanation :
Price of a commodity is always determined by the forces of demand and supply in the market. The price at which the amount demanded and amount supplied are equal is known as 'equilibrium price.' The equilibrium price definitely increases when there is an in-crease in demand combined with the decrease in supply.
[25] Short term contractions and expansions in economic activity are called .
A.
Expansions
B.
Recession
C.
Deficits
D.
The business cycle
Ans:
The business cycle
Explanation :
The business cycle is the fluctuation in economic activity that an economy experiences over a period of time. It is basically defined in terms of periods of expansion or recession. During expansions, the economy grows in real terms (i.e. excluding inflation), as evidenced by increases in indicators like employment, industrial production, sales and personal incomes. During recessions, the economy contracts, as measured by decreases in the above indicators.
Explanation :
The business cycle is the fluctuation in economic activity that an economy experiences over a period of time. It is basically defined in terms of periods of expansion or recession. During expansions, the economy grows in real terms (i.e. excluding inflation), as evidenced by increases in indicators like employment, industrial production, sales and personal incomes. During recessions, the economy contracts, as measured by decreases in the above indicators.