McqMate
| 201. |
Which one of the following is an example of optional money? |
| A. | Currency note |
| B. | Coins |
| C. | Cheque |
| D. | Bond |
| Answer» C. Cheque | |
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Explanation: On the basis of acceptability, money has been classified into legal tender and optional money. Legal tender money is enforced by law. Optional money is that money which may or may not be accepted as a means of payment; it has no legal sanction. Different credit instruments, like, cheques, bank drafts, etc., are the examples of optional money. |
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| 202. |
'Money' is an example of - |
| A. | Sunk capital |
| B. | Floating capital |
| C. | Concrete capital |
| D. | Social capital |
| Answer» B. Floating capital | |
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Explanation: Money is something which is widely accepted in payment for goods and services and in setting debts. Money is an example of Floating Capital. |
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| 203. |
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 |
| Answer» B. makes the monetary policies less effective | |
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Explanation: In India, Black money refers to funds earned on the black market, on which income and other taxes has not been paid. Black money leads to black liquidity which is immune to any monetary-fiscal policy. It can move around in the economy creating excess demand in several vulnerable sectors of the economy. Of particular relevance in this context is a policy dominated by sector-wise credit rationing in order to maintain inter-sectoral balances. The cost of credit is one one part of such a policy. So, in nutshell, the existence of parallel economy erodes the effectiveness of monetary policies. |
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| 204. |
An economy is in equilibrium when - |
| A. | planned consumption exceeds planned saving |
| B. | planned consumption exceeds planned investment |
| C. | intended saving equals intended investment |
| D. | intended investment exceeds intended savings |
| Answer» C. intended saving equals intended investment | |
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Explanation: In economics, economic equilibrium is a state of the world where economic forces are balanced and in the absence of external influences the (equilibrium) values of economic variables will not change. The condition of equilibrium of income is the equality of intended saving and intended investment. An economy is in equilibrium when total savings equal total investment. |
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| 205. |
The 'Canons of Taxation' were propounded by - |
| A. | Edwin Canon |
| B. | Adam Smith |
| C. | J.M. Keynes |
| D. | Dalton |
| Answer» B. Adam Smith | |
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Explanation: Canons of Taxation were first originally laid down by economist Adam Smith in his famous book 'The Wealth of Nations". In this book, Adam smith only gave four canons of taxation: (i) canon of equity: (ii) canon of certainty: (iii) canon of convenience; and (iv) canon of economy. |
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| 206. |
Beyond a certain point deficit financing will certainly lead to - |
| A. | inflation |
| B. | deflation |
| C. | recession |
| D. | economic stagnation |
| Answer» A. inflation | |
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Explanation: Deficit financing is a practice in which a government spends more money than it receives as revenue, the difference being made up by borrowing or minting new funds. Some economists are of the view that it leads to inflation as governments pay off debts by printing fiat money, increasing the money supply and the purchasing power of the people which increases the aggregate demand. |
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| 207. |
VAT is imposed: |
| A. | Directly on Consumer |
| B. | On first stage of production |
| C. | On final stage of production |
| D. | On all stages between production and sale |
| Answer» D. On all stages between production and sale | |
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Explanation: Value Added Tax (VAT) is imposed on the value added to each commodity by a firm during all stages of production and distribution. In simple terms, it is a fee assessed against businesses at each step of the production and distribution process, usually whenever a product is resold or value is added to it. Valueadded taxation in India was introduced as an indirect value added tax (VAT) into the Indian taxation system from 1 April 2005. |
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| 208. |
The aim of Differentiated Interest Scheme was to provide concessional loans to - |
| A. | weaker section of the society |
| B. | Public Sector Industries |
| C. | Public Limited Companies |
| D. | big exports |
| Answer» A. weaker section of the society | |
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Explanation: The Differential Rate of Interest Scheme, formulated in March 1972, offers financial assistance at concessional rate of interest. 0 4% to those who intend taking up any productive activity and has been tailored for persons whose income is very low. |
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| 209. |
Investment and savings are kept equal through a change in the level of - |
| A. | Consumption |
| B. | Investment |
| C. | Government expenditure |
| D. | Income |
| Answer» A. Consumption | |
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Explanation: Desired savings are kept equal to desired investment by responses to interest rate changes. Savings identity or the savings investment identity is a concept in National Income Accounting stating that the amount saved (S) in an economy will be amount invested (I). This identity only holds true because investment here is defined as including inventories. Thus, should consumers decide to save more, and spend less, the fall in demand would lead to an increase in business inventories. The change in inventories brings savings and investment into balance without any intention by business to increase investment. |
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| 210. |
Which of the following is not required while computing Gross National Product (GNP)? |
| A. | Net foreign investment |
| B. | Private investment |
| C. | Per capita income of citizens |
| D. | Purchase of goods by government |
| Answer» C. Per capita income of citizens | |
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Explanation: Gross National Product (GNP) is the market value of all products and services produced in one year by labour and property supplied by the residents of a country. Basically, GNP is the total value of all final goods and services produced within a nation in a particular year, plus income earned by its citizens (including income of those located abroad), minus income of non-residents located in that country. GNP measures the value of goods andservices that the country's citizens produced regardless of their location. |
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| 211. |
In a highly developed country the relative contribution of agriculture to GDP is |
| A. | relatively high |
| B. | relatively low |
| C. | the same as that of other sectors |
| D. | zero |
| Answer» B. relatively low | |
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Explanation: In developed countries, the labor productivity of any commercial agriculture is high, so only a very small percentage of the population is involved with agriculture even when agriculture is a major industry and export. These countries focus more on manufacturing and service industry. Agriculture or the primary sectors of the economy have sizeable contributions in the GDP of developing nations. |
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| 212. |
The demand for money, according to Keynes, is for - |
| A. | speculative motive |
| B. | transaction motive |
| C. | precautionary motive |
| D. | All the above motives |
| Answer» C. precautionary motive | |
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Explanation: According to Keynes, money is demanded because of three motives -transaction, precautionary and speculative. The first two motives provide yield of convenience and certainty. The third motive provides money yield. Keynes has termed demand for money as liquidity preference. |
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| 213. |
Economic progress of a country is determined by - |
| A. | Increase in per capita income of people of country |
| B. | Increase in the price of produced capital goods during the year |
| C. | Increased numbers of Trade Unions |
| D. | Fall in the general price level of a country |
| Answer» A. Increase in per capita income of people of country | |
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Explanation: Economic progress of a country is determined by increase in per capita income of people f that country. |
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| 214. |
What is "book-building"? |
| A. | Preparing the income and expenditure ledgers of a company (book-keeping) |
| B. | Manipulating the profit and loss statements of a company |
| C. | A process of inviting subscriptions to a public offer of securities, essentially through a tendering process |
| D. | Publishers' activity |
| Answer» C. A process of inviting subscriptions to a public offer of securities, essentially through a tendering process | |
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Explanation: Book building refers to the process of generating, capturing, and recording investor demand for shares during an IPO (or other securities during their issuance process) in order to support efficient price discovery. Usually, the issuer appoints a major investment bank to act as a major securities underwriter or bookrunner. The "book" is the off-market collation of investor demand by the bookrunner and is confidential to the bookrunner, issuer, and underwriter. Book-building is a process of price discovery used in public offers. The issuer sets a base price and a band within which the investor is allowed to bid for shares. |
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| 215. |
A hammer in the hands of a house-wife is a good. |
| A. | consumer |
| B. | capital |
| C. | free |
| D. | intermediary |
| Answer» D. intermediary | |
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Explanation: Good is any tangible item, whether produced or found naturally and which is available for exchange. Free good is a good that is so abundant is supply that it has no opportunity cost, for example, air. Intermediary good is a firm's product that is used as an input into the production process of either the same firm or another. |
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| 216. |
Surplus budget is recommended during |
| A. | Boom |
| B. | Depression |
| C. | Famines |
| D. | War |
| Answer» B. Depression | |
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Explanation: Surplus budget is a budget in which government receipts arc greater than government expenditures. Such a budget is desired when the economy is battling inflation due to excess aggregate demand (AD). Surplus budget plugs the inflationary gap by lowering the level of aggregate demand. AD is lowered on account of (i) rise in revenue collection by the government and (ii) fall in government expenditure. |
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| 217. |
Economic profit or normal profit is the same as - |
| A. | optimum profit |
| B. | accounting profile |
| C. | maximum profit |
| D. | net profit |
| Answer» D. net profit | |
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Explanation: Normal profit or economic profit is an economic condition occurring when the difference between a firm's total revenue and total cost is equal to zero. Simply put, normal profit is the minimum level of profit needed for a company to remain competitive in the market. In a sense, normal profit is the same as net profit which is calculated by subtracting a company's total expenses from total revenue, thus showing what the company has earned (or lost) in a given period of time. Accounting profit occurs when revenues are greater than costs, and not equal, as in the case of normal profit. |
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| 218. |
Which of the following is not a feat tare of a capitalist economy? |
| A. | Right to private property |
| B. | Existence of competition |
| C. | Service motive |
| D. | Freedom of choice to consumers |
| Answer» C. Service motive | |
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Explanation: Capitalism is an economic system in which each individual in his capacity as a consumer, producer, and resource owner is engaged in economic activity with a large measure of economic freedom. The inspiring force in this system is self-interest and maximization of profit. The decisions of businessmen, farmers, producers, including that of wage-earners are based on the profit motive. |
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| 219. |
When the demand for a good increases with an increase in income, such a good is called - |
| A. | Superior good |
| B. | Giffin good |
| C. | Inferior good |
| D. | Normal good |
| Answer» A. Superior good | |
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Explanation: A superior good is a product that people demand more of as they their incomes grow. These are products that are generally more expensive and rarer like diamonds and classic cars. Such a good must possess two economic characteristics: it must be scarce, and, along with that, it must have a high price. |
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| 220. |
In equilibrium, a perfectly competitive firm will equate - |
| A. | marginal social cost with marginal social benefit |
| B. | market supply with market demand |
| C. | marginal profit with marginal cost |
| D. | marginal revenue with marginal cost |
| Answer» D. marginal revenue with marginal cost | |
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Explanation: A perfectly competitive firm's supply curve is that portion of its marginal cost curve that lies above the minimum of the average variable cost curve. A perfectly competitive firm maximizes profit by producing the quantity of output that equates price and marginal cost. In that price equals marginal revenue for a perfectly competitive firm, price is also equal to marginal cost. In other words, the firm produces by moving up and down along its marginal cost curve. The marginal cost curve is thus the perfectly competitive firm's supply curve. |
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| 221. |
Equilibrium is a condition that can - |
| A. | never change |
| B. | change only if some outside factor changes |
| C. | change only if some internal factor changes |
| D. | change only if government policies change |
| Answer» C. change only if some internal factor changes | |
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Explanation: In economics, economic equilibrium is a state of the world where economic forces are balanced and in the absenceof external influences the (equilibrium) values of economic variables will not change. For example, in the standard text-book model of perfect competition, equilibrium occurs at the point, at which quantity demanded and quantity supplied is equal. Equilibrium can change if there is a change in demand or supply conditions which arc internal factor changes. |
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| 222. |
Enterpreneurial ability is a special kind of labour that - |
| A. | is hired out to firms at high wages |
| B. | organizes the process of production |
| C. | produces new capital goods to earn interest |
| D. | manages to avoid losses by continual innovation |
| Answer» B. organizes the process of production | |
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Explanation: In economics, factors of production are the inputs to the production process. Factors of production' may also refer specifically to the 'primary factors', which are stocks including land, labor (the ability to work), and capital goods applied to production. Many economists today consider "human capital" (skills and education) as the fourth factor of production, with entrepreneurship as a form of human capital. In markets, entrepreneurs combine the other factors of production, land, labor, and capital, in order to make a profit. |
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| 223. |
An exceptional demand curve is one that moves - |
| A. | upward to the right |
| B. | downward to the right |
| C. | horizontally |
| D. | vertically |
| Answer» B. downward to the right | |
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Explanation: A demand curve that violates the law of demand is termed an exceptional demand curve. If a household expects the price of a commodity to increase, it may start purchasing a greater amount of the commodity even at the presently increased price. Similarly, if the household expects the price of the commodity to decrease, it may postpone its purchases. Thus, law of demand is violated in such cases. In this case, the demand curve does not slope down from left to right; instead it presents a backward slope from the top right to down left. This curve is known as an exceptional demand curve. |
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| 224. |
Production function explains the relationship between - |
| A. | initial inputs and ultimate output |
| B. | inputs and ultimate consumption |
| C. | output and consumption |
| D. | output and exports |
| Answer» A. initial inputs and ultimate output | |
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Explanation: Production function explains the relationship between factor input and output under given technology. It explains as to for increasing the output, in which proportion various inputs or factors may be employed under given technological conditions. In short, production function may be defined as a technological relationship that tells the maximum output producible from various combinations of inputs. Production function explains the physical relationship between input and output under given technology. |
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| 225. |
The four factors of production are - |
| A. | land, labour, capital, organisation, |
| B. | land, electricity, water, labour |
| C. | labour, capital, land, rainfall, |
| D. | labour, climate, land, tools, |
| Answer» A. land, labour, capital, organisation, | |
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Explanation: Factors of Production is an economic term to describe the inputs that are used in the production of goods or services in the attempt to make an economic profit. Resources required for generation of goods or services, generally classified into four major groups: (i) Land (including all natural resources), (ii) Labor (including all human resources), (iii) Capital (including all man-made resources), and (iv) Enterprise (which brings all the previous resources together for production). |
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| 226. |
The term utility means - |
| A. | usefulness of a commodity |
| B. | the satisfaction which a commodity yields |
| C. | the service which a commodity is capable of rendering |
| D. | None of these |
| Answer» B. the satisfaction which a commodity yields | |
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Explanation: In economics, 'Utility,' refers to the total satisfaction received from consuming a good or service. It is usually applied by economists in such constructs as the indifference curve, which plots the combination of commodities that an individual or a society would accept to maintain a given level of satisfaction. |
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| 227. |
The degree of monopoly power is to be measured in terms of the firm's- |
| A. | normal profit |
| B. | supernormal profit |
| C. | both normal and supernormal profit |
| D. | selling price |
| Answer» B. supernormal profit | |
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Explanation: Monopoly power implies the amount of discretion which a monopolist possesses to fix up the prices of his products and degree of control over his output decisions. According to J.S. Bains, the degree of monopoly power can be measured by the monopoly firm's super-normal profit. |
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| 228. |
Who propounded the Innovation theory of profits? |
| A. | J.A. Schumpeter |
| B. | P.A. Samuelson |
| C. | Alfred Marshall |
| D. | David Ricardo. |
| Answer» A. J.A. Schumpeter | |
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Explanation: Schumpeter's (1934) original theory of innovative profits emphasized the role of entrepreneurship (his term was entrepreneurial profits) and the seeking out of opportunities for novel value-generating activities which would expand (and transform) the circular flow of income. It did so with reference to a distinction between invention or discovery on the one hand and innovation, commercialization and entrepreneurship on the other. This separation of invention and innovation marked out the typical nineteenth century institutional model of innovation, in which independent inventors typically fed discoveries as potential inputs to entrepreneurial firms. |
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| 229. |
The principle of maximum social advantage is the basic principle of - |
| A. | Micro Economics |
| B. | Macro Economics |
| C. | Fiscal Economics |
| D. | Environmental Economics |
| Answer» C. Fiscal Economics | |
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Explanation: The 'Principle of Maximum Social Advantage', introduced by British economist Hugh Dalton, is the fundamental principle of Public Finance which implies that all the financial operations of the state should aim at maximization of net social benefit. It takes into consideration both the aspects of public finance that is the government revenue or taxation as well as government expenditure. Since it studies problems related to government taxation and spending, it comes under the domain of fiscal economics. |
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| 230. |
Diamonds are priced higher than water because : |
| A. | they are sold by selected firms with monopolistic powers. |
| B. | their marginal utility to buyers is higher than that of water. |
| C. | their total utility to buyers is higher than that of water. |
| D. | consumers do not buy them at lower prices. |
| Answer» B. their marginal utility to buyers is higher than that of water. | |
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Explanation: The water diamond paradox or puzzle was a mystery of Adam Smith who observed that the price of diamonds was much higher than that of water even though water seemed to offer for more utility than diamonds. The resolution of this puzzle or paradox is based on the distinction between marginal utility and total utility. The marginal utility of diamonds is very high and so consumers are willing to pay higher prices for diamond, than for water. |
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| 231. |
Buyers and Sellers will have perfect knowledge of market conditions under - |
| A. | Duopoly |
| B. | Perfect competition |
| C. | Monopolistic competition |
| D. | Oligopoly |
| Answer» A. Duopoly | |
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Explanation: Complete market information is one of the main features of Perfect Competition. This condition implies close contact betweenbuyers and sellers. Both of them possess complete knowledge about the prices at which goods are being bought and sold, and the prices at which others are prepared to buy or sell. |
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| 232. |
In short run, if a competitive firm incurs losses, it will - |
| A. | stop production. |
| B. | continue to produce as long as it can cover its variable costs. |
| C. | raise price of its product. |
| D. | go far advertising campaign. |
| Answer» A. stop production. | |
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Explanation: In the short run, a firm that is operating at a loss (where the revenue is less that the total cost or the price is less than the unit cost) must decide to operate or temporarily shutdown. It will shutdown if the sale of the goods or services produced cannot even cover the variable costs of production. |
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| 233. |
If the average revenue is a horizontal straight line, marginal revenue will be - |
| A. | U shaped |
| B. | Kinked |
| C. | Identical with average revenue |
| D. | L shaped |
| Answer» C. Identical with average revenue | |
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Explanation: The price of a good is also known as the Average Revenue of the firm. Average Revenue (AR) or Price and Marginal Revenue (MR) are identical. When the former is constant, the latter is also constant. More-over, the Average Revenue curve of a firm is the same as the individual demand curve. Hence, the competitive demand curve is a horizontal straight line parallel to the OX axis. |
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| 234. |
The demand of a factor of production is |
| A. | direct |
| B. | derived |
| C. | neutral |
| D. | discretion of the producer |
| Answer» B. derived | |
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Explanation: There are 4 factors of production; land, labor, capital and entrepreneurship. The demand for the factors of production is a derived demand. That means these factors of productionare demanded because there is a demand for the end product they produce. |
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| 235. |
Bilateral monopoly refers to the market situation of - |
| A. | two sellers, two buyers |
| B. | one seller and two buyers |
| C. | two sellers and one buyer |
| D. | one seller and one buyer |
| Answer» D. one seller and one buyer | |
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Explanation: In a bilateral monopoly there is both a monopoly (a single seller) and monopsony (a single buyer) in the same market. The one supplier tends to act as a mo-nopoly power, and looks to charge high prices to the one buyer. The lone buyer looks towards paying a price that is as low as possible. Since both parties have conflicting goals, |
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| 236. |
Production function refers to the functional relationship between input and |
| A. | product |
| B. | produce |
| C. | output |
| D. | service |
| Answer» C. output | |
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Explanation: The Production function expresses a functional relationship amidst quantities of raw materials and goods. It is the name given to the relationship between rates of input of productive services and the rate of output of product. |
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| 237. |
Under perfect competition, the industry does not have any excess capacity because each firm produces at the minimum point on its - |
| A. | long-run marginal cost curve |
| B. | long-run average cost curve |
| C. | long-run average variable cost curve |
| D. | long-run average revenue curve |
| Answer» B. long-run average cost curve | |
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Explanation: Under perfect competition, the firms operate at the minimum point of long-run average cost curve. In this way, the actual long- run output of the firm under monopolistic competition falls short of what is produced underperfect competition which can be considered the socially ideal output. This gives the mea-sure of excess capacity which lies unutilized under imperfect competition. |
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| 238. |
Exploitation of labour is said to exist when - |
| A. | Wage = Marginal Revenue Product |
| B. | Wage < Marginal Revenue Product |
| C. | Wage > Marginal Revenue Product |
| D. | Marginal Revenue Product =0 |
| Answer» B. Wage < Marginal Revenue Product | |
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Explanation: The term "exploitation" is used to denote the payment to labor of a wage less than its marginal revenue product. Under monopolistic competition, all factors are exploited in this sense. All firms hire labour until the marginal revenue product equals the marginal factor cost. |
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| 239. |
The size of the market for a product refers to - |
| A. | the number of people in the given area |
| B. | the geographical area served by the proudcers |
| C. | the volume of potential sales of the product |
| D. | the number of potential buyers of the product |
| Answer» D. the number of potential buyers of the product | |
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Explanation: The size of market for a product refers to number of buyers and sellers in a particular market. This is especially important for companies that wish to launch a new product or service, since small markets are less likely to be able to support a high volume of goods. The market size is defined through the market volume and the market potential (defines the up- per limit of the total demand and takes potential clients into consideration). |
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| 240. |
Economic problem arises mainly due to |
| A. | overpopulation |
| B. | unemployment |
| C. | scarcity of resources |
| D. | lack of industries |
| Answer» C. scarcity of resources | |
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Explanation: The theory of Economic problem states that there is scarcity, or that the finiteresources available are insufficient to satisfy all human wants and needs. The problem then becomes how to determine what is to be produced and how the factors of production (such as capital and labor) are to be allocated. |
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| 241. |
In Economics the 'Utility' and 'Usefulness' have - |
| A. | same meaning |
| B. | different meaning |
| C. | opposite meaning |
| D. | None of the above |
| Answer» B. different meaning | |
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Explanation: In economics, utility is a representation of preferences over some set of goods and services. Preferences have a utility representation so long as they are transitive, complete, and continuous. Usefulness refers to which extent something is useful and the utility is the quality of that piece in practical use. Both are inter-related terms. Utility is a factor of usefulness term. Usefulness means having practical utility of a piece which is beneficial, pertinent and functional. |
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| 242. |
If two commodities are complements, then their crossprice elasticity is- |
| A. | zero |
| B. | positive |
| C. | negative |
| D. | imaginary number |
| Answer» D. imaginary number | |
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Explanation: In economics, the cross elasticity of demand or cross-price elasticity of demand measures the responsiveness of the demand for a good to a change in the price of another good. It is measured as the percentage change in demand for the first good that occurs in response to a percentage change in price of the second good. A negative cross elasticity denotes two products that are complements, while a positive cross elasticity denotes two substitute products. |
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| 243. |
Transfer earning or alternative cost is otherwise known as - |
| A. | Variable cost |
| B. | Implicit cost |
| C. | Explicit cost. |
| D. | Opportunity cost |
| Answer» D. Opportunity cost | |
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Explanation: 0 |
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| 244. |
Economic development depends on : |
| A. | Natural resources |
| B. | Capital formation |
| C. | Size of the market |
| D. | All of the above |
| Answer» D. All of the above | |
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Explanation: Economic development generally refers to the sustained, concerted actions of policymakers and communities that promote the standard of living and economic health of a specific area. Economic development can also be referred to as the quantitative and qualitative changes in the economy. Such actions can involve multiple areas including development of human capital, critical infrastructure, regional competitiveness, environmental sustainability, social inclusion, health, safety, literacy, and other initiatives. |
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| 245. |
Human Development Index was developed by : |
| A. | Amartya Sen |
| B. | Mahbub-ul-Haq |
| C. | Friedman |
| D. | Montek Singh |
| Answer» B. Mahbub-ul-Haq | |
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Explanation: The origins of the Human Development Index (HDI) are found in the annual Human Development Reports of the United Nations Development Programme (UNDP). These were devised and launched by Pakistani economist Mahbub ul Haq in 1990. To produce the Human Development Reports, Mahbub ul Haq brought together a group of well-known development economists including: Paul Streeten, Frances Stewart. |
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| 246. |
While determining income the expenditure on which of the following items is not considered as investment? |
| A. | Construction of factory |
| B. | Computer |
| C. | Increase in the stock of unsold articles |
| D. | Stock and share in joint stock company |
| Answer» C. Increase in the stock of unsold articles | |
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Explanation: The gross national product is the sum total of all final goods and services produced by the people of one country in one year. The GNP is a flow concept. It can be calculated with either the expenditure approach or the income approach. The expenditure approach sums all that is purchased: in a sense, it is equivalent to the income approach because purchases are only possible if income is present. GDP can be calculated as the sum of all expenditures: personal consumption expenditure (C), gross private domestic investment (Ig), government purchases (G), and net exports (Xn). Increase in the stock of unsold articles do not come under any of these heads. |
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| 247. |
Rate of interest is determined by - |
| A. | The rate of return on the capital invested |
| B. | Central Government |
| C. | Liquidity preference |
| D. | Commercial Banks |
| Answer» C. Liquidity preference | |
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Explanation: According to the classical view, rate of interest is determined by the interaction of supply of and demand for capital. Thus this theory is popularly called as the demand and supply of theory of rate of interest. The supply of money together with the liquidity-preference curve in theory interact to determine the interest rate at which the quantity of money demanded equals the quantity of money supplied. According to Keynes, interest is the price paid for surrendering their liquid assets. Greater the liquidity preference higher shall be the rate of interest. The liquidity preference constitutes the demand for money. |
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| 248. |
Speculative demand for cash is determined by - |
| A. | The rate of interest |
| B. | the level of income |
| C. | the general price level |
| D. | the market conditions |
| Answer» A. The rate of interest | |
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Explanation: Speculative demand is the demand for financial assets, such as securities, money or foreign currency that is not dictated by real transactions such as trade, or financing. The assets demand for money is inversely related to the market interest rate. This is because at lower interest rate, more people will expect a rise in interest rate (or a fall in bond prices). |
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| 249. |
Gross National Product is the money measure of - |
| A. | all tangible goods produced in a country |
| B. | final goods and services produced in the economy |
| C. | services generated annually in the economy |
| D. | all tangible goods available in the economy |
| Answer» B. final goods and services produced in the economy | |
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Explanation: Gross national product (GNP) is the market value of all products and services produced in one year by labour and property supplied by the residents of a country. It is the total value of all final goods and services produced within a nation in a particular year, plus income earned by its citizens (including income of those located abroad), minus income of non-residents located in that country. |
|
| 250. |
The difference between GNP and NNP equals - |
| A. | corporate profits |
| B. | personal taxes |
| C. | transfer payments |
| D. | depreciation |
| Answer» D. depreciation | |
|
Explanation: Gross National Product [GNP) is the gross value of all the final products without deducting the depreciation of fixed capital. Net National Product (NNP) is the value of net output in an economy during a period of one year. The difference between the GNP and NNP is equal to Capital depreciation. |
|
| 251. |
Investment multiplier shows the effect of investment on - |
| A. | Employment |
| B. | Savings |
| C. | Income |
| D. | Consumption |
| Answer» C. Income | |
|
Explanation: Investment multiplier is simply the multiplier effect of an injection of investment into an economy. The multiplier effect refers to the idea that an initial spending rise can lead to even greater increase in national income |
|
| 252. |
Barter transactions means - |
| A. | Goods are exchanged with gold. |
| B. | Coins are exchanged for goods. |
| C. | Money acts as a medium of exchange. |
| D. | Goods are exchanged with goods. |
| Answer» D. Goods are exchanged with goods. | |
|
Explanation: Barter is a system of exchange where goods or services are directly exchanged for other goods or services without using a medium of exchange, such as money. Barter, as a replacement for money as the method of exchange, is used in times of monetary crisis, such as when the currency may be either un- stable or simply unavailable for conducting commerce, |
|
| 253. |
The supply-side measure to control inflation is - |
| A. | Reducing public expenditure |
| B. | Price control through Public Distribution System |
| C. | Higher taxation to mop up liquidity |
| D. | Credit control |
| Answer» B. Price control through Public Distribution System | |
|
Explanation: The issue of inflation is addressed from both demand and supply sides. demand management is achieved by measures such as postponing public expenditure, mopping up excess liquidity either through taxes or savings schemes, etc. On the supply side, the mechanism of Public Distribution System (PDS) ensures availability of essential commodities for the vulnerable sections of society, This helps to maintain price levels. Coupled with this is the open market sale of rice and wheat resorted to by FCI from its buffer stock in times of price rise. |
|
| 254. |
HDI is an aggregate measure of progress in which of the three dimensions? |
| A. | Health, Education, Income |
| B. | Food Security, Employment, Income |
| C. | Agriculture, Industry, Services |
| D. | Height, Weight, Colour |
| Answer» A. Health, Education, Income | |
|
Explanation: The Human Development Index (HDI) is an aggregate measure of progress in three dimensions—health, education and income which are used to rank countries into four tiers of human development. The FIDI was developed by the Pakistani economist Mahboob ul Haq working alongside Indian economist Amartya Sen. |
|
| 255. |
What is an octroi? |
| A. | Tax |
| B. | Tax collection centre |
| C. | Tax processing centre |
| D. | Tax information centre |
| Answer» A. Tax | |
|
Explanation: Octroi is a local tax which is collected by the state government on those goods that have been bought into the city/state for the purpose of personal use and sale. The charges on the items are generally levied after on the weight, value and total number of goods. It is levied on certain articles, such as foodstuffs, on their entry into a city. |
|
| 256. |
Demand of commodity mainly depends upon - |
| A. | Purchasing will |
| B. | Purchasing power |
| C. | Tax policy |
| D. | Advertisement |
| Answer» B. Purchasing power | |
|
Explanation: The demand of commodity mainly stems from the consumption capacity of the buyer. Demand is equal to desire plus ability to pay plus will to spend. Demand for a commodity depends upon number of factors called Determinants. |
|
| 257. |
NIFTY is associated with - |
| A. | Cloth Market Price Index |
| B. | Consumer Price Index |
| C. | BSE Index |
| D. | NSE Index |
| Answer» D. NSE Index | |
|
Explanation: The NSE's key index is the S&P CNX Nifty, known as the NSE NIFTY (National Stock Exchange Fifty), an index of fifty major stocks weighted by market capitalization. Nifty Fifty was an informal term used to refer to 50 popular large cap stocks on the New York Stock Exchange in the 1960s and 1970s that were widely regarded as solid buy and hold growth stocks. NIFTY means National Index for Fifty. |
|
| 258. |
The data collection for national income estimation is conducted in India by— |
| A. | The Finance Ministry of the Government of India |
| B. | The RBI |
| C. | The NSSO (National Sample Survey Organization |
| D. | None of these |
| Answer» C. The NSSO (National Sample Survey Organization | |
|
Explanation: The National Sample Survey Office (NSSO) in India is a unique setup to carry out surveys on socioeconomic, demographic, agricultural and industrial subjects for collecting data from households and from enterprises located in villages and in the towns. It is a focal agency of the Government of India for collection of statistical data in the areas which are vital for developmental planning. |
|
| 259. |
What is AGMARK? |
| A. | It is a marketing seal issued on the graded agricultural commodity |
| B. | It stands for agricultural marketing |
| C. | It represents agricultural management and regulation |
| D. | None of these |
| Answer» B. It stands for agricultural marketing | |
|
Explanation: AGIVIARK is a certification mark employed on agricultural products in India, assuring that they conform to a set of standards approved by the Directorate of Marketing and |
|
| 260. |
The Imperial Bank of India, after its nationalization came to be known as : |
| A. | Reserve Bank of India |
| B. | State Bank of India |
| C. | United Bank of India |
| D. | Indian Overseas bank |
| Answer» B. State Bank of India | |
|
Explanation: The State Bank of India, the largest banking and financial services company in India by revenue, assets and market capitalization: traces its ancestry to British India, through the Imperial Bank of India, to the founding in 1806 of the Bank of Calcutta, making it the oldest commercial bank in the Indian Subcontinent. Bank of Madras merged into the other two presidency banks—Bank of Calcutta and Bank of Bombay—to form the Imperial Bank of India, which in turn became the State Bank of India. The Government of India nationalized the Imperial Bank of India in 1955, with the Reserve Bank of India taking a 60% stake, and renamed it the State Bank of India |
|
| 261. |
Floating Exchange Rate is also referred to as - |
| A. | Flexible Exchange Rate |
| B. | Fixed Exchange Rate |
| C. | Real Exchange Rate |
| D. | Controlled Exchange Rate |
| Answer» A. Flexible Exchange Rate | |
|
Explanation: A floating exchange rate or fluctuating exchange rate is a type of exchange rate regime wherein a currency's value is allowed to fluctuate according to the foreign exchange market. In this sense, it is quite flexible and not something fixed or constant. Such rates automatically adjust, enabling a country to dampen the impact of shocks and foreign business cycles, and to preempt the possibility of having a balance of payments crisis. |
|
| 262. |
Countries that depend mainly on the export of primary products for their income, are prone to - |
| A. | inflation |
| B. | economic instability |
| C. | increasing unemployment |
| D. | stable economic growth |
| Answer» C. increasing unemployment | |
|
Explanation: Most of the world's poorest countries depend for increasing export earnings on agricultural products that are vulnerable to fluctuating or declining terms of trade. Disadvantageous terms of technology transfer, protectionism, and decline in financial flows compound the already existing poverty and lack of work. Being labour-intensive, such sectors are prone to various types of unemployment. Developing countries that rely on the export of primary products were hit particularly hard by falling commodity prices between 1980 and 1984. |
|
| 263. |
Bank deposits that can be withdrawn without notice are called - |
| A. | account payee deposits |
| B. | fixed deposits |
| C. | variable deposits |
| D. | demand deposits |
| Answer» D. demand deposits | |
|
Explanation: Demand deposits are funds held in an account from which deposited funds can be withdrawn at any time without any advance notice to the depository institution. Demand deposits can be "demanded" by an account holder at any time. Many checking and savings accounts today are demand deposits and are accessible by the account holder through a variety of banking options, including teller, ATM and online banking. In contrast, a term deposit is a type of account which cannot be accessed for a predetermined period (typically the loan's term). |
|
| 264. |
What does ECS in banking transactions stand for? |
| A. | Excess Credit Supervisor |
| B. | Extra Cash Status |
| C. | Exchange Clearing Standard |
| D. | Electronic Clearing Service |
| Answer» D. Electronic Clearing Service | |
|
Explanation: Electronic Clearing Service is a mode of electronic funds transfer from one bank account to another bank account using the services of a Clearing House. This is normally for bulk transfers from one account to many accounts or vice-versa. This can be used both for making payments like distribution of dividend, interest, salary, pension, etc. by institutions or for collection of amounts for purposes such as payments to utility companies like telephone, electricity, or charges such as house tax, water tax, etc or for loan installments of financial institutions/banks or regular investments of persons. |
|
| 265. |
Which one is not a function of money? |
| A. | Transfer of value |
| B. | Store of value |
| C. | Price stabilization |
| D. | Value measurement |
| Answer» C. Price stabilization | |
|
Explanation: Generally, economists have defined four types of functions of money which are as follows: (i) Medium of exchange (transfer of value) (ii) Measurement of value, (iii) Standard of deferred payments, and (iv) Store of value. Price stabilization is a function of monetary policy. |
|
| 266. |
Inflation is caused by - |
| A. | increase in money supply and decrease in production |
| B. | increase in money supply |
| C. | increase in production |
| D. | decrease in production |
| Answer» A. increase in money supply and decrease in production | |
|
Explanation: Economists generally agree that in the long run, inflation is caused by increases in the money supply. According to the theory of Demand-Pull Inflation, if demand grows faster than supply, prices will increase. There is too much money chasing too few goods. The increase in money supply is not matched by the equivalent production of goods. |
|
| 267. |
State which of the following is correct? The Consumer Price Index reflects - |
| A. | the standard of living |
| B. | the extent of inflation in the prices of consumer goods |
| C. | the increasing per capita income |
| D. | the growth of the economy |
| Answer» B. the extent of inflation in the prices of consumer goods | |
|
Explanation: A consumer price index (CPI) measures changes in the price level of consumer goods and services purchased by households. The annual percentage change in a CPI is used as a measure of inflation. A CPI can be used to index (i.e., adjust for the effect of inflation) the real value of wages, salaries, pensions, for regulating prices and for deflating monetary magnitudes to show changes in real values. |
|
| 268. |
What are the main components of basic social infrastructure of an economy? |
| A. | Education, Industry and Agriculture |
| B. | Education, Health and Civil amenities |
| C. | Transport, Health and Banks |
| D. | Industry, Trade and Transport |
| Answer» B. Education, Health and Civil amenities | |
|
Explanation: Social infrastructure refers to the facilities and mechanisms that ensure education, health care, community development, income distribution, employment and social welfare. It Includes health care system, including hospitals, the financing of health care, including health insurance, the systems for regulation and testing of medications and medical procedures; the educational and research system, including elementary and secondary schools, universities, specialized colleges, research institutions; Social welfare systems; Sports and recreational infrastructure, such as parks, sports facilities, the system of sports leagues and associations: Cultural infrastructure; and business travel and tourism infrastructure, including both man-made and natural attractions, etc. |
|
| 269. |
The tax levied on gross sales revenue from business transactions is called - |
| A. | Turnover Tax |
| B. | Sales Tax |
| C. | Capital Gains Tax |
| D. | Corporation Tax |
| Answer» A. Turnover Tax | |
|
Explanation: A turnover tax is similar to a sales |
|
| 270. |
Ad Valorem tax is levied - |
| A. | according to value added by the Government. |
| B. | according to value addition to a commodity |
| C. | according to value given by producers |
| D. | according to value added by the finance ministry |
| Answer» C. according to value given by producers | |
|
Explanation: An ad valorem tax (Latin for "according to value") is a tax based on the value of real estate or personal property. It is more common than a specific tax, a tax based on the quantity of an item, such as cents per kilogram, regardless of price. It is levied on the basis of value given by producers. So sometimes, the primary difficulty with such taxation, especially in the case of tariffs, is in establishing a satisfactory value figure. |
|
| 271. |
Equilibrium price means - |
| A. | Price determined by demand and supply |
| B. | Price determined by Cost and Profit |
| C. | Price determined by Cost of production |
| D. | Price determined to maximize profit |
| Answer» A. Price determined by demand and supply | |
|
Explanation: Equilibrium price is a state in economy where the supply of goods matches demand. When a major index experiences a period of consolidation or sideways momentum, it can be said that the forces of supply and demand are relatively equal and that the market is in a stale of equilibrium. In short, it is the market price at which the supply of an item equals the quantity demanded. |
|
| 272. |
Opportunity cost of production of a commodity is - |
| A. | the cost that the firm could have Incurred when a different technique was adopted |
| B. | the cost that the firm could have incurred under a different method of production |
| C. | the actual cost incurred |
| D. | the next best alternative output |
| Answer» D. the next best alternative output | |
|
Explanation: The concept of opportunity cost is based on scar-city and choice. The opportunity cost of a commodity is the next best alternative commodity sacrificed. In other words opportunity cost of a commodity is forgoing the opportunity to produce alternative goods and services. If one commodity is produced another commodity is sacrificed. |
|
| 273. |
Surplus earned by a factor other than land in the short period of referred to as- |
| A. | economic rent |
| B. | net rent |
| C. | quasi-rent |
| D. | super-normal rent |
| Answer» C. quasi-rent | |
|
Explanation: Quasi-rent is the surplus which is received in the short period because of demand exceeding the supply by the man made factors besides land. It is an analytical term in economics, for the income earned, in excess of post-investment opportunity cost, by a sunk cost investment. In general, an economic rent is the difference between the income from a factor of production in a particular use, and either the cost of bringing the factor into economic use (Classical factor rent), or the opportunity cost of using the factor, where opportunity cost is defined as the current income minus the income available in the next best use. |
|
| 274. |
If the change in demand for a commodity is at a faster rate than change in the price of the commodity, the demand is - |
| A. | perfectly inelastic |
| B. | elastic |
| C. | perfectly elastic |
| D. | inelastic |
| Answer» C. perfectly elastic | |
|
Explanation: If quantity demanded changes by a very large percentage as a result of a tiny percentage change in price, then the demand is said to be perfectly elastic. It reflects the fact that quantity demanded is extremely responsive to even a small change in price. Technically, the elasticity in this extreme case would beundefined but it approaches negative infinity as demand becomes more elastic. |
|
| 275. |
Which of the following are not fixed costs? |
| A. | Rent on land |
| B. | Municipal taxes |
| C. | Wages paid to workers |
| D. | Insurance charges |
| Answer» C. Wages paid to workers | |
|
Explanation: In economics, fixed costs are business expenses that are not dependent on the level of goods or services produced by the business. They tend to be time-related, such as salaries or rents being paid per month, and are often referred to as overhead costs. For some employees, salary is paid on monthly rates, independent of how many hours the employees work. This is a fixed cost. On the other hand, the hours of hourly employees paid in wages, can often be varied, so this type of labour cost is a variable cost. |
|
| 276. |
Cost of production of the producer is given by: |
| A. | sum of wages paid to labourers. |
| B. | sum of wages and interest paid on capital. |
| C. | sum of wages, interest, rent and supernormal profit. |
| D. | sum of wages, interest, rent and normal profit. |
| Answer» D. sum of wages, interest, rent and normal profit. | |
|
Explanation: The following elements are included in the cost of production: (1) Purchase of raw machinery, (2) Installation of plant and machinery, (3) Wages of labor, (4) Rent of Building, (e) Interest on capital, (f) Wear and tear of the machinery and building, (g) Advertisement expenses, (h) Insurance charges, |
|
| 277. |
The market price is related to : |
| A. | very short period |
| B. | short period |
| C. | long period |
| D. | very long period |
| Answer» A. very short period | |
|
Explanation: Marshall was the first economist who analyzed the importance of time in price determination. Market period is a very short period in which supply being fixed, price is determined by demand. The time period is of few clays or weeks in which the supply of a product can be amplified out of given stock to match the demand. This is possible for durable goods. |
|
| 278. |
The demand for necessities is - |
| A. | elastic |
| B. | perfectly inelastic |
| C. | inelastic |
| D. | perfectly elastic |
| Answer» B. perfectly inelastic | |
|
Explanation: Inelastic demand means that if the price changes, the quantity demanded will not change much. The more necessary a good is, the lower the elasticity, as people will attempt to buy it no matter the price. Necessities such as water are likely to have perfectly inelastic demand. |
|
| 279. |
If a good has negative income elasticity and positive price elasticity of demand, it is a |
| A. | giffen good |
| B. | normal good |
| C. | superior good |
| D. | an inferior good |
| Answer» A. giffen good | |
|
Explanation: A negative income elasticity of demand is associated with inferior goods. The Giffen good is an unusual type of inferior good which has positive price elasticity of demand. It is a good which people paradoxically consume more of as the price rises, violating the law of demand. When price goes up, the quantity demanded also goes up. |
|
| 280. |
A unit price elastic demand curve will touch - |
| A. | both price and quantity axis |
| B. | neither price axis, nor quantity axis |
| C. | only price axis |
| D. | only quantity axis |
| Answer» B. neither price axis, nor quantity axis | |
|
Explanation: Unit elastic refers to an elasticity alternative in which any percentage change in price cause an equal percentage change in quantity. In other words, any change in price, whether big or small, triggers exactly the same percentage change in quantity. However, the unit price elastic demand curve does not touch either price axis or quantity axis. |
|
| 281. |
If the supply curve is a straight line passing through the origin, then the price elasticity of supply will be - |
| A. | less than unity |
| B. | infinitely large |
| C. | greater than unity |
| D. | equal to unity |
| Answer» D. equal to unity | |
|
Explanation: Any straight line supply curve passing through the origin has an elasticity of supply equal to 1. The different types of price elasticity of supply are listed below: |
|
| 282. |
According to Modern Theory of Rent, rent accrues to - |
| A. | capital only |
| B. | any factor |
| C. | labour only |
| D. | land only |
| Answer» B. any factor | |
|
Explanation: Modern theory of rent does not confine itself to the reward of only land as a factor of production as was the case in the classical Ricardian theory of rent. Rent in modern sense can arise in respect of any other factor of production. i.e., labour, capital and entrepreneurship. |
|
| 283. |
As the number of investments made by a firm increases, its internal rate of return - |
| A. | declines due to diminishing marginal productivity. |
| B. | declines because the market rate of interest will fall, ceteris paribus. |
| C. | increases to compensate the firm for the current consumption foregone. |
| D. | increases because the level of savings will fall. |
| Answer» C. increases to compensate the firm for the current consumption foregone. | |
|
Explanation: Internal rates of return are commonly used to evaluate the desirability of investments or projects. The higher a project's internal rate of return, the more desirable it is to undertake the project. A firm (or individual), in theory, undertakes all projects or investments available with IRRs that exceed the cost of capital. As the number of investments increase, its internal rate of return is greater than an established minimum acceptable rate of return or cost of capital. |
|
| 284. |
The opportunity cost of a factor of production is - |
| A. | what it is earning in its present use. |
| B. | what it can earn in the long period. |
| C. | what has to be paid to retain it in its present use. |
| D. | what it can earn in some other use. |
| Answer» D. what it can earn in some other use. | |
|
Explanation: The opportunity cost of a choice is the value of the best alternative forgone, in a situation in which a choice needs to be made between several mutually exclusive alternatives given limited resources. It is equivalent to what a factor could earn for the firm in alter-native uses. |
|
| 285. |
The demand for labour is called - |
| A. | Market demand |
| B. | Direct demand |
| C. | Derived demand |
| D. | Factory demand |
| Answer» C. Derived demand | |
|
Explanation: The demand for labour is "derived- from the production and demand for the product being demanded. If the demand for the product increases, either the price will increase or the demand for production labour will increase until the equilibrium price and production numbers are met. Labour is "derived" from the market demand for the product. |
|
| 286. |
Equilibrium price is the price when : |
| A. | supply is greater than demand |
| B. | supply is less than demand |
| C. | demand is very high |
| D. | supply is equal to demand |
| Answer» D. supply is equal to demand | |
|
Explanation: The equilibrium price is the price where the goods and services supplied by the producer equals the goods and services demanded by the customer(s). How the equilibrium price is achieved is through the 'Invisible Hand', or market forces of the economy. |
|
| 287. |
Elasticity of demand measures the responsiveness of the quantity demanded of a goods to a |
| A. | change in the price of the goods |
| B. | change in the price of substitutes |
| C. | change in the price of the complements |
| D. | change in the price of joint products |
| Answer» A. change in the price of the goods | |
|
Explanation: Price elasticity of demand is a measure of responsiveness of the quantity of a good or service demanded to changes in its price. This measure of elasticity is sometimes referred to as the own-price elasticity of demand for a good, i.e., the elasticity of demand with respect to the good's own price, in order to distinguish it from the elasticity of demand for that good with respect to the change in the price of some other good, a complementary or substitute good. |
|
| 288. |
Product differentiation is the most important feature of - |
| A. | Pure competition |
| B. | monopolistic competition |
| C. | monopoly |
| D. | oligopoly |
| Answer» B. monopolistic competition | |
|
Explanation: There are six characteristics of monopolistic com-petition (MC): (1) Product differentiation; (2) many firms; (3) Free entry and exit in the long run; (4) Independent decision making; (e) market power; and (0 Buyers and Sellers do not. have perfect information. |
|
| 289. |
Division of labour is the result of - |
| A. | Complicated work |
| B. | excessive pressure |
| C. | excess supply of labour |
| D. | specialization |
| Answer» D. specialization | |
|
Explanation: Division of Labor is the "specialization" of cooperative labor in specific, circumscribed tasks and like roles. It is a process whereby the production process is broken down into a sequence of stages and workers are assigned to particular stages. |
|
| 290. |
Which from the following is not true when the interest rate in the economy goes up? |
| A. | Saving increases |
| B. | Lending decreases |
| C. | Cost of production increases |
| D. | Return on capital increases |
| Answer» D. Return on capital increases | |
|
Explanation: The interest rate is the cost of demanding or borrowing loanable funds. Alternatively, the interest rate is the rate of return from supplying or lending loanable funds. The demand for loanable funds takes account of the rate of return on capital. The rate of return on capital is the additional revenue that a firm can earn from its employment of new capital. This additional revenue is usually measured as a percentage rate per unit of time, which is why it is called the rate of return on capital. |
|
| 291. |
Labour Intensive Technique would get chosen in a - |
| A. | Labour Surplus Economy |
| B. | Capital Surplus Economy |
| C. | Developed Economy |
| D. | Developing Economy |
| Answer» A. Labour Surplus Economy | |
|
Explanation: Labour' refers to the people required to carry out a process in a business. Labour-intensive processes are those that require a relatively high level of labour compared to capital investment. These processes are more likely to be used to produce individual or personalized products, or to produce on a smallscale. The costs of labour are: wages and other benefits, recruitment, training and so on. Labour intensive processes are more likely to be seen in Job production and in smaller-scale enterprises. |
|
| 292. |
When marginal utility is zero, the total utility is - |
| A. | Minimum |
| B. | Increasing |
| C. | Maximum |
| D. | Decreasing |
| Answer» C. Maximum | |
|
Explanation: Marginal utility measures the extra utility (or satisfaction) from consuming an additional unit of a product. Total utility is the total satisfaction from the consumption of the product. According to the Law of Diminishing Marginal Utility, total utility increases at a diminishing rate. When marginal utility is 0 this means there is no increase in total satisfaction from the consumption of that unit. So the total unit is at maximum. |
|
| 293. |
Operating Surplus arises in the - |
| A. | Government Sector |
| B. | Production for self consumption |
| C. | Subsistence farming |
| D. | Enterprise Sector |
| Answer» A. Government Sector | |
| 294. |
The definition of 'small-scale industry' in India is based on - |
| A. | sales by the unit |
| B. | Investment In machines and equipments |
| C. | market coverage |
| D. | export capacity |
| Answer» B. Investment In machines and equipments | |
|
Explanation: Generally, small-scale sector is defined in terms of investment ceilings on the original value of the installed plant and machinery. As per the Ministry of Micro, Small & Medium Enterprises of India, a small scale industry is an industrial undertaking in which the investment in fixed assets in plant and machinery whether held on ownership terms on lease or on hire purchase does not exceed Rs 10 million. Fixed capital investment in a unit has been adopted as criteria to make a distinction between small-scale and large-scale industries. This limit is being continuously raised up wards by government. |
|
| 295. |
What type of products, does CACP recommend minimum support price for? |
| A. | Industrial products |
| B. | Agricultural products |
| C. | Pharmaceutical products |
| D. | None of the above |
| Answer» B. Agricultural products | |
|
Explanation: The Agricultural Prices Commission was set up in January. 1965 to advise the Government on price policy of major agricultural commodities. Since March 1985, the Commission has been known as Commission for Agricultural Costs and Prices (CACP). The minimum support prices (MSP) for major agricultural products are fixed by the government. each year, after taking into account the recommendations of CACP. |
|
| 296. |
Special Economic Zone (SEZ) concept was first introduced in - |
| A. | China |
| B. | Japan |
| C. | India |
| D. | Pakistan |
| Answer» A. China | |
|
Explanation: Worldwide, the first known instance of an SEZ seems to have been an industrial park set up in Puerto Rico in 1947 to attract investment from the US mainland. In the 1960s, Ireland and Taiwan followed suit, but in the 1980s China made the SEZs gain global currency with its largest SEZ being the metropolis of Shenzhen. |
|
| 297. |
Externality theory is the basic theory of the following branch of Economics: |
| A. | Environomics |
| B. | Fiscal Economics |
| C. | International Economics |
| D. | Macro Economics |
| Answer» A. Environomics | |
|
Explanation: In economics, an externality is a cost or benefit which results from an activity or transaction and which affects an otherwise uninvolved party who did not choose to incur that cost or benefit. Environmental pollution is a classic case of an externality. Externality theory forms the basic theory of environmental economics. |
|
| 298. |
The balance of payments of a country is in equilibrium when the - |
| A. | demand as well as supply of the domestic currency are the highest |
| B. | demand for the domestic currency is equal to its supply |
| C. | demand for the domestic currency is the highest |
| D. | demand for the domestic currency is the lowest |
| Answer» B. demand for the domestic currency is equal to its supply | |
|
Explanation: When the balance of payments (BOP) of a country is in equilibrium, the surplus or deficit is eliminated from the BOP. When the BOP of a country is in equilibrium, the demand for domestic currency is equal to its supply. The demand and supply situation is thus neither favourable nor unfavourable. |
|
| 299. |
Cheap money means - |
| A. | Low rates of interest |
| B. | Low level of saving |
| C. | Low level of income |
| D. | Low level of standard of livtrig |
| Answer» A. Low rates of interest | |
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Explanation: Cheap money is a loan or credit with a low interest rate, or the setting of low interest rates by a central bank like the Federal Reserve. Cheap money is good for borrowers, but had for investors, who will see the same low interest rates on investments like savings accounts, money market funds, CDs and bonds. Cheap money can have detrimental economicconsequences as borrowers take on excessive leverage. |
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| 300. |
When too much money is chasing too few goods, the situation is - |
| A. | Deflation |
| B. | Inflation |
| C. | Recession |
| D. | Stagflation |
| Answer» B. Inflation | |
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Explanation: Inflation occurs when too much money is chasing too few goods. The prevailing view in mainstream economics is that inflation is caused by the interaction of the supply of money with output and interest rates. In general, mainstream economists divide into two camps: those who believe that monetary effects dominate all others in setting the rate of inflation, or broadly speaking, monetarists, and those who believe that the interaction of money, interest and out-put dominate over of her effects, or broadly speaking Keynesians. Other theories, such as those of the Austrian school of economies, believe that inflation of the general price level and of specific prices is a result from an increase in the supply of money by central banking authorities. |
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