McqMate
Chapters
101. |
Cost of living increases when business cycle is |
A. | Expanding |
B. | Contracting |
C. | At peak |
D. | At lowest point |
Answer» C. At peak |
102. |
All but one are the endogenous factors of business cycle |
A. | War |
B. | Changes in government spending |
C. | Money supply |
D. | Fluctuations in investment |
Answer» A. War |
103. |
Fall in the interest rate is a typical feature of |
A. | Recovery |
B. | Boom |
C. | Depression |
D. | Contraction |
Answer» C. Depression |
104. |
During depression __________industry suffer from excess production capacity |
A. | Capital goods |
B. | Consumer durable goods |
C. | Non-durable goods |
D. | Both (a) and (b |
Answer» D. Both (a) and (b |
105. |
The lowest level of economic activity is called |
A. | Contraction |
B. | Trough |
C. | Recovery |
D. | None of them |
Answer» B. Trough |
106. |
Which of the following is notthe feature of business cycle? |
A. | Business cycle follow perfectly timed cycle |
B. | Business cycle vary in intensity |
C. | Business cycle vary in length |
D. | Aggregate economic activity |
Answer» A. Business cycle follow perfectly timed cycle |
107. |
At the time of Great Depression of 1930s, the global GDP fell by around |
A. | 12 % |
B. | 14 % |
C. | 15 % |
D. | 10 % |
Answer» C. 15 % |
108. |
Which of the following describes best a typical trade cycle? |
A. | Economic expansions are followed by economic contractions |
B. | Inflation is followed by rising income and employment |
C. | Economic expansions are followed by economic growth and development |
D. | Stagflation followed by rising employment |
Answer» A. Economic expansions are followed by economic contractions |
109. |
During upswing, the unemployment rate and output |
A. | Rises; falls |
B. | Rises; rises |
C. | Falls; rises |
D. | Falls ; falls |
Answer» A. Rises; falls |
110. |
If any unemployment exists during expansion phase of business cycle, it is |
A. | Voluntary and frictional |
B. | Technological and structural |
C. | Frictional and structural |
D. | Structural and involuntary |
Answer» C. Frictional and structural |
111. |
The most probable outcome of increase in aggregate demand is |
A. | Expansion of economic activity |
B. | Contraction of economic activity |
C. | Stable economic activity |
D. | Volatile economic activity |
Answer» A. Expansion of economic activity |
112. |
Economic recession is characterized by all of the following except |
A. | Decline in investment, employment |
B. | Increase in the price of inputs due to increased demand for inputs |
C. | Investors’ confidence is shaken |
D. | Demand for goods, service decline |
Answer» B. Increase in the price of inputs due to increased demand for inputs |
113. |
Understanding business cycle is important for business managers because |
A. | They affect the demand for their products |
B. | They affect their profits |
C. | To frame appropriate policies and forward planning |
D. | All of the above |
Answer» D. All of the above |
114. |
Which indicators change before the economy itself changes |
A. | Lagging |
B. | Coincident |
C. | Leading |
D. | Concurrent |
Answer» C. Leading |
115. |
Which indicators change after the economy as a whole changes |
A. | Lagging |
B. | Coincident |
C. | Leading |
D. | Concurrent |
Answer» A. Lagging |
116. |
A variable that occur simultaneously with the business cycle movements is |
A. | Leading indicator |
B. | Lagging indicator |
C. | Coincidentindicator |
D. | Cyclical indicator |
Answer» C. Coincidentindicator |
117. |
The principle of accelerator explains the process by which |
A. | An increase (or decrease) in the demand for consumption goods leads to an increase (or decrease) in the investment on capital goods |
B. | The ratio between induced investment and an initial change in consumption expenditure |
C. | An increase (or decrease) in the investment on capital goods leads to an increase (or decrease) in the demand for consumption goods |
D. | None of the above |
Answer» A. An increase (or decrease) in the demand for consumption goods leads to an increase (or decrease) in the investment on capital goods |
118. |
Inflation is a situation when |
A. | Prices of some goods rise |
B. | General price level rises continuously |
C. | Prices double every year |
D. | Prices rise and fall |
Answer» B. General price level rises continuously |
119. |
An inflation caused by an enhanced wages of labour is |
A. | Demand-pull inflation |
B. | Cost-push inflation |
C. | Hyperinflation |
D. | Stagflation |
Answer» B. Cost-push inflation |
120. |
Inflation in under-developed country is basically caused by |
A. | Mass poverty |
B. | Less production |
C. | Lack of technical know-how |
D. | Market imperfection |
Answer» D. Market imperfection |
121. |
According to Keynes, inflationary gap is caused by |
A. | excess supply |
B. | excess demand |
C. | deficiency of demand |
D. | deficiency of supply |
Answer» B. excess demand |
122. |
Stagflation implies a situation of |
A. | High inflation and high unemployment |
B. | Low unemployment and low inflation |
C. | High inflation and low unemployment |
D. | Low inflation and high unemployment |
Answer» A. High inflation and high unemployment |
123. |
Demand- Pull inflation is caused by an |
A. | Increase in the aggregate effective demand for goods and services |
B. | Increase in the money incomes of the factors of production |
C. | Increased investment in the economy |
D. | All of the above |
Answer» A. Increase in the aggregate effective demand for goods and services |
124. |
Which of the following is a monetary measure to control inflation in an economy? |
A. | Increase in money supply |
B. | Demonetization of currency |
C. | Increase in government expenditure |
D. | All of the above |
Answer» B. Demonetization of currency |
125. |
In Keynesian view, inflation is |
A. | The rise in the price level after the point of full employment |
B. | A rise in the price level before the point of full employment |
C. | Too much money chasing too few goods |
D. | All of the above |
Answer» A. The rise in the price level after the point of full employment |
126. |
“Inflation is a state in which the value of money is falling i.e., prices are rising”.Who said this? |
A. | Hansen |
B. | Keynes |
C. | Crowther |
D. | Fisher |
Answer» C. Crowther |
127. |
If inflation is allowed to continue without any check, it is known as |
A. | Supressed inflation |
B. | Normal inflation |
C. | Open inflation |
D. | Deflation |
Answer» C. Open inflation |
128. |
When both prices and money income fall, the situation is called |
A. | Disinflation |
B. | Recession |
C. | Deflation |
D. | Anti-inflation |
Answer» C. Deflation |
129. |
Inflation in a developed country usually sets in |
A. | Before the point of full employment |
B. | After the point of full employment |
C. | at the point full employment |
D. | None of the above |
Answer» B. After the point of full employment |
130. |
During inflation, who suffers the most? |
A. | Wage and salary earners |
B. | Creditors |
C. | Debtors |
D. | Businessman |
Answer» A. Wage and salary earners |
131. |
When government interrupts price rise, there is |
A. | Suppressed inflation |
B. | Reflation |
C. | Open inflation |
D. | Deflation |
Answer» A. Suppressed inflation |
132. |
The phenomenal rise in prices accompanied by increased real income is known as |
A. | inflation |
B. | deflation |
C. | reflation |
D. | None of the above |
Answer» C. reflation |
133. |
Which of the following measure proves effective in reducing the rate of inflation? |
A. | Decreased personal consumption |
B. | Evaluation of currency |
C. | Increased taxation |
D. | All of the above |
Answer» C. Increased taxation |
134. |
Inflation can be controlled by applying: |
A. | Monetary and fiscal policies |
B. | Monetary and labour policy |
C. | Fiscal and Commercial Policies |
D. | All of the above |
Answer» A. Monetary and fiscal policies |
135. |
During inflation |
A. | Lenders lose, borrowers gain |
B. | Borrowers lose, lenders gain |
C. | Borrowers and lenders both lose |
D. | All sections of the society gain |
Answer» A. Lenders lose, borrowers gain |
136. |
Which people are most likely to gain during inflation? |
A. | Those living on pension |
B. | Those living on their savings |
C. | Those who are repaying borrowed money |
D. | Those who have lent money |
Answer» C. Those who are repaying borrowed money |
137. |
Inflation leads to |
A. | Distribution of income equal |
B. | Distribution of income unequal |
C. | No effect on distribution of income |
D. | Affects only industrial sector |
Answer» B. Distribution of income unequal |
138. |
Inflation in an under-developed economy generally sets in |
A. | Before the point of full employment |
B. | After the point of full employment |
C. | At the point of full employment level |
D. | All of the above |
Answer» A. Before the point of full employment |
139. |
Which of the following measure is adopted to reduce inflation? |
A. | Reduction in bank rate |
B. | Reduction in Repo rate |
C. | Increase in government expenditure |
D. | Cuts in government spending |
Answer» D. Cuts in government spending |
140. |
According to the monetarists, inflation is caused by |
A. | Supply shocks |
B. | Expansionary fiscal policies |
C. | Expansionary monetary policies |
D. | Government regulations |
Answer» C. Expansionary monetary policies |
141. |
Theoretically, one can distinguish a demand- pull inflation from a cost-push inflation by comparing |
A. | How fast prices rise relative to wages |
B. | The unemployment rate with its natural rate level |
C. | When prices rise relative to wages |
D. | None of the above |
Answer» B. The unemployment rate with its natural rate level |
142. |
Demand-pull inflation arises when |
A. | Policymakers set a very high unemployment target |
B. | A persistent budget deficit is financed by money creation |
C. | The deficit is financed by selling bonds to the public |
D. | All of the above |
Answer» B. A persistent budget deficit is financed by money creation |
143. |
Government may pursue inflationary monetary policies |
A. | To promote high employment |
B. | To accommodate demands of workers for higher wages |
C. | To finance a persistent budget deficit |
D. | All of the above |
Answer» D. All of the above |
144. |
Governments may end up with a high money growth rate and high inflation as a result of policies designed to |
A. | Lower unemployment |
B. | Finance persistent government budget deficits through money creation rather than by issuing bonds |
C. | Redistribute wealth from debtors to creditors |
D. | Both ( a) and (b |
Answer» D. Both ( a) and (b |
145. |
Which of the following is an effect of inflation? |
A. | Erosion in purchasing power |
B. | Affects relative price of goods |
C. | Increase in inequalities of income |
D. | All of the above |
Answer» D. All of the above |
146. |
Which of the following can be undertaken to control inflation? |
A. | Control on public expenditure |
B. | Control on hoarding and black-marketing |
C. | Effective control on credit |
D. | All of the above |
Answer» D. All of the above |
147. |
Which of the following is phenomenon that leads to Hyperinflation? |
A. | It is a situation when aggregate demand in an economy outpaces aggregate supply |
B. | It is a situation of persistent rise in inflation along with dip in growth and increase in unemployment |
C. | It is a situation caused by an increase in prices of inputs like labour, raw material etc |
D. | It is a situation when a nation experiences very high and accelerating inflation |
Answer» D. It is a situation when a nation experiences very high and accelerating inflation |
148. |
Inflationary gap said to exist when |
A. | Real GDP >Potential GDP |
B. | Real GDP <Potential GDP |
C. | Real GDP= Potential GDP |
D. | Unemployment rate> natural rate of unemployment |
Answer» A. Real GDP >Potential GDP |
149. |
Phillip’s curve shows the relationship between the rate of |
A. | Unemployment and output growth |
B. | unemploymentand increase in money wages |
C. | Employment and inflation |
D. | All of the above |
Answer» B. unemploymentand increase in money wages |
150. |
According to Phillips curve unemployment will return to the natural rate when: |
A. | Nominal wages are equal to expected wages |
B. | Real wages are back at equilibrium level |
C. | Nominal wages are growing faster than inflation |
D. | Inflation is higher than the growth of nominal wages |
Answer» B. Real wages are back at equilibrium level |
151. |
An increase in aggregate is more likely to lead to demand pull inflation if: |
A. | Aggregate supply is perfectly elastic |
B. | Aggregate supply is perfectly inelastic |
C. | Aggregate supply is unit inelastic |
D. | Aggregate supply is relatively inelastic |
Answer» B. Aggregate supply is perfectly inelastic |
152. |
In short-run, unemployment may fall below the natural rate of unemployment if: |
A. | Nominal wages have risen less than inflation |
B. | Nominal wages have risen at the same rate as inflation |
C. | Nominal wages have risen more than inflation |
D. | Nominal wages have risen less than unemployment |
Answer» A. Nominal wages have risen less than inflation |
153. |
The effects of inflation on the price competitiveness of a country’s products may be offset by |
A. | An appreciation of the currency |
B. | A revaluation of the currency |
C. | A depreciation of the currency |
D. | None of the above |
Answer» C. A depreciation of the currency |
154. |
Countries with the highest inflation rates are likely to have |
A. | The highest rate of money growth |
B. | Large budget deficits |
C. | The lowest interest rates |
D. | Both (a) and (b |
Answer» D. Both (a) and (b |
155. |
A one-time increase in the price level is |
A. | rarely reported by the news media as inflation, but is nevertheless considered to be inflation by economists |
B. | regularly reported by the news media as inflation, but is not considered to be inflation by economist. |
C. | regularly reported by the news media as inflation because it is considered to be inflation by economists |
D. | None of the above |
Answer» B. regularly reported by the news media as inflation, but is not considered to be inflation by economist. |
156. |
Which economist proposed that “ Inflation is always and everywhere a monetary phenomenon” |
A. | JM Keynes |
B. | J.R.Hicks |
C. | Milton Friedman |
D. | Franco Modigliani |
Answer» C. Milton Friedman |
157. |
According to monetarists, inflation is caused by |
A. | Supply shocks |
B. | Expansionary fiscal policies |
C. | Expansionary monetary policies |
D. | Rising prices |
Answer» C. Expansionary monetary policies |
158. |
Which of the following is generally regarded as the true index of economic growth? |
A. | An increase in national income at constant prices during a year |
B. | A sustained increase in real per capita income |
C. | An increase in national income at current prices over time |
D. | An increase in national income along with a corresponding increase in population |
Answer» B. A sustained increase in real per capita income |
159. |
The concept of economic growth is |
A. | Identical with the concept of economic development |
B. | Narrower than the concept of economic development |
C. | Wider as compared to that of economic development |
D. | Unrelated to the concept of economic development |
Answer» B. Narrower than the concept of economic development |
160. |
Economic growth is measured as a percentage change in |
A. | Gross Domestic Product |
B. | Gross National Product |
C. | Both (a) and (b |
D. | Government expenditure |
Answer» C. Both (a) and (b |
161. |
The concept of economic growth is more relevant for |
A. | Developed countries |
B. | Underdeveloped countries |
C. | European countries |
D. | All of the above |
Answer» A. Developed countries |
162. |
Which of the following is not an indicator of economic development? |
A. | Increase in literacy level |
B. | Low growth of population |
C. | Low proportion of labour force in the primary section |
D. | Decrease in inequality of income |
Answer» C. Low proportion of labour force in the primary section |
163. |
The rate of growth of the economy mainly depends upon |
A. | The rate of growth of labour force |
B. | The proportion of national income saved and invested |
C. | The rate of technological improvements |
D. | All of the above |
Answer» D. All of the above |
164. |
Among the following determinants of growth, which is a non-economic factor? |
A. | Natural resources |
B. | Population growth |
C. | Favourablelegislation |
D. | Capital accumulation |
Answer» C. Favourablelegislation |
165. |
Besides increase in output, economic development is concerned with |
A. | Inputs and their efficiency |
B. | Equitable distribution of income |
C. | Life sustenance, self-esteem and freedom from want, ignorance and squalor |
D. | All of the above |
Answer» D. All of the above |
166. |
The most simple and popular method of measuring economic development is to calculate the trend of Gross National Product (GNP) at |
A. | Current prices |
B. | Constant prices |
C. | Both of the above |
D. | None of the above |
Answer» B. Constant prices |
167. |
The most important factor in economic development is |
A. | Quality of human resources |
B. | Quality of natural resources |
C. | Quality of governance |
D. | Quality of banking system |
Answer» A. Quality of human resources |
168. |
When economic development takes place |
A. | Share of services in GDP increases |
B. | Share of agriculture in GDP increases |
C. | Share of industry in GDP increases |
D. | Both (a) and (c |
Answer» D. Both (a) and (c |
169. |
Which of the following is acting as an obstacle to economic development |
A. | Shortage of money |
B. | Urbanization |
C. | Political instability |
D. | Shortage of labour |
Answer» C. Political instability |
170. |
The Solow’s growth model assumes that the two factors of production labour and capital are paid according to |
A. | their marginal physical productivities |
B. | the skills of the labour |
C. | the quality of the output |
D. | None of the above |
Answer» A. their marginal physical productivities |
171. |
Neo-classical growth model considered two-factor production function with |
A. | Technology and output |
B. | Capital and labour |
C. | Labour and technology |
D. | Capital and technology |
Answer» B. Capital and labour |
172. |
Technological progress helps in |
A. | Increase in overall productivity |
B. | Economic growth |
C. | Both of the above |
D. | None of the above |
Answer» C. Both of the above |
173. |
The technique of production in which the amount of capital used per unit of labour is larger than that of labour is known as |
A. | Capital-intensive technique |
B. | Modern technique |
C. | Scientific technique |
D. | All of the above |
Answer» A. Capital-intensive technique |
174. |
Economic growth can be measured in terms of changes in |
A. | GDP per head in agricultural sector |
B. | GDP per head of working population |
C. | Real national income per head |
D. | All of the above |
Answer» C. Real national income per head |
175. |
Assuming that 3 units of capital are required to produce 1 unit of output, then capitaloutput ratio would be |
A. | 3 ∶ 2 |
B. | 3 ∶ 1 |
C. | 3 ∶ 3 |
D. | 3 ∶ 4 |
Answer» B. 3 ∶ 1 |
176. |
With economic growth, the proportion of labour-force engaged in agriculture |
A. | Increases |
B. | Decreases |
C. | Remains unaffected |
D. | Changes in uncertain manner |
Answer» B. Decreases |
177. |
A strategy of heavy industry is sometimes preferred for a developing economy because it can |
A. | generate employment opportunities on a large scale |
B. | provide a strong base for rapid industrialization |
C. | contain inflationary measures |
D. | both (a) and (b |
Answer» D. both (a) and (b |
178. |
The incremental capital-output ration (ICOR) refers to the |
A. | Ratio of investment to change in output |
B. | Ratio of capital stock to the total output |
C. | Marginal productivity of capital |
D. | Financed by the citizens of a country and the income enjoyed by them |
Answer» A. Ratio of investment to change in output |
179. |
Capital-output ratio is determined by |
A. | Sectoral allocation of capital |
B. | Level of economic activity |
C. | Human and natural resources |
D. | All of the above |
Answer» D. All of the above |
180. |
Which of the following is the indicators of economics growth |
A. | National income |
B. | Per capita income |
C. | Per capita consumption |
D. | All of the above |
Answer» D. All of the above |
181. |
According to the neo-classical theory, economic development is |
A. | Gradual |
B. | Harmonious |
C. | Cumulative |
D. | All of the above |
Answer» D. All of the above |
182. |
Which growth model inspired the use of capital-output ratio for development planning? |
A. | Harrod-Domar model |
B. | Solow model |
C. | Kaldor model |
D. | Feldman model |
Answer» A. Harrod-Domar model |
183. |
Harrod-Domar model of economic growth is based on |
A. | Underveloped economy |
B. | Advanced capitalist economy |
C. | Developing economy |
D. | All of the above |
Answer» B. Advanced capitalist economy |
184. |
Harrod-Domar model operates in a |
A. | Closed economy |
B. | Open economy |
C. | Both open and closed economy |
D. | None of the above |
Answer» A. Closed economy |
185. |
Harrod- Domar model is based on |
A. | Two distinct rates of growth |
B. | Three distinct rates of growth |
C. | Four distinct rates of growth |
D. | Five distinct rates of growth |
Answer» B. Three distinct rates of growth |
186. |
Solow’s model of long-run growth is an improvement over that of |
A. | J.E. Meade |
B. | Harrod-Domar |
C. | J. Robinson |
D. | A.K.Sen |
Answer» B. Harrod-Domar |
187. |
The major difference between Harrod-Domar and Solow models of growth lies in |
A. | Returns to scale |
B. | Returns to variable factors |
C. | Substitutability between labour and capital |
D. | Growth of income |
Answer» C. Substitutability between labour and capital |
188. |
Which growth model analyses the contribution of technological progress to the overall growth rate |
A. | Solow model |
B. | Kaldor model |
C. | Harrod model |
D. | All of the above |
Answer» A. Solow model |
189. |
The saving ratio in Solow’s model is |
A. | Constant |
B. | Negative |
C. | Flexible |
D. | None of the above |
Answer» A. Constant |
190. |
Which of the following models formed the basis of India’s First Five Year Plan |
A. | Malanobis model |
B. | Feldman model |
C. | Harrod-Domar model |
D. | Leontief model |
Answer» C. Harrod-Domar model |
191. |
Which of the following models uses three distinct concepts of growth? |
A. | Ramsey model |
B. | Harrod-Domar model |
C. | Solow model |
D. | Lewis model |
Answer» B. Harrod-Domar model |
192. |
The sequence of the three growth rates in Harod-Domar model is |
A. | actual, warranted and natural growth rates |
B. | natural,warranted and actual growth rates |
C. | warranted, actual and natural growth rates |
D. | natural,actual and warranted growth rates |
Answer» A. actual, warranted and natural growth rates |
193. |
Which of the following models makes the assumption of constantsaving-income ratio? |
A. | Kaldor model |
B. | Leontief model |
C. | Hoarrod-Domar model |
D. | Joan Robinson model |
Answer» C. Hoarrod-Domar model |
194. |
For neo-classical theorists, economic under- development is the product of which of the following |
A. | Inappropriate economic policies and too much state interference in the economy |
B. | Barriers against free trade |
C. | Low prices for raw-materials |
D. | Both (a) and (b |
Answer» D. Both (a) and (b |
195. |
In Harrod-Domar model, the actual growth rate represented by G, is determined by |
A. | Aggregate demand and aggregate supply |
B. | Saving ratio and the capital-output ratio |
C. | Increase in productive capacity |
D. | Net autonomous investment |
Answer» B. Saving ratio and the capital-output ratio |
196. |
According to Harrod-Domar model, once the steady growth is interrupted and the economy falls into disequilibrium, cumulative forces tend to perpetuate divergence thereby leading to |
A. | inflation in the economy |
B. | either secular deflation or secular inflation |
C. | Low economic growth rates |
D. | All of the above |
Answer» B. either secular deflation or secular inflation |
197. |
In Solow’s model of economic growth, production takes places under |
A. | Increasing returns to scale |
B. | Constant returns to scale |
C. | decreasing returns to scale |
D. | None of the above |
Answer» B. Constant returns to scale |
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