McqMate
| 1. |
The classical economists believed that the demand for labour is a function of: |
| A. | total money wages |
| B. | money wage rate |
| C. | total real wages |
| D. | real wage rate |
| Answer» D. real wage rate | |
| 2. |
In classical theory of employment, there isthe possibility of: |
| A. | voluntary unemployment |
| B. | no unemployment |
| C. | involuntary unemployment |
| D. | disguised unemployment |
| Answer» A. voluntary unemployment | |
| 3. |
The idea that a general cut in wages will finally lead to a state of full employment was suggested by : |
| A. | keynes |
| B. | marshall |
| C. | j.b.say |
| D. | a.c.pigou |
| Answer» D. a.c.pigou | |
| 4. |
Say’s law of market says: |
| A. | supply creates its own demand |
| B. | demand creates supply |
| C. | income generates demand |
| D. | savings create demand |
| Answer» A. supply creates its own demand | |
| 5. |
The aggregate production function implied under classical theory is : |
| A. | long run |
| B. | short run |
| C. | no time element |
| D. | none of the above |
| Answer» A. long run | |
| 6. |
In the Cambridge equation of M = kPR, the value of kis: |
| A. | m/v |
| B. | 1/v |
| C. | v in fisher’s equation |
| D. | none of these |
| Answer» B. 1/v | |
| 7. |
As a result of an increase in capital, ceteris paribus, ------- the marginal productivity of labour: |
| A. | remains constant |
| B. | increase |
| C. | decreases |
| D. | none of these |
| Answer» B. increase | |
| 8. |
In the Fisher’s extended equation of exchange MI VI represents: |
| A. | credit money |
| B. | primary money |
| C. | both primary andcredit money |
| D. | general price level |
| Answer» A. credit money | |
| 9. |
In Fisher’s transaction velocity model, one of the following is not an assumption: |
| A. | velocity of circulation of money is constant |
| B. | the volume of transactions is constant |
| C. | full employment |
| D. | p is considered as an active factor |
| Answer» D. p is considered as an active factor | |
| 10. |
The cash balance equation M = KPO was given by: |
| A. | keynes |
| B. | pigou |
| C. | robertson |
| D. | marshall |
| Answer» D. marshall | |
| 11. |
“Supply creates its own demand “is a law of: |
| A. | investment |
| B. | inflation |
| C. | consumption |
| D. | market |
| Answer» D. market | |
| 12. |
In the equation MV+ MI VI = PT, ‘M ‘denotes: |
| A. | velocity of money |
| B. | money in circulation |
| C. | bank deposit |
| D. | none of these |
| Answer» B. money in circulation | |
| 13. |
I classical demand for money, the relationship between money supply and price level is: |
| A. | proportional |
| B. | non-proportional |
| C. | neither proportional nor non-proportional |
| D. | none of these |
| Answer» B. non-proportional | |
| 14. |
As per classical theory saving is: |
| A. | an increasing function of rate of interest |
| B. | decreasing function of rate of interest |
| C. | decreasing function of level of income |
| D. | none of these |
| Answer» A. an increasing function of rate of interest | |
| 15. |
The Cambridge version of the quantity theory of money was developed by: |
| A. | fisher |
| B. | alfred marshall |
| C. | pigou |
| D. | keynes |
| Answer» C. pigou | |
| 16. |
In classical system which of the following keeps the economy at full employment: |
| A. | level of saving |
| B. | increase in money supply |
| C. | adjustment in investment |
| D. | adjustment in money wages |
| Answer» D. adjustment in money wages | |
| 17. |
In Fisher’s equation of exchange MV=PT, the variation of which produces a proportional change in price: |
| A. | m |
| B. | v |
| C. | p |
| D. | t |
| Answer» A. m | |
| 18. |
According to classical economists, variationsin savings are due to: |
| A. | level of investment |
| B. | rate ofinterest |
| C. | level of employment |
| D. | none of the above |
| Answer» B. rate ofinterest | |
| 19. |
In classical theory which of the following is found in the economy: |
| A. | unemployment |
| B. | involuntary unemployment |
| C. | less than full employment |
| D. | full employment |
| Answer» D. full employment | |
| 20. |
In MV=PT, if M doubles and V and T remain constant, then P will: |
| A. | double |
| B. | 1/2 |
| C. | 1 |
| D. | 4 |
| Answer» A. double | |
| 21. |
Pigou’s version of Cambridge equation is: |
| A. | m = kp/y |
| B. | p= kr/m |
| C. | mv = pt |
| D. | mv = mivi |
| Answer» B. p= kr/m | |
| 22. |
The quantity theory of money was restated by: |
| A. | alfred marshall |
| B. | milton friedman |
| C. | irving fisher |
| D. | j.m. .keynes |
| Answer» B. milton friedman | |
| 23. |
The law which states that supply creates its own demand and overproduction is impossible is known as: |
| A. | the law of supply |
| B. | say’s law of market |
| C. | law of demand |
| D. | law of macro economics |
| Answer» B. say’s law of market | |
| 24. |
Wages and prices do not adjust quickly to restore general equilibrium is a property of |
| A. | classical economics |
| B. | keynesian economics |
| C. | monetary economics |
| D. | supply side economics |
| Answer» B. keynesian economics | |
| 25. |
Classicals treated money as a: |
| A. | medium of exchange |
| B. | store of value |
| C. | both |
| D. | none |
| Answer» A. medium of exchange | |
| 26. |
When there is an increase in the autonomous money supply, ceteris paribus, LM shifts: |
| A. | leftward |
| B. | rightward |
| C. | no shift |
| D. | none |
| Answer» B. rightward | |
| 27. |
An Economic model is a statement of relationship among economic ------ |
| A. | variables |
| B. | phenomena |
| C. | development |
| D. | none of these |
| Answer» A. variables | |
| 28. |
LM curve shows the equilibrium condition in ---------- market |
| A. | goods market |
| B. | product market |
| C. | money market |
| D. | none of these |
| Answer» C. money market | |
| 29. |
Supply creates its own demand is the Basis of: |
| A. | classical economics |
| B. | keynesian economics |
| C. | monetarism |
| D. | none of these |
| Answer» A. classical economics | |
| 30. |
The simplest ISLM model consists of: |
| A. | two markets |
| B. | three markets |
| C. | four markets |
| D. | five markets |
| Answer» A. two markets | |
| 31. |
The equilibrium in the product market is represented by which curve? |
| A. | is |
| B. | lm |
| C. | demand |
| D. | supply curve |
| Answer» A. is | |
| 32. |
The IS curve has a------slope |
| A. | positive |
| B. | negative |
| C. | zero |
| D. | none of these |
| Answer» B. negative | |
| 33. |
The LM curve has a------slope |
| A. | positive |
| B. | negative |
| C. | zero |
| D. | none of these |
| Answer» A. positive | |
| 34. |
ISLM model was developed by: |
| A. | hicks |
| B. | keynes |
| C. | friedman |
| D. | none of these |
| Answer» A. hicks | |
| 35. |
The perfectly elastic segment of the LM curve is: |
| A. | keynesian range |
| B. | classical range |
| C. | intermediate range |
| D. | none of these |
| Answer» A. keynesian range | |
| 36. |
Which policy is effective in the Classical range? |
| A. | monetary policy |
| B. | fiscal policy |
| C. | incomes policy |
| D. | none of these |
| Answer» A. monetary policy | |
| 37. |
Which policy is effective in the Keynesian range? |
| A. | monetary policy |
| B. | fiscal policy |
| C. | incomes policy |
| D. | none of these |
| Answer» B. fiscal policy | |
| 38. |
Which policy is effective in the intermediate range? |
| A. | monetary policy |
| B. | fiscal policy |
| C. | both policies |
| D. | none of these |
| Answer» C. both policies | |
| 39. |
IS-LM model was developed by: |
| A. | keynes |
| B. | walras |
| C. | j.r.hicks |
| D. | don-patinkin |
| Answer» C. j.r.hicks | |
| 40. |
Frictional unemployment exists: |
| A. | when there is a decrease in real gdp |
| B. | because it takes time to find a job when one is first entering the labour force |
| C. | as a result of technological change |
| D. | when an individual retires |
| Answer» B. because it takes time to find a job when one is first entering the labour force | |
| 41. |
The natural rate of unemployment equals the sum of those who are: |
| A. | frictionally and structurally unemployed |
| B. | frictionallyandcyclicallyunemployed |
| C. | structurallyandcyclicallyunemployed |
| D. | frictionally structurally and cyclically unemployed |
| Answer» A. frictionally and structurally unemployed | |
| 42. |
The marginal productivity of labour is: |
| A. | the incremental output due to an increase in capital, ceteris paribus |
| B. | the incremental output due to an increase in labour, ceteris paribus. |
| C. | the incremental output due to a change in technology, ceteris paribus |
| D. | the incremental output due to a change in technology and a change in the |
| Answer» B. the incremental output due to an increase in labour, ceteris paribus. | |
| 43. |
The marginal productivity of labour: |
| A. | increases when the price of the good sold increases, ceteris paribus |
| B. | decreases when there is an adverse supply shock, ceteris paribus |
| C. | increase when more workers are hired, ceteris paribus |
| D. | decreases when there is an increase in the quantity of capital, ceteris paribus |
| Answer» B. decreases when there is an adverse supply shock, ceteris paribus | |
| 44. |
When saving is greater than investment in a two-sectormodel, |
| A. | outputshould increase |
| B. | output should decrease |
| C. | output should not change |
| D. | none of these |
| Answer» B. output should decrease | |
| 45. |
When output exceeds spending: |
| A. | there is unsold output, and level of output will fall |
| B. | there is unsold output, and level of output will rise |
| C. | there is unsold output, and level of spending willrise |
| D. | there is no unsold output since the level of spending will rise |
| Answer» A. there is unsold output, and level of output will fall | |
| 46. |
When investment is negatively related to the rate of interest, equilibrium output in the goods market: |
| A. | is unrelated to the rate of interest |
| B. | is inversely related to the rate of interest |
| C. | is positively related to the rate of interest |
| D. | falls as the rate of interest decreases |
| Answer» B. is inversely related to the rate of interest | |
| 47. |
Simultaneous equilibrium in the money (LM) and goods (IS) market exists: |
| A. | at an unlimited number of output levels and rates of interest |
| B. | at only one output level and rate ofinterest |
| C. | at an unlimited number of output levels and only one rate of interest |
| D. | at only one output level and an unlimited number of rates of interest |
| Answer» B. at only one output level and rate ofinterest | |
| 48. |
In which of the following situations will an increase in the money supply have no effect upon output? |
| A. | lm is steeply sloped and is is steeply sloped |
| B. | lm is vertical and is is steeply sloped |
| C. | lm is steeply sloped and is is vertical |
| D. | lm is relatively flat as is is |
| Answer» C. lm is steeply sloped and is is vertical | |
| 49. |
Policy Neutrality is the main proposition of: |
| A. | supply side economics. |
| B. | keynesian economics |
| C. | monetarism |
| D. | rational expectations hypothesis |
| Answer» D. rational expectations hypothesis | |
| 50. |
Who invented the General Equilibrium analysis? |
| A. | l. walras. |
| B. | w. leontief |
| C. | j.m.keynes. |
| D. | none of these. |
| Answer» A. l. walras. | |
| 51. |
Employment equilibrium in the Classical theory is achievedthrough: |
| A. | wage-price flexibility. |
| B. | changes in aggregate demand |
| C. | changes in aggregate supply |
| D. | none of these. |
| Answer» A. wage-price flexibility. | |
| 52. |
Market does not clear is a proposition of: |
| A. | neoclassical theory. |
| B. | keynesian economics |
| C. | monetarism |
| D. | rational expectations |
| Answer» B. keynesian economics | |
| 53. |
The interest rate paid on bonds is known as: |
| A. | call rate |
| B. | coupon rate |
| C. | repo rate |
| D. | bank rate |
| Answer» B. coupon rate | |
| 54. |
The monetary policy is completely ineffective when the LM curve is: |
| A. | vertical . |
| B. | horizontal. |
| C. | upward sloping. |
| D. | downward sloping |
| Answer» B. horizontal. | |
| 55. |
Monetarism is associated with: |
| A. | keynesian school |
| B. | chicago school |
| C. | cambridge school. |
| D. | neo-classical school. |
| Answer» B. chicago school | |
| 56. |
Changes in the subjective or objective factors |
| A. | never affect consumption function |
| B. | always cause downward shift in consumption function |
| C. | always cause upward shift in consumption function |
| D. | they cause upward or downward shifts in consumption function |
| Answer» D. they cause upward or downward shifts in consumption function | |
| 57. |
Saving is a function of |
| A. | export |
| B. | import |
| C. | investment |
| D. | income |
| Answer» D. income | |
| 58. |
Entrepreneurs will have no tendency to expand or contract output and employment when |
| A. | ad>as |
| B. | ad<as |
| C. | ad=as |
| D. | none of the above |
| Answer» C. ad=as | |
| 59. |
The slope of the consumption function is called |
| A. | mpc |
| B. | mps |
| C. | apc |
| D. | aps |
| Answer» A. mpc | |
| 60. |
The concept of effective demand is associated with the nameof |
| A. | marshall |
| B. | keynes |
| C. | krugman |
| D. | say |
| Answer» B. keynes | |
| 61. |
In a closed economy, the value of multiplier , when MPC is 0.90 |
| A. | 25 |
| B. | 90 |
| C. | 10 |
| D. | 9 |
| Answer» C. 10 | |
| 62. |
Income is a ------- variable |
| A. | flow |
| B. | discontinuous |
| C. | stock |
| D. | none of the above |
| Answer» A. flow | |
| 63. |
Ratio of consumption expenditure to any particular level ofincome |
| A. | mps |
| B. | aps |
| C. | apc |
| D. | mpc |
| Answer» C. apc | |
| 64. |
Psychological law of consumption states that the value of MPC is lies between zero and |
| A. | 1 |
| B. | 2 |
| C. | 3 |
| D. | 4 |
| Answer» A. 1 | |
| 65. |
Net investment is also known as |
| A. | depreciation |
| B. | induced investment |
| C. | autonomousinvestment |
| D. | capital formation |
| Answer» D. capital formation | |
| 66. |
In the saving function S = -a + (1-b)Y, the term ‘b’ denotes |
| A. | saving |
| B. | mpc |
| C. | mps |
| D. | aps |
| Answer» B. mpc | |
| 67. |
Who propounded Psychological law of consumption |
| A. | adam smith |
| B. | ricardo |
| C. | keynes |
| D. | pigou |
| Answer» C. keynes | |
| 68. |
When MPS = 0.2, MPC will be |
| A. | 0.8 |
| B. | 0.2 |
| C. | 1.2 |
| D. | 20 |
| Answer» A. 0.8 | |
| 69. |
In the linear consumption function C = a + bY, coefficient ‘a’ denotes |
| A. | mpc |
| B. | apc |
| C. | autonomous consumption |
| D. | induced consumption |
| Answer» C. autonomous consumption | |
| 70. |
According to Keynes, rising aggregate income is always associated with |
| A. | higher saving rate |
| B. | higher import |
| C. | lower export |
| D. | low production |
| Answer» A. higher saving rate | |
| 71. |
When MPC = 0.5, the value of multiplier is |
| A. | 5 |
| B. | 0.5 |
| C. | 2 |
| D. | 4 |
| Answer» C. 2 | |
| 72. |
Who postulated the law Supply creates its own demand |
| A. | keynes |
| B. | j b say |
| C. | marshall |
| D. | pigou |
| Answer» B. j b say | |
| 73. |
Autonomousinvestment is |
| A. | income inelastic |
| B. | instable |
| C. | interest elastic |
| D. | incomeelastic |
| Answer» A. income inelastic | |
| 74. |
MEC for a capital good was found out to be 10% and the market rate of interest is 9%, then the investment is |
| A. | not profitable |
| B. | profitable |
| C. | breakeven |
| D. | cannot say |
| Answer» B. profitable | |
| 75. |
In the Keynesian two sector economy, AD>AS, then |
| A. | s=i |
| B. | s>i |
| C. | s<i |
| D. | s=0 |
| Answer» C. s<i | |
| 76. |
Value of MPC is |
| A. | >1 |
| B. | <1 |
| C. | 0 |
| D. | 0≤ mpc ≥1 |
| Answer» D. 0≤ mpc ≥1 | |
| 77. |
Schedule that expressesrelationship between rate of interest and corresponding amount of investment |
| A. | mei |
| B. | mec |
| C. | effective demand |
| D. | aggregate demand |
| Answer» A. mei | |
| 78. |
Net investment is |
| A. | value of gross minus subsidies |
| B. | investment after providing for depreciation |
| C. | value of gross output before providing forsubsidies |
| D. | none of the above |
| Answer» B. investment after providing for depreciation | |
| 79. |
MEC is directly related to |
| A. | prospective yield |
| B. | supply price |
| C. | rate of interest |
| D. | all of the above |
| Answer» A. prospective yield | |
| 80. |
According to Keynes the most important determinant ofconsumption |
| A. | rate of interest |
| B. | saving |
| C. | income |
| D. | investment |
| Answer» C. income | |
| 81. |
In the Keynesian two sector economy, AD<AS, then |
| A. | s=i |
| B. | s>i |
| C. | s<i |
| D. | s=0 |
| Answer» B. s>i | |
| 82. |
In the equation C = 60 + 0.6 Y, MPCis |
| A. | 60 |
| B. | 0.6 |
| C. | 0 |
| D. | 1 |
| Answer» B. 0.6 | |
| 83. |
Keynes assumed thepresence of --------- economy for the fundamental law of consumption |
| A. | capitalistic |
| B. | socialistic |
| C. | planned |
| D. | none of the above |
| Answer» A. capitalistic | |
| 84. |
According to Keynes the most important determinant ofinvestment |
| A. | mec |
| B. | effective demand |
| C. | aggregate demand |
| D. | rate of interest |
| Answer» A. mec | |
| 85. |
When disposable income risesfrom Rs 500 to Rs 600 and consumption expenditure changes from Rs 470 to Rs 560, MPC will be equalto |
| A. | 900 |
| B. | 100 |
| C. | 0.9 |
| D. | 1 |
| Answer» C. 0.9 | |
| 86. |
In a two sector economy, aggregate demand is equalto |
| A. | c+i |
| B. | c+s |
| C. | s+i |
| D. | all of the above |
| Answer» A. c+i | |
| 87. |
In Keynesian terminology, investment means: |
| A. | financial investment |
| B. | real investment |
| C. | induced investment |
| D. | none of the above |
| Answer» B. real investment | |
| 88. |
Rate of change in savings to change in income: |
| A. | aps |
| B. | apc |
| C. | mps |
| D. | mpc |
| Answer» C. mps | |
| 89. |
Keynesian economics is also known as: |
| A. | supply side economics |
| B. | monetary economics |
| C. | rational expectations |
| D. | depression economics |
| Answer» D. depression economics | |
| 90. |
Which of the following can cause shifts in consumption function: |
| A. | psychological attitude |
| B. | social practices |
| C. | business motives |
| D. | changes in price level |
| Answer» D. changes in price level | |
| 91. |
APC is determined by the following equation: |
| A. | c/y |
| B. | s/y |
| C. | ∆c/∆y |
| D. | ∆s/∆y |
| Answer» A. c/y | |
| 92. |
In the Keynesian two sector model, when AD = AS, then: |
| A. | s<i |
| B. | s>i |
| C. | s=i |
| D. | i=0 |
| Answer» C. s=i | |
| 93. |
Which of the following is not correct: |
| A. | mpc declines as income increases |
| B. | mpc is positive but less than one |
| C. | mps is always positive |
| D. | all the above |
| Answer» C. mps is always positive | |
| 94. |
According to Keynes, saving is: |
| A. | private virtue but not social virtue |
| B. | private and social virtue |
| C. | is neither private virtue nor social virtue |
| D. | is either social virtue or private virtue |
| Answer» A. private virtue but not social virtue | |
| 95. |
MEC isinversely related to: |
| A. | prospective yield |
| B. | supply price |
| C. | investment |
| D. | rate of interest |
| Answer» A. prospective yield | |
| 96. |
Keynes considered subjective and objective factors: |
| A. | important determinants of consumption |
| B. | unimportant determinants of consumption |
| C. | determinants of investment |
| D. | determinants of business’s willingness to pay |
| Answer» B. unimportant determinants of consumption | |
| 97. |
The sum of marginal propensity to consume plus marginal propensity to save must equal to: |
| A. | 0 |
| B. | 1 |
| C. | 100 |
| D. | 1000 |
| Answer» B. 1 | |
| 98. |
Keynesian economics is: |
| A. | macro |
| B. | micro |
| C. | both |
| D. | none |
| Answer» A. macro | |
| 99. |
The MEC increases when: |
| A. | capitalstock increases |
| B. | capitalstock decreases |
| C. | capital remains constant |
| D. | none of the above |
| Answer» B. capitalstock decreases | |
| 100. |
Which of the following is correct? |
| A. | 1+mps =mpc |
| B. | 1- mpc =mps |
| C. | mpc + mps >1 |
| D. | mpc+ mps<1 |
| Answer» B. 1- mpc =mps | |
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