80+ Macro Economics 2 Solved MCQs

1.

The headline inflation in India is measured in:

A. wpi
B. cpi
C. gdp deflator
D. all
Answer» A. wpi
2.

The working group in India include in the age:

A. 14 to 55
B. 15 to 59
C. 20 and above
D. 25 and above
Answer» B. 15 to 59
3.

The main type of un employment referred by the Classicals:

A. voluntary
B. involuntary
C. both
D. none
Answer» A. voluntary
4.

The main type of un employment referred by the Keynesian:

A. voluntary
B. involuntary
C. both
D. none
Answer» B. involuntary
5.

The main type of un employment referred by the Post-Keynesians:

A. voluntary
B. involuntary
C. natural rate
D. none
Answer» C. natural rate
6.

Main reason for frictional unemployment is :

A. lack of opportunities
B. low wage
C. high cost
D. market imperfection
Answer» D. market imperfection
7.

Okun’s law related with :

A. unemployment and growth rate
B. inflation and growth rate
C. wage lose
D. none
Answer» A. unemployment and growth rate
8.

The term Stagflation is coined by:

A. samuelson
B. iain macleod
C. keynes
D. none
Answer» B. iain macleod
9.

Long run Phillips Curve is :

A. parallel
B. horizontal
C. vertical
D. kinked
Answer» C. vertical
10.

In business cycle, depression is followed by:

A. . boom
B. recovery
C. recession
D. none of the above
Answer» B. recovery
11.

A business cycle has:

A. three phases
B. four phases
C. five phases
D. six phases
Answer» B. four phases
12.

Open market operations refer to the sale and purchase by the RBI of:

A. gold
B. foreign exchange
C. government securities
D. all the above
Answer» C. government securities
13.

Which of the following is not an objective of monetary policy?

A. price stability
B. balance of payments equilibrium
C. economic growth
D. reduction in export
Answer» D. reduction in export
14.

Which of the following is not a quantitative credit control measure?

A. bank rate
B. cash reserve ratio
C. regulation of margin requirement
D. open market operation
Answer» C. regulation of margin requirement
15.

Which of the following is not an element of high Powered money?

A. currency
B. repos
C. required reserves
D. excess reserves
Answer» B. repos
16.

The ratio of money supply to high powered money is:

A. slr
B. crr
C. money multiplier
D. bank rate
Answer» C. money multiplier
17.

Fiscal Policy is a policy of the

A. central bank
B. government
C. finance commission
D. finance minister
Answer» B. government
18.

Fiscal Policy includes:

A. expenditure policy
B. tax policy
C. both a and b
D. neither a nor b.
Answer» C. both a and b
19.

The objective of Monetary Policy is :

A. to print notes of desired denominations
B. to control cost and supply of money
C. to provide loan to government
D. none of these
Answer» A. to print notes of desired denominations
20.

Fiscal Policy refers to policy towards:

A. public revenue
B. public expenditure
C. public debt
D. all of the above
Answer» D. all of the above
21.

In a closed economy which of the following is not a macroeconomic objective?

A. national income growth
B. price level stability
C. bop stability
D. employment
Answer» C. bop stability
22.

A business cycle is composed of ------phases:

A. 2 phase
B. 3 phase
C. 4 phase
D. no phase
Answer» C. 4 phase
23.

The percentage of deposits of commercial banks statutorily kept with the RBI is :

A. cash reserve ratio
B. statutory liquidity ratio
C. repo rate
D. none of these
Answer» A. cash reserve ratio
24.

Peak is the --- turning point of the business cycle.

A. upper turning point
B. lower turning point
C. middle turning point
D. none of these
Answer» A. upper turning point
25.

The trough of a business cycle occurs when hits its lowest point.

A. inflation
B. the money supply
C. aggregate economic activity
D. the unemployment rate
Answer» C. aggregate economic activity
26.

The lowest point in the business cycle is referred to as the:

A. expansion.
B. boom.
C. trough.
D. peak.
Answer» C. trough.
27.

When aggregate economic activity is increasing, the economy is said to be in:

A. an expansion.
B. a contraction.
C. a peak.
D. a turning point.
Answer» A. an expansion.
28.

When aggregate economic activity is declining, the economy is said to be in:

A. a contraction.
B. an expansion.
C. a trough.
D. a turning point.
Answer» A. a contraction.
29.

What are the two main components of business cycle theories?

A. a description of shocks and a model of how the economy responds to them
B. a model of how people decide to spend and a description of the government’s role in the economy
C. a model of how equilibrium is reached and a description of the government’s role in the economy
D. a description of shocks and a description of the government’s role in the economy
Answer» A. a description of shocks and a model of how the economy responds to them
30.

Economists use the term shocks to mean:

A. unexpected government actions that affect the economy
B. typically unpredictable forces that have major impacts on the economy
C. sudden rises in oil prices
D. the business cycle.
Answer» B. typically unpredictable forces that have major impacts on the economy
31.

Wars, new inventions, harvest failures, and changes in government policy are examples of:

A. the business cycle.
B. economic models.
C. shocks.
D. opportunity costs.
Answer» C. shocks.
32.

Peaks and troughs of the business cycle are known collectively as:

A. volatility.
B. turning points.
C. equilibrium points.
D. real business cycle events.
Answer» B. turning points.
33.

ISLM model was basically .............. sector model:

A. two
B. one
C. three
D. four
Answer» A. two
34.

ISLM model was firstly developed by …………

A. hansen
B. hicks
C. keynes
D. none
Answer» B. hicks
35.

IS curve represents the equilibrium of ............. sector.

A. money
B. goods
C. government
D. all
Answer» B. goods
36.

Original IS-LM model is a .......... model.

A. open
B. closed
C. both
D. none
Answer» B. closed
37.

ISLM is used to determine:

A. income
B. interest
C. both
D. all
Answer» C. both
38.

The goods market is otherwise referred to as:

A. money
B. financial
C. both
D. real sector
Answer» D. real sector
39.

The relationship between income and interest in the IS curve is:

A. direct
B. indirect
C. no relation
D. none
Answer» B. indirect
40.

The relationship between income and interest in the LM curve is:

A. direct
B. indirect
C. no relation
D. none
Answer» A. direct
41.

The tax cut shift the IS curve to the:

A. right
B. left
C. no change
D. any of these.
Answer» A. right
42.

Increase in Government expenditure shift IS curve to:

A. right
B. left
C. no change
D. any of these.
Answer» A. right
43.

Decrease in money supply shift the LM curve to the:

A. right
B. left
C. no change
D. any of these.
Answer» B. left
44.

One of the limitations of the ISLM model was:

A. static nature
B. open model
C. price is exogenous
D. all
Answer» A. static nature
45.

Who develop the ISLM open economy model?

A. mundell
B. fleming
C. both
D. none
Answer» C. both
46.

For an open economy model which curve is added IS-LM?

A. ms
B. demand
C. md
D. bp.
Answer» D. bp.
47.

A temporary unemployment which exists during the period of the transfer of labor from one occupation to another is called

A. voluntary unemployment
B. involuntary unemployment
C. cyclical unemployment
D. frictional unemployment
Answer» D. frictional unemployment
48.

When more workers are engaged in a work than actually required to work, it is called

A. voluntary unemployment
B. involuntary unemployment
C. disguised unemployment
D. frictional unemployment
Answer» C. disguised unemployment
49.

The position of IS curve depends on---

A. rate of interest,
B. rate of investment,
C. autonomous expenditure
D. none of the above
Answer» C. autonomous expenditure
50.

The curve which relates the level of income with the rate of interest which is determined by money- market equilibrium corresponding to different levels of demand for money is known as

A. is curve
B. lm curve
C. income curve
D. none of the above.
Answer» B. lm curve
51.

LM curve slopes—

A. downward to the right
B. upward to the right
C. vertical
D. horizontal.
Answer» B. upward to the right
52.

The great depression was caused by what major event?

A. an increase in federal spending
B. the stock market crash
C. automobile workers going on strike
D. president hoover announcing a war
Answer» B. the stock market crash
53.

Great Depression was between ……and …….

A. 1929,1939
B. 1930,1950
C. 1928,1930
D. 1930,1940
Answer» D. 1930,1940
54.

The financial crisis of 2007-08 originated in the following country.

A. us
B. uk
C. russia
D. india
Answer» A. us
55.

During the financial crisis of 2007-08, which financial instruments commonly came to be called “Toxic Assets”?

A. treasury bill
B. mortgaged backed securities
C. s&p stokes
D. government bonds
Answer» B. mortgaged backed securities
56.

The period of economic downturn that ensued after the financial crisis of 2007-08 and affected many countries world-wide is called:

A. the great depression
B. the great recession
C. black friday
D. great collapse
Answer» B. the great recession
57.

Fiscal policy in India is formulated by

A. reserve bank of india
B. planning commission
C. finance ministry
D. securities and exchange board of india
Answer» C. finance ministry
58.

Economic Survey in India is published by the

A. reserve bank of india
B. ministry of finance, government of india
C. niti aayog
D. ministry of industries, government of india
Answer» C. niti aayog
59.

Which one of the following is the largest item of expenditure of the Government of India on revenue account?

A. defense
B. pensions
C. subsidies
D. interest payments
Answer» D. interest payments
60.

The lowest level of economic activity is called            

A. contraction
B. trough
C. recovery
D. none of the above
Answer» B. trough
61.

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» A. capital goods
62.

The term business cycle refers to –

A. fluctuations in aggregate economic activity over time.
B. ups and down in the production of goods
C. increasing unemployment
D. declining savings
Answer» A. fluctuations in aggregate economic activity over time.
63.

Expansion phase all but one of the following characteristics.

A. increase in national output
B. increase in consumer spending
C. excess production capacity of industries
D. expansion of bank credit
Answer» C. excess production capacity of industries
64.

Which one of the following is not the characteristic of business cycle?

A. they are recurrent
B. they are not at regular intervals
C. they have uniform causes
D. all the above
Answer» C. they have uniform causes
65.

The turning points of the business cycle are

A. expansion and peak
B. peak and contraction
C. contraction and trough
D. peak and trough
Answer» D. peak and trough
66.

refers to the top or the highest point of business cycle.

A. expansion
B. peak
C. expansion and peak
D. none of the above
Answer» B. peak
67.

Involuntary unemployment is almost zero in the phase of business cycle.

A. expansion
B. contraction
C. trough
D. depression
Answer» A. expansion
68.

The economy is said to be overheated at the _ phase of business cycle.

A. expansion
B. peak
C. contraction
D. depression
Answer» B. peak
69.

Cost of living increases when business cycle is            

A. expanding
B. contracting
C. at peak
D. at lowest point
Answer» C. at peak
70.

There is large scale of involuntary unemployment in the phase of business cycle.

A. expansion
B. peak
C. contraction
D. none of the above
Answer» C. contraction
71.

Fall in the level of investments, fall in production, fall in employment, fall stock prices, etc. are found during phase of business cycle.

A. expansion
B. boom
C. peak
D. contraction
Answer» D. contraction
72.

All but one are the endogenous factors of business cycle

A. war
B. changes in government spending
C. money supply
D. fluctuations in investments
Answer» A. war
73.

When prices are falling continuously, the phenomenon is called:

A. inflation
B. stagflation
C. deflation
D. reflation
Answer» C. deflation
74.

When too much money chases too few goods, the resulting Inflation is called:

A. deflation
B. demand-pull inflation
C. cost push inflation
D. stagflation
Answer» B. demand-pull inflation
75.

Cause of Inflation in India is / are:

A. deficit financing
B. erratic agriculture growth
C. inadequate rise in industrial production
D. all of the above
Answer» D. all of the above
76.

Stagflation means:

A. inflation with stagnation
B. recession with stagnation
C. inflation galloping like stage
D. inflation & increasing output
Answer» A. inflation with stagnation
77.

Which is the most effective quantitative method to control inflation in the economy?

A. bank rate policy
B. selective credit control
C. cash reserve ratio
D. both (a) and (b)
Answer» C. cash reserve ratio
78.

Which measures are followed by the government for handling inflation?

A. monetary measures
B. fiscal measures
C. controlling investments
D. all of these
Answer» D. all of these
79.

Inflation is measured on the basis of:

A. wholesale price index
B. consumer price index
C. marshall’s index
D. all of these
Answer» B. consumer price index
80.

When price increases due to increase in factor prices it is .

A. demand pull inflation
B. cost pull inflation
C. stagflation
D. none of the above.
Answer» B. cost pull inflation
81.

According to the 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» A. nominal wages are equal to expected wages
82.

Demand pull inflation may be caused by ?

A. an increase in costs
B. a reduction in interest rate
C. a reduction in government spending
D. an outward shift in aggregate supply
Answer» B. a reduction in interest rate
83.

The economist who proposed that, “Inflation is always and everywhere a monetary phenomenon” was

A. john maynard keynes.
B. john r. hicks.
C. milton friedman.
D. franco modigliani.
Answer» C. milton friedman.
84.

Inflation occurs whenever

A. the price level rises.
B. the money supply increases.
C. the price level rises continuously over a period of time.
D. the price level falls continuously over a period of time.
Answer» C. the price level rises continuously over a period of time.
85.

An unrealistically low unemployment target will most likely result in

A. inflation.
B. an unemployment rate falling below the natural rate.
C. excessive monetary growth.
D. all of the above.
Answer» D. all of the above.
86.

Governments 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. for all the above reasons.
Answer» D. for all the above reasons.
87.

Which of the following is least likely to lead to inflationary monetary policy?

A. rising unemployment
B. expanding federal budget deficits
C. declining oil prices
D. conflict in the middle east
Answer» C. declining oil prices
88.

Economists from which of the following schools of thought are most likely to favor activist government policies?

A. keynesian
B. monetarist
C. classical
D. all of the above
Answer» A. keynesian
89.

According to the monetarists, inflation is caused by

A. supply shocks.
B. expansionary fiscal policies.
C. expansionary monetary policies.
D. rising prices.
Answer» C. expansionary monetary policies.
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