Chapter: Basic concepts of Macro economics
1.

Who is credited with bringing the term "the invisible hand" in economics?

A. adam smith
B. john maynard keynes
C. f. hayek
D. samuelson
Answer» A. adam smith
2.

Macroeconomics as a separate branch came to be studied after the contributions of which economist?

A. adam smith
B. john maynard keynes
C. f. hayek
D. samuelson
Answer» B. john maynard keynes
3.

When did the Great Depression hit the United States?

A. 2007
B. 1929
C. 1936
D. 2001
Answer» B. 1929
4.

Macroeconomics is a study of economics that deals with which 4 major factors:

A. households, firms, government, and demand-supply
B. households, firms, government and external sector
C. firms, government, free-market, and regulations
D. none of the above
Answer» B. households, firms, government and external sector
5.

What are consumption goods?

A. goods used for consumption in the production process
B. goods such as tools, machinery, etc which are used to create final consumption goods
C. goods and services that are consumed fully when purchased by the consumers
D. none of the above
Answer» C. goods and services that are consumed fully when purchased by the consumers
6.

What are Capital goods?

A. goods used for consumption in the production process
B. goods such as tools, machinery, etc which are used to create final consumer goods
C. goods and services that are consumed fully when purchased by the consumers
D. none of the above
Answer» B. goods such as tools, machinery, etc which are used to create final consumer goods
7.

What does the term Gross investment mean while denoting a nation's economy?

A. gross investment= net investment + depreciation
B. gross investment= net investment - depreciation
C. gross investment= depreciation - net investment
D. none of the above
Answer» A. gross investment= net investment + depreciation
8.

What does the term free-market denote in terms of economy?

A. minimal government intervention in trade and minimum regulations
B. maximum government intervention in trade and maximum regulations
C. means of production owned by the state
D. none of the above
Answer» A. minimal government intervention in trade and minimum regulations
9.

___________economics can study the problem of Inflation in the country.

A. micro
B. macro
C. static
D. dynamic
Answer» B. macro
10.

The credit of development of macroeconomic approach must go to ________.

A. dr. marshall
B. prof. pigou
C. lord keynes
D. mrs. joan robinson)
Answer» C. lord keynes
11.

Macroeconomics does not study _________.

A. whole economy
B. national income
C. aggregate supply
D. product pricing)
Answer» D. product pricing)
12.

_________ is the subject matter of Macroeconomics.

A. growth theory
B. factory pricing
C. market structure
D. individual incomes
Answer» A. growth theory
13.

Micro and Macro approaches are ________.

A. competitive
B. alternative
C. substitutes
D. complementary
Answer» D. complementary
14.

For economists, statements about the world are of two types:

A. assumptions and theories
B. positive statements and negative statements
C. positive statements and normative statements
D. specific statements and general statements
Answer» C. positive statements and normative statements
15.

In a market economy:

A. households decide which firms to work for and what to buy with their incomes
B. profit and self-interest guide the decisions of firms and households
C. firms decide whom to hire and what to produced.
D. all of the above are true
Answer» D. all of the above are true
16.

Statistics such as GDP, the unemployment rate, the rate of inflation and the trade balance are:

A. macro, since they tell us something about the entire economy
B. neither macro nor micro, but properly in the realm of political science
C. both micro and macro
D. micro, since they affect individual households and firms
Answer» A. macro, since they tell us something about the entire economy
17.

What do you mean by a mixed economy?

A. modern and traditional industries
B. public and private sectors
C. foreign and domestic investments
D. commercial and subsistence farming
Answer» B. public and private sectors
18.

In Economics, a good is something which,

A. is a service
B. can be a service
C. appears appealing
D. satisfies wants and needs
Answer» D. satisfies wants and needs
19.

The basic factors of production are land, labour, capital and,

A. enterprise
B. investment
C. machinery
D. resources
Answer» A. enterprise
20.

Macroeconomics became popular after-------------

A. great depression of 1929- 33
B. 1972-73
C. 1996- 97
D. 2006- 07
Answer» A. great depression of 1929- 33
21.

The term ‘macro’ has been derived from--------------

A. greek word ‘makros’ which means large
B. english word ‘makros’ which means large
C. greek word ‘makros’ which means small
D. french word ‘makros’ which means large
Answer» A. greek word ‘makros’ which means large
22.

In macroeconomics, we study about ------------------

A. theory of national income & employment
B. theory of money supply & price level
C. theory of international trade & eco growth
D. all of the above.
Answer» D. all of the above.
23.

Which of the following is/are the goals of macroeconomics-----------?

A. to achieve higher level of gdp
B. to achieve higher level of employment
C. stability of prices
D. all the above
Answer» D. all the above
Chapter: National Income accounting
24.

The average income of a country is called

A. per capita income
B. disposable income
C. inflation rate
D. real national income
Answer» A. per capita income
25.

The value of NNP at production point is called

A. nnp at factor cost
B. nnp at market price
C. gnp at market price
D. gnp at factor cost
Answer» A. nnp at factor cost
26.

The value of NNP at consumer point is called the

A. nnp at factor cost
B. nnp at market price
C. gnp at market price
D. gnp at factor cost
Answer» B. nnp at market price
27.

When depreciation is deducted from GNP, the net value is

A. net national product (nnp)
B. net domestic product
C. gross national product
D. disposable income
Answer» A. net national product (nnp)
28.

What is the net value of GDP after deducting depreciation from GDP(Gross domestic product)?

A. net national product
B. net domestic product
C. gross national product
D. disposable income
Answer» B. net domestic product
29.

Consider the following statements and identify the right ones.
i. National income is the monetary value of all final goods and services produced.
ii. Depreciation is deducted from gross value to get the net value

A. i only
B. ii only
C. both
D. none
Answer» C. both
30.

Which of the following is considered as financial year in India?

A. april 1 to march 31
B. january 1 to december 31
C. march 1 to april 30
D. march 16 to march 15
Answer» A. april 1 to march 31
31.

Which is not added in the calculation of national income of India?

A. the value of goods and services
B. the sold value of the old fridge
C. services rendered by the housewives
D. both [b] & [c]
Answer» D. both [b] & [c]
32.

Which sector contributes the most to India's economy in terms of GDP?

A. service sector
B. manufacturing sector
C. agricultural sector
D. small scale industries
Answer» A. service sector
33.

Which statement is true?

A. national expenditure = national income
B. national expenditure = national income + national savings
C. national expenditure = national income + taxes
D. national expenditure = national income – taxes
Answer» A. national expenditure = national income
34.

There are methods of measuring national income:

A. 5
B. 2
C. 1
D. 3
Answer» D. 3
35.

If we compare GDP and GNP, then:

A. gnp = gdp - net income from abroad
B. gnp = gdp + net income from abroad (r-p) ……. gdp+(r-p)
C. gnp = nnp - net income from abroad
D. gnp = nnp + net income from abroad
Answer» B. gnp = gdp + net income from abroad (r-p) ……. gdp+(r-p)
36.

Select the correct statement:

A. transfer payment are included in national income
B. depreciation allowance is a part of gnp
C. taxes are not included in nnp
D. gdp means gross direct production
Answer» B. depreciation allowance is a part of gnp
37.

Which is the largest figure:

A. nnp
B. gnp
C. pi (disposable personal income)
D. pi (personal income)
Answer» B. gnp
38.

Which is a flow concept:

A. number of my shirts
B. my total wealth
C. my monthly income
D. money supply
Answer» C. my monthly income
39.

To avoid double counting when GDP is estimated, economists:

A. use gdp deflator
B. calculate value added at each stage of production
C. use retail prices
D. use price of only intermediate goods
Answer» B. calculate value added at each stage of production
40.

Personal income includes:

A. direct taxes
B. indirect taxes
C. depreciation
D. none of these
Answer» A. direct taxes
41.

Personal income includes:

A. transfer payments
B. indirect taxes
C. depreciation
D. all of the above
Answer» A. transfer payments
42.

If savings exceed investment then:

A. national income rises
B. national income falls
C. national income is not affected
D. none of the above
Answer» B. national income falls
43.

This statement is true

A. ni = rent + interest + wages + profit
B. ni = rent + interest + wages + taxes
C. ni = govt. expenditure + interest + wages + profit
D. ni = rent + interest + wages + pensions
Answer» A. ni = rent + interest + wages + profit
44.

Which Ministry is responsible for calculating GDP in India?

A. ministry of finance
B. ministry of commerce and industry
C. ministry of central statistical and program implementation
D. ministry of consumer affairs
Answer» C. ministry of central statistical and program implementation
45.

Which state of India currently has the highest Per Capita Income?

A. goa
B. delhi
C. maharashtra
D. punjab
Answer» A. goa
46.

How much does the primary sector contribute to India's GDP?

A. 26%
B. 20%
C. 53%
D. 14%
Answer» B. 20%
47.

Which sector contributes the most to India's economy?

A. service sector
B. manufacturing sector
C. agricultural sector
D. small scale industries
Answer» A. service sector
48.

If the contribution of the agricultural sector is decreasing in a country's economy, then what conclusion can be drawn?

A. the country is growing in the direction of being a developed nation
B. the country is moving towards becoming developing nation
C. the country is moving towards becoming less developed nation
D. the economic growth rate of the country has stopped
Answer» A. the country is growing in the direction of being a developed nation
49.

Which is not added in the calculation of national income of India?

A. the value of goods and services
B. the sold value of the old fridge
C. services rendered by the housewives
D. both b & c
Answer» D. both b & c
50.

Output means. ……………unless stated otherwise

A. gross output at mp (gdpmp)
B. net output at mp
C. gross output at fc
D. none
Answer» A. gross output at mp (gdpmp)
51.

Which of the following is not a component of domestic income?

A. operating surplus
B. compensation of employees
C. net factor income from abroad
D. mixed income
Answer» C. net factor income from abroad
52.

If factor cost is greater than marker price, it means that

A. indirect taxes < subsidies (subsidy> indirect taxes)
B. indirect taxes > subsidies
C. i.t = subsidies
D. none
Answer» A. indirect taxes < subsidies (subsidy> indirect taxes)
53.

An Indian farmer produces wheat without incurring cost of inputs alll
sells for Rs. 1,000 to a miller who grinds wheat into flour and sells for Rs 1,200 to baker. The
baker sells bread to consumers for Rs. 1,600. Total added is Rs.

A. 1,600
B. 2,200
C. 1,000
D. 1,400
Answer» A. 1,600
54.

Which of the following is not true about final goods ?

A. final gods satisfy wants of ultimate consumers and producers.
B. final goods have direct demand as they satisfy the wants directly.
C. final goods are subject to further transformation in the process of production.
D. final goods are neither used up as raw-material nor for resale in the same year.
Answer» C. final goods are subject to further transformation in the process of production.
55.

Following is an example of final good:

A. flour used by a banker in making biscuits
B. unsold stock of goods lying with the sellers
C. tyres purchased by a transport company
D. mobile sets purchased by a mobile dealer
Answer» B. unsold stock of goods lying with the sellers
56.

Which out of the following is not included in estimation of NI?

A. subsidized lunch
B. old-age pension
C. free medical facilities
D. construction of a house
Answer» B. old-age pension
57.

Which of the following is a synonym of “Undistributed Profits”?

A. savings of private corporate sector
B. reserves and surplus
C. retained earnings
D. all of these
Answer» D. all of these
58.

Piyush’s mother is a teacher. She also teaches Piyush. How would you treat this white calculating national income and domestic income ?

A. it will be included in the national income, but not in the domestic income.
B. it will be included in the domestic income, but not in the national income.
C. it will be included in domestic income as well as national income.
D. it will neither be included in the domestic income nor in the national income.
Answer» D. it will neither be included in the domestic income nor in the national income.
59.

Goods which are not used in the production of other goods are called:

A. capital goods
B. consumption goods
C. producer goods
D. intermediate goods
Answer» B. consumption goods
60.

Depreciation is the:

A. loss of vale of fixed assets in use due to normal wear and tear
B. loss of value of fixed assets in use due to normal rate of accidental damages
C. loss of value of fixed assets in the due to foreseen obsolescence
D. all of these
Answer» D. all of these
61.

Which of following is not included in national income ?

A. factor income
B. rent
C. operating surplus
D. transfer income
Answer» D. transfer income
62.

Which of following is not an intermediate goods?

A. wheat
B. gold
C. service of doctor
D. sand and bricks
Answer» C. service of doctor
63.

Which of following is not a final good?

A. machinery purchased by dealer
B. machinery purchased by a factory
C. use of petrol
D. washing machine
Answer» A. machinery purchased by dealer
64.

Which of following is not a part of national income?

A. depreciation
B. net factor income from abroad
C. operating surplus
D. mixed income
Answer» A. depreciation
65.

Product method of calculating national income is also known as:

A. income method
B. value added method
C. expenditure method
D. distribution method
Answer» B. value added method
66.

Transfer payments refer to payments, which are made:

A. without any exchange of goods and services
B. to workers on transfer from one job to another
C. as compensation to employees
D. none
Answer» A. without any exchange of goods and services
67.

National Income differs from Net National Product at market price by the amount of:

A. current transfers from rest of the world
B. net indirect taxes (difference between indirect tax and subsidy)
C. national debt interest
D. it does not differ
Answer» B. net indirect taxes (difference between indirect tax and subsidy)
68.

Net national product at factor cost is also known as:

A. net domestic product
B. gross national product
C. national income
D. personal income
Answer» C. national income
69.

In GNP calculation which of the following should be excluded?

A. rental incomes
B. interest payments
C. dividends
D. government transfer payment
Answer» D. government transfer payment
70.

National Income differs from Net National Product at market price by the amount of:

A. current transfers from rest of the world
B. net indirect taxes
C. national debt interest
D. it does not differ
Answer» B. net indirect taxes
Chapter: Theory of Income and Employment
71.

Excess demand for money, according to Say’s law in the Economy:

A. is greater
B. is very less
C. is equal to zero
D. there is no relationship between excess demand for money and say’s law
Answer» D. there is no relationship between excess demand for money and say’s law
72.

Which of the following is not an assumption of classical theory?

A. price flexibility
B. unemployment
C. say’s law
D. neutrality of money
Answer» B. unemployment
73.

In classical theory the equality between saving and investment is brought about by:

A. rate of interest
B. income
C. consumption
D. multiplier
Answer» A. rate of interest
74.

The normal condition of a capitalist economy in classical theory is:

A. underemployment
B. full employment
C. general unemployment
D. frictional unemployment
Answer» B. full employment
75.

In classical theory of employment, there is the possibility of:

A. voluntary unemployment
B. no unemployment
C. involuntary unemployment
D. disguised unemployment
Answer» A. voluntary unemployment
76.

“Supply creates its own demand “is a law of:

A. investment
B. inflation
C. consumption
D. market
Answer» D. market
77.

According to classical economists, variations in savings are due to:

A. level of investment
B. rate of interest
C. level of employment
D. none of the above
Answer» B. rate of interest
78.

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
79.

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
80.

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 will rise
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
81.

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
82.

The slope of the consumption function is called

A. mpc
B. mps
C. apc
D. aps
Answer» A. mpc
83.

The concept of effective demand is associated with the name of

A. marshall
B. keynes
C. krugman
D. say
Answer» B. keynes
84.

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
85.

Net investment is also known as

A. depreciation
B. induced investment
C. autonomous investment
D. capital formation
Answer» D. capital formation
86.

In the saving function S = -a + (b)Y, the term ‘b’ denotes

A. saving
B. mpc
C. mps
D. aps
Answer» B. mpc
87.

Who propounded Psychological law of consumption

A. adam smith
B. ricardo
C. keynes
D. pigou
Answer» C. keynes
88.

When MPS = 0.2, MPC will be

A. 0.8
B. 0.2
C. 1.2
D. 20
Answer» A. 0.8
89.

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
90.

In the equation C = 60 + 0.6 Y, MPC is

A. 60
B. 0.6
C. 0
D. 1
Answer» B. 0.6
91.

Keynes assumed the presence of --------- economy for the fundamental law of consumption

A. capitalistic
B. socialistic
C. planned
D. none of the above
Answer» A. capitalistic
Chapter: Business Cycle, inflation and deflation
92.

Demand-pull inflation may be caused by:

A. an increase in costs
B. a reduction in interest rates
C. a reduction in government spending
D. an outward shift in aggregate supply
Answer» B. a reduction in interest rates
93.

Inflation:

A. always reduces the cost of living
B. always reduces the standard of living
C. reduces the price of products
D. reduces the purchasing power of a rupee
Answer» D. reduces the purchasing power of a rupee
94.

An increase in injections into the economy may lead to:

A. an outward shift of aggregate demand and demand-pull inflation
B. an outward shift of aggregate demand and cost-push inflation
C. an outward shift of aggregate supply and demand-pull inflation
D. an outward shift of aggregate supply and cost-push inflation
Answer» A. an outward shift of aggregate demand and demand-pull inflation
95.

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 long-run 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 long-run equilibrium level
96.

What is the cause of inflation?

A. if money supply increases.
B. if the production rate falls.
C. if money supply increases and production falls.
D. both money supply and production decreases.
Answer» C. if money supply increases and production falls.
97.

What does the inflation imply?

A. rise in budget deficit
B. rise in prices of consumer goods.
C. rise in money supply.
D. rise in general price index.
Answer» D. rise in general price index.
98.

How the inflation can be checked temporarily?

A. increase in money supply
B. decrease in money supply
C. increase in wages
D. decrease in tax
Answer» B. decrease in money supply
99.

Which groups are not protected from inflation?

A. industrial worker
B. agricultural farmers
C. government pensioners
D. saving bank account holders
Answer» B. agricultural farmers
100.

Which of the following cannot be included among the remedies of inflation?

A. better capacity utilization
B. by making low bank rate
C. by reducing budget deficit
D. by making high bank rate
Answer» B. by making low bank rate
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