McqMate
These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Bachelor of Commerce (B Com) .
Chapters
| 151. |
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 | |
| 152. |
Net investment is also known as |
| A. | Depreciation |
| B. | Induced investment |
| C. | Autonomous investment |
| D. | Capital formation |
| Answer» D. Capital formation | |
| 153. |
In the saving function S = -a + 1-b(Y), the term ‘b’ denotes |
| A. | Saving |
| B. | MPC |
| C. | MPS |
| D. | APS |
| Answer» B. MPC | |
| 154. |
Who propounded Psychological law of consumption |
| A. | Adam Smith |
| B. | Ricardo |
| C. | Keynes |
| D. | Pigou |
| Answer» C. Keynes | |
| 155. |
When MPS = 0.2, MPC will be |
| A. | 0.8 |
| B. | 0.2 |
| C. | 1.2 |
| D. | 20 |
| Answer» A. 0.8 | |
| 156. |
In the linear consumption function C = a + b(Y), coefficient ‘a’ denotes |
| A. | MPC |
| B. | APC |
| C. | Autonomous consumption |
| D. | Induced consumption |
| Answer» C. Autonomous consumption | |
| 157. |
In the equation C = 60 + 0.6 Y, MPC is |
| A. | 60 |
| B. | 0.6 |
| C. | 0 |
| D. | 1 |
| Answer» B. 0.6 | |
| 158. |
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 | |
| 159. |
Which of the following is a union tax? |
| A. | Corporation tax |
| B. | Taxes on agricultural income |
| C. | Capitation taxes |
| D. | Land revenues |
| Answer» A. Corporation tax | |
| 160. |
Which of the following is not a union tax? |
| A. | Taxes on railway freights and fares |
| B. | Stamp duties on financial documents |
| C. | Tolls |
| D. | A and b only |
| Answer» C. Tolls | |
| 161. |
The tax levied by the union government on income of individuals is known as |
| A. | Personal income tax |
| B. | Interest tax |
| C. | Wealth tax |
| D. | Corporation tax |
| Answer» A. Personal income tax | |
| 162. |
The tax on net income of companies is |
| A. | Personal income tax |
| B. | Interest tax |
| C. | Wealth tax |
| D. | Corporate tax |
| Answer» D. Corporate tax | |
| 163. |
The most important source of revenue to the states is |
| A. | Sales tax |
| B. | Service tax |
| C. | Excise duty |
| D. | None of the above |
| Answer» A. Sales tax | |
| 164. |
The difference between revenue expenditure and revenue receipts is |
| A. | Revenue deficit |
| B. | Fiscal deficit |
| C. | Budget deficit |
| D. | Primary deficit |
| Answer» A. Revenue deficit | |
| 165. |
The difference between total expenditure and total receipts is |
| A. | Fiscal deficit |
| B. | Budget deficit |
| C. | Primary deficit |
| D. | Revenue deficit |
| Answer» B. Budget deficit | |
| 166. |
Maximum Social Advantage is achieved, |
| A. | at the point where the marginal social benefit of public expenditure and the marginal social sacrifice of taxation are equated |
| B. | at the point where the marginal social benefit of public expenditure is higher than the marginal social sacrifice of taxation |
| C. | at the point where the marginal social benefit of public expenditure is lower than the marginal social sacrifice of taxation |
| D. | at the point where the marginal social benefit of public expenditure and the marginal social sacrifice of taxation are zero |
| Answer» A. at the point where the marginal social benefit of public expenditure and the marginal social sacrifice of taxation are equated | |
| 167. |
Which one of the following economists introduced the principle of “Maximum Social Advantage”? |
| A. | Alfred Marshall |
| B. | John Maynard Keynes |
| C. | Karl Marx |
| D. | Hugh Dalton |
| Answer» D. Hugh Dalton | |
| 168. |
In a free market economy, self-interested individuals operate through a system of mutual interdependence to promote the general benefit of society at large. Adam Smith referred this as: |
| A. | Invisible hand |
| B. | Direct Intervention |
| C. | Collective Spirit |
| D. | Private Spirit |
| Answer» A. Invisible hand | |
| 169. |
The role of Government would be highest in which of the following type of economy: |
| A. | Free market economy |
| B. | Keynesian Economy |
| C. | Mixed Economy |
| D. | Socialist Economy |
| Answer» D. Socialist Economy | |
| 170. |
Taxes are levied to |
| A. | Provide general benefits to the People |
| B. | Encourage people on unnecessary spending |
| C. | Accumulate funds for the Government for future use |
| D. | All of the above |
| Answer» A. Provide general benefits to the People | |
| 171. |
Which of the following factors contribute to public debt of a country? |
| A. | To undertake public welfare |
| B. | Urge for economic growth |
| C. | Inefficiencies of public organisations and corruption |
| D. | All of the above |
| Answer» D. All of the above | |
| 172. |
Which of the following are the causes of public debt of a country? |
| A. | War or war-preparedness, including nuclear programmes |
| B. | To cover the budget deficits on current account |
| C. | To undertake public welfare schemes |
| D. | All of the above |
| Answer» D. All of the above | |
| 173. |
Which of the following statement is INCORRECT with regard to the burden of public debt of a country? |
| A. | If the public debt is taken for productive purposes it will not be a burden on the economy. |
| B. | If the public debt is taken for unproductive purposes, it will impose both money burden and real burden on the economy. |
| C. | In case of Internal Debt, the direct money burden on the economy is huge as transfer of wealth happens within the community |
| D. | In the case of External debt, the amount of repayment of interest and principal represents the direct money burden on the community |
| Answer» C. In case of Internal Debt, the direct money burden on the economy is huge as transfer of wealth happens within the community | |
| 174. |
Public Debt means |
| A. | Borrowing by a Government from abroad and does not include borrowing from within the country |
| B. | Borrowing by general public, private individuals or association of individuals from the Government which they need to repay to Government under the prescribed terms and conditions |
| C. | Borrowing by General Public in the form of loans or advances from the Government, Local Bodies, Government owned financial institutions |
| D. | Borrowing by a Government from within the country or from abroad, from private individuals or association of individuals or from banking and non-banking institutions |
| Answer» D. Borrowing by a Government from within the country or from abroad, from private individuals or association of individuals or from banking and non-banking institutions | |
| 175. |
Debt obligations of the government that have maturities of one year or less is normally called |
| A. | Commercial Papers |
| B. | Commercial Deposits |
| C. | Treasury Bills |
| D. | Certificate of Deposits |
| Answer» C. Treasury Bills | |
| 176. |
Which of the following could be a reason for raising public loans by a country? |
| A. | Bringing gap between revenue and expenditure through temporary loans from central bank. |
| B. | To reduce depression in the economy and financing public works program. |
| C. | Financing the public sector for expanding and strengthening the public enterprises |
| D. | All of the above |
| Answer» D. All of the above | |
| 177. |
Public Debt has a secular tendency to go up in every country. Which of the following are reasons contributing to such a trend? |
| A. | Increase trend in Financing of Public works programs |
| B. | Increasing trend in Financing for Economic Development |
| C. | Undertaking of Welfare Schemes by the Government |
| D. | All of the above |
| Answer» D. All of the above | |
| 178. |
Expenditure incurred by the Government on building durable assets, like highways, multipurpose dams, irrigation projects are in the nature of |
| A. | Capital Expenditure |
| B. | Revenue Expenditure |
| C. | Transfer Expenditure |
| D. | Unproductive Expenditure |
| Answer» A. Capital Expenditure | |
| 179. |
Which of the following describes the situation where revenues and expenditures are equal during a given period? |
| A. | Public Debt |
| B. | Budget Surplus |
| C. | Balanced Budget |
| D. | Budget Deficit |
| Answer» C. Balanced Budget | |
| 180. |
Old age pension is “National Old Age Pension Schemes”, “Interest payments”, “Subsidies”, “Unemployment allowances”, “Welfare benefits to weaker sections, etc.” By incurring such expenditure, the government does not get anything in return, but it adds to the welfare of the people, especially belong to the weaker sections of the society. Such expenditure basically results in redistribution of money incomes within the society. |
| A. | Non-Transfer Expenditure |
| B. | Transfer Expenditure or transfer payments |
| C. | Capital Expenditure |
| D. | Non-Distributive Expenditure |
| Answer» B. Transfer Expenditure or transfer payments | |
| 181. |
With increase in urbanization and industrialization, the role of Government started: |
| A. | Declining |
| B. | Increasing |
| C. | Stagnant |
| D. | Unstable |
| Answer» B. Increasing | |
| 182. |
The ratio of change in the national income in relation to the change in government spending that causes it is referred to as: |
| A. | Fiscal Multiplier |
| B. | Spending Ratio |
| C. | Expenditure Ratio |
| D. | Cost Multiplier |
| Answer» A. Fiscal Multiplier | |
| 183. |
Expenditures incurred on civil administration, defence forces is in the nature of |
| A. | Capital Expenditure |
| B. | Revenue Expenditure |
| C. | Transfer Expenditure |
| D. | Productive Expenditure |
| Answer» B. Revenue Expenditure | |
| 184. |
The practice by Governments in which a government spends more money than it receives as revenue is referred to as: |
| A. | Piggy backing |
| B. | Direct Funding |
| C. | Deficit financing |
| D. | Pump Priming |
| Answer» C. Deficit financing | |
| 185. |
Expenditure on defence, interest payments, law and order maintenance and public administration expenses are generally treated as: |
| A. | Productive Expenditure |
| B. | Unproductive Expenditure |
| C. | Growth-oriented Expenditure |
| D. | Progressive Expenditure |
| Answer» B. Unproductive Expenditure | |
| 186. |
Developmental expenditure refers to |
| A. | Revenue Expenditure incurred for meeting current expenses of the Government |
| B. | Capital Expenditure incurred for creating long-term assets of the Government |
| C. | Expenditure which is incurred on activities directly related to economic development |
| D. | Expenditure which is incurred on running the normal government administration |
| Answer» C. Expenditure which is incurred on activities directly related to economic development | |
| 187. |
The multiplier effect is best described as: |
| A. | the increase in final income arising from any new injection of spending |
| B. | the increase in the expenditure of a country |
| C. | the increase in the public debt of a country |
| D. | the increase in investment of a country |
| Answer» A. the increase in final income arising from any new injection of spending | |
| 188. |
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 | |
| 189. |
The low point in the business cycle is referred to as the |
| A. | expansion. |
| B. | boom. |
| C. | trough. |
| D. | peak. |
| Answer» C. trough. | |
| 190. |
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. | |
| 191. |
In a boom: |
| A. | Unemployment is likely to fall |
| B. | Prices are likely to fall |
| C. | Demand is likely to fall |
| D. | Imports are likely to fall |
| Answer» A. Unemployment is likely to fall | |
| 192. |
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. | |
| 193. |
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. | |
| 194. |
Industries that are extremely sensitive to the business cycle are the |
| A. | durable goods and service sectors. |
| B. | nondurable goods and service sectors. |
| C. | capital goods and nondurable goods sectors. |
| D. | capital goods and durable goods sectors. |
| Answer» D. capital goods and durable goods sectors. | |
| 195. |
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 cycles. |
| Answer» B. typically, unpredictable forces that have major impacts on the economy. | |
| 196. |
Primarily, macroeconomists use microeconomic principles to study |
| A. | business cycles and trends in the stock market. |
| B. | long-run economic growth and antitrust policies. |
| C. | trends in the stock market and long-term economic growth. |
| D. | long-run economic growth and business cycles. |
| Answer» D. long-run economic growth and business cycles. | |
| 197. |
The two most important American business cycle events of the twentieth century were |
| A. | the Great Depression and stagflation. |
| B. | World War II and the Great Depression. |
| C. | the productivity slowdown and the Great Depression. |
| D. | government budget deficits and World War II. |
| Answer» B. World War II and the Great Depression. | |
| 198. |
According to real business cycle theory, the primary causes of business cycles are |
| A. | shocks to aggregate demand. |
| B. | monetary factors. |
| C. | technology shocks. |
| D. | waves of self-fulfilling optimism and pessimism. |
| Answer» C. technology shocks. | |
| 199. |
The macroeconomic models that are most supportive of the role of government policy aimed at smoothing business cycles are |
| A. | real business cycle models. |
| B. | endogenous growth models. |
| C. | Keynesian models. |
| D. | growth models. |
| Answer» C. Keynesian models. | |
| 200. |
Business cycles are |
| A. | each unique, but all have a single cause. |
| B. | each unique and they can have many causes. |
| C. | similar, and they all have a single cause. |
| D. | similar, but they can have many causes. |
| Answer» D. similar, but they can have many causes. | |
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