Inflation is the state in which ..............................
A.
the value of money decreases
B.
the value of money increases
C.
the value of the money increases first and then decreases
D.
the value of money decreases first and increases later
Answer»
A. the value of money decreases
103.
Which of the following class will not be negatively affected by the higher inflation?
A.
the consumer class
B.
the debtor class
C.
pensioner class
D.
business class
Answer»
D. business class
104.
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 the above
Answer»
D. all the above
105.
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
106.
. 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.
107.
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
108.
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.
109.
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.
110.
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.
111.
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.
Chapter: Macro Economic Policies
112.
The government spending multiplier is as higher as:
A.
higher is the government spending
B.
higher is the mpc
C.
lower is the mpc
D.
lower is the tax revenue
Answer»
B. higher is the mpc
113.
Point out which of the following is not an instrument of fiscal policy:
A.
an increase in the interest rate
B.
a cut in unemployment compensation
C.
an increase in tobacco taxes
D.
a cut in the marginal rates of irpf
Answer»
A. an increase in the interest rate
114.
The function of investment spending shifts to the left if:
A.
the interest rate rises
B.
the interest rate falls
C.
business expectations improve
D.
business expectations get worse
Answer»
D. business expectations get worse
115.
An increase in the interest rate1
A.
shifts the aggregate demand curve to the left
B.
shifts the aggregate demand curve to the right
C.
has no effect
D.
moves the economy along the aggregate demand curve
Answer»
A. shifts the aggregate demand curve to the left
116.
As higher is the MPS
A.
lower is the multiplier.
B.
higher is the investment spending
C.
higher is the equilibrium income.
D.
all the answers are right
Answer»
A. lower is the multiplier.
117.
To increase the money supply, the bank central could:
A.
cut taxes
B.
purchase bonds in the open-market
C.
encourage people to held more cash (currency in circulation)
D.
increase the government spending
Answer»
B. purchase bonds in the open-market
118.
The variable that connect the market of money and the market of goods via investment spending is:
A.
the mpc
B.
the interest rate
C.
the mps
D.
the cpi
Answer»
B. the interest rate
119.
Point out the monetary policy instrument:
A.
an increase in direct taxes
B.
open-market operations
C.
freezing pensions
D.
a cut in government purchase of goods and services
Answer»
B. open-market operations
120.
Monetary Policy is a regulatory policy by which the ______or monetary authority of a country controls the
supply of money, availability of bank credit and cost of money that is the rate of interest:
A.
central bank (rbi)
B.
sbi
C.
iba
D.
none of these
Answer»
A. central bank (rbi)
121.
_______controls the supply of money and bank credit:
A.
rbi
B.
indian banking association
C.
sebi
D.
none of these
Answer»
A. rbi
122.
The main objective of monetary policy in India is_______:
A.
growth with stability
B.
reduce poverty and achieve stability
C.
overall monetary stability
D.
none of these
Answer»
A. growth with stability
123.
The Cash Reserve Ratio is an effective instrument of credit control. Under the RBI Act, 1934 every
______bank has to keep certain minimum cash reserves with RBI:
A.
public bank
B.
commercial bank
C.
industrial and agricultural banks
D.
none of these
Answer»
B. commercial bank
124.
If RBI wants to increase the credit flow it buys ______:
A.
government securities
B.
shares and debentures
C.
other local and short-term securities
D.
none of these
Answer»
A. government securities
More MCQs
125.
Trade between two countries is called
A.
Internal trade
B.
Intra-Country trade
C.
Intra-State Trade
D.
International Trade
Answer»
D. International Trade
126.
According to Classical economists, _ is the reason for a country to specialie in the production of a commodity
A.
Internalisation
B.
Cost differences
C.
International Division of labor
D.
Special Commodities
Answer»
C. International Division of labor
127.
International trade is the result of an advantage country possesses in producing a particular commodity at a _
A.
Lower Cost
B.
Equal cost
C.
Higher cost
D.
Constant Cost
Answer»
A. Lower Cost
128.
Absolute difference in Cost is explained by
A.
David Ricardo
B.
Adam Smith
C.
J.S.Mill
D.
Alfred Marshall
Answer»
B. Adam Smith
129.
According to Adam Smith, international trade is advantageous for all participating countries only if they enjoy _ difference in cost of production
A.
Comparative
B.
Equal
C.
Absolute
D.
Unequal
Answer»
C. Absolute
130.
Who aid the following, " The esence of international trade is not the absolute difference in cost but a comparative difference in cost."
A.
Adam Smith
B.
David Ricardo
C.
J.S.Mill
D.
Alfred Marshall
Answer»
B. David Ricardo
131.
Ricardian theory has _ countries and
commodities
A.
32
B.
23
C.
24
D.
22
Answer»
D. 22
132.
Which of the following is NOT an assumption of Comparative Cost Advantage Theory?
A.
Perfect Competition
B.
Increasing return to scale
C.
Perfect Mobility of labor within countries
D.
Homogenoeus labor
Answer»
B. Increasing return to scale
133.
Comparative Advantage is expressed in _
A.
Absolute Cost
B.
Variable cost
C.
Cost ratios
D.
Marginal Cost
Answer»
C. Cost ratios
134.
England 1 unit wine =1/2unit cloth, Portugal 1 unit wine = 1 unit cloth. This is an example of
A.
Comparative Cost
B.
Absolute Cost
C.
Relative Cost
D.
Unequal Cost
Answer»
A. Comparative Cost
135.
Comparative Advantage theory is based on _ value
A.
Cost theory
B.
Productivity theory
C.
Quality theory
D.
labor theory
Answer»
D. labor theory
136.
No change in technology, no transport cost, constant returns to scale - these assumptions make the Comparative Cost advantage theory
__
A.
Dynamic
B.
Redundant
C.
Static
D.
Unacceptable
Answer»
C. Static
137.
If a country enjoys an absolute advantage in the production of all commodities then also trade is possible”. Who said this?
A.
Adam Smith
B.
David Ricardo
C.
J.S.Mill
D.
Alfred Marshall
Answer»
B. David Ricardo
138.
According to H-O theory, International trade is, but a pecial case of _ _ trade.
A.
Inter-state
B.
Intra state
C.
Intra-Country
D.
Inter-regional
Answer»
D. Inter-regional
139.
H-o Theory s based on value theory.
A.
Partial
B.
Semi-partial
C.
General
D.
Semi-General
Answer»
C. General
140.
H-O Theory is a _ _ model
A.
1 X 1 X 1
B.
2 X 2 X 2
C.
3 X 3 X 3
D.
4 X 4 X 4
Answer»
B. 2 X 2 X 2
141.
Commodity Y is Capital intensive if _ _
A.
Ky / Ly = Kx / Lx
B.
Ky / Ly < Kx /Lx
C.
Ky /Ly > Kx / Lx
D.
Ky > Kx
Answer»
C. Ky /Ly > Kx / Lx
142.
If,England 1 wine = 1/2 cloth and if Portugal 1 wine = 1 cloth, this I an example of
A.
Comparative advantage
B.
Absolute Advantage
C.
Similar Cost
D.
Unequal Cost
Answer»
A. Comparative advantage
143.
If Commodity Y requres 2 units of capital and 2 units of labor and commodity X requires 1 unit of capital and 4 units of labor then Y is
A.
Labor intenive
B.
Labor specific
C.
Capital Intensive
D.
Capital Specific
Answer»
C. Capital Intensive
144.
Factor intensity is measured in _ terms
A.
Absolute Cost
B.
Factor ratios
C.
Relative Cost
D.
Frequency of capital labor
Answer»
B. Factor ratios
145.
Total amount of labor in Nation 1 is greater than labor in nation 2 if
A.
TK1 /TL1 > TK2 /TL2
B.
TK1 / TL1 < TK2
/TL2
C.
TK1 /TL1 = TK2/TL2
D.
TL1 > TL2
Answer»
A. TK1 /TL1 > TK2 /TL2
146.
Factor abundance can be explained using
A.
Demand curve
B.
Supply curve
C.
Tangent
D.
PPC
Answer»
D. PPC
147.
A nation is capital abundant if
A.
PK1/PL1 < PK2/PL2
B.
PK1/PL1
>PK2/PL2
C.
PK1/PL1 = PK2/PL2
D.
PK1 < PK2
Answer»
B. PK1/PL1
>PK2/PL2
148.
Abundance of a factor makes it
A.
Easy
B.
More
C.
Expensive
D.
Cheap
Answer»
D. Cheap
149.
r1 / w1 < r2 / w2 means
A.
Nation 1 is capital abundant
B.
Nation 1 is labor abundant
C.
Nation 2 is capital abundant
D.
Nation 2 has high wages
Answer»
A. Nation 1 is capital abundant
150.
The rate at which goods are exchangeed between two countries is called
A.
Import price
B.
Export rate
C.
Foreign exchange
D.
Terms of trade
Answer»
D. Terms of trade
151.
The ratio of price of export to price of import is called
A.
Import price
B.
Export rate
C.
Foreign exchange
D.
Terms of trade
Answer»
D. Terms of trade
152.
Px / Pm is
A.
Gros barter terms of trade
B.
Net Barter terms oftrade
C.
Terms of trade
D.
Commodity terms of trade
Answer»
C. Terms of trade
153.
When many commodities are traded terms of trade is expresed as _ of its export pricr to import price
A.
sum
B.
multiple
C.
index ratio
D.
index
Answer»
C. index ratio
154.
If import prices rse more than export prices, terms of trade have _
A.
improved
B.
deteriorated
C.
increased
D.
advanced
Answer»
B. deteriorated
155.
The limitations of Commodty terms of trade gave rise to _
A.
Net barter terms of trade
B.
gross barter term of trade
C.
single factoral terms of trade
D.
double fctoral terms of trade
Answer»
B. gross barter term of trade
156.
A favourable terms of trade indicates _ imports for given exports
A.
more
B.
less
C.
lower
D.
same
Answer»
A. more
157.
is equally important as price of exports
A.
Income from exports
B.
Production level of exports
C.
amount of labor fromexports
D.
raw materials used for exports
Answer»
A. Income from exports
158.
A decline in price would increase exports if demand is__
A.
inelastic
B.
elastic
C.
constant
D.
fluctuating
Answer»
B. elastic
159.
_ _ introduced the concept of Gross barter terms of trade
A.
Adam Smith
B.
Alfred Marshall
C.
F W Taussig
D.
David Ricardo
Answer»
C. F W Taussig
160.
Single factoral terms of trade take in to account
A.
Export and import prices
B.
Changes in efficiency of factors producing export goods
C.
Changes in demand for imports
D.
Changes in demand for exports
Answer»
B. Changes in efficiency of factors producing export goods
161.
Two countries can gain from foreign trade if
A.
Cost ratios are different
B.
Price ratios are different
C.
Both cost ratios and price ratios are different
D.
Tarifs are different
Answer»
C. Both cost ratios and price ratios are different
162.
J.S.Mill brought in _ factor to explain termsof trade
A.
cost
B.
demand
C.
supply
D.
quality
Answer»
B. demand
163.
Reciprocal demand is
A.
Mutual demand of two countries
to each other’s goods
B.
Mutual supply
C.
price of export and import
D.
Investment
Answer»
A. Mutual demand of two countries
to each other’s goods
164.
The developing Countries it is argued usually
A.
Enjoy Favourable terms of trade
B.
Suffers from adverse terms of trade
C.
have better income terms of trade
D.
have better bargaining power
Answer»
B. Suffers from adverse terms of trade
165.
Comparative advantage occurs when ……..than other country .
A.
A country has more population
B.
A country can produce more goods
C.
A country has a lower opportunity cost in the production of a good
D.
A country has more product lines
Answer»
C. A country has a lower opportunity cost in the production of a good
166.
A tariff------
A.
Increases the volume of trade
B.
Reduces the volume of trade
C.
Has no effect on the volume of trade
D.
encourages foreign goods
Answer»
B. Reduces the volume of trade
167.
Terms of trade of less developed countries are generally unfavourable because
A.
They export primary goods
B.
They export capital goods
C.
They export few goods
D.
They import few goods
Answer»
A. They export primary goods
168.
According to J S Mill, equilibrium terms of trade is determined by __ demand
A.
Market
B.
Aggregate
C.
Effective
D.
Reciprocal
Answer»
D. Reciprocal
169.
Marshall and Edgeworth introduced a geometrical device to explain the gains from trade which is known as
A.
Indifference cur
B.
Offer curve
C.
Isoquant
D.
Demand curve
Answer»
B. Offer curve
170.
The concept of offer curves is associated with the names of
A.
David Ricardo
B.
J S Mill and Alfred
C.
Alfred Marshall an
D.
Edgeworth and Pareto
Answer»
C. Alfred Marshall an
171.
The offer curve of a country is based on
A.
Relative prices
B.
Price of exports
C.
Price of imports
D.
Volume of exports
Answer»
A. Relative prices
172.
Reciprocal demand is
A.
Mutual supply
B.
Ratio of volume of
C.
Ratio of earnings f
D.
Mutual demand of tw
Answer»
D. Mutual demand of tw
173.
In a free world in which no restrictions exist, international trade will lead to
A.
Reduced real li
B.
Reduced efficiency
C.
Reduced real GDP
D.
Increased efficiency
Answer»
D. Increased efficiency
174.
A commercial policy is a government policy related to _.
A.
Commercial transactions of private companies
B.
Economic transactions across international borders
C.
Commercial transactions of developed countries
D.
Taxes
Answer»
B. Economic transactions across international borders
175.
The classical economist Adam Smith was a champion of _ .
A.
Protectionism
B.
Free Trade
C.
Trade Wars
D.
Intra indstry trade
Answer»
B. Free Trade
176.
The origin of protectionist policy can be traced back to _ __.
A.
Free trade era
B.
Mercantilists days
C.
Globalisation period
D.
Brettonwoods system
Answer»
B. Mercantilists days
177.
Infant Industry Argument is justified for _ .
A.
Protecting old industries
B.
For enabling competitive efficiency of industries
C.
For strengthening public sector
D.
For allowing free trade
Answer»
B. For enabling competitive efficiency of industries
178.
Pick out the wrong statement.
A.
Tariffs are primarily levied to earn revenue.
B.
Tariffs are levied to protect domestic
industries.
C.
Tariffs reduce the prices of the commodity on which it is levied.
D.
Tariffs affect the income and employment.
Answer»
C. Tariffs reduce the prices of the commodity on which it is levied.
179.
Pick out the wrong statement.
A.
Tariffs restrict trade
B.
Import quotas have a direct effect in reducing imports
C.
Voluntary export restraint is an example of tariff barriers.
D.
An export subsidy is a government grant given to an export firm.
Answer»
C. Voluntary export restraint is an example of tariff barriers.
180.
Economic integration means.
A.
Application of tariffs
B.
Removal of customs duties
C.
Banning the movement of goods and services
D.
banning trade
Answer»
B. Removal of customs duties
181.
_ is the highest form of economic integration.
A.
Preferential trading system
B.
Free trade union
C.
Customs union
D.
Economic union
Answer»
D. Economic union
182.
The European Economic Community (EEC) was founded in 1957 under the treaty of _.
A.
Paris
B.
Rome
C.
Washington
D.
Veraiiles
Answer»
B. Rome
183.
Pick out the feature which does not describe European Union.
A.
Common currency
B.
Elimination of customs duties on the movement of goods.
C.
Independent policies for agriculture among member nations.
D.
Creation of a European Social Fund to improve employment opportunities of workers.
Answer»
C. Independent policies for agriculture among member nations.
184.
European union was initially formed with _ European countries.
A.
27
B.
28
C.
6
D.
5
Answer»
C. 6
185.
Prime Minister _ announced the government’s intention that U.K. will not seek permanent membership of the European single market or the EU customs union after leaving the EU.
A.
David Cameroon
B.
Trump
C.
Narendra Modi
D.
Theresa May
Answer»
D. Theresa May
186.
The referendum for Brexit was held on _ .
A.
July 1st 2017
B.
June 23rd 2016
C.
September 1,
2017
D.
July 23rd 2016
Answer»
B. June 23rd 2016
187.
The full form of ASEAN is _ .
A.
Association of South East African Nations
B.
Association of South Europe Allied Nations
C.
Association of South East Asian Nations
D.
Association oS Southern,eastern European Nations
Answer»
C. Association of South East Asian Nations
188.
ASEAN was formed with the signing of _.
A.
European declaration
B.
American declaration
C.
Asean declaration
D.
Bangkok declaration
Answer»
D. Bangkok declaration
189.
Pick out the wrong statement.
A.
The objective of ASEAN is to achieve economic,
political, social and cultural co- operation among its members.
B.
U.K. is a member of ASEAN
C.
There will be free movement of goods and services within ASEAN
D.
ASEAN FTA will improve business competitiveness between the members.
Answer»
B. U.K. is a member of ASEAN
190.
The objective of commercial policy is / are
_ .
A.
increase trade relation
B.
endanger domestic market
C.
allow import of goods
D.
Restrict exports
Answer»
D. Restrict exports
191.
Under free trade _ benefit more.
A.
consumer
B.
agents
C.
middlemen
D.
traders
Answer»
A. consumer
192.
Under free trade __ will be higher.
A.
wages
B.
trade wars
C.
civil wars
D.
restrictions
Answer»
A. wages
193.
Free trade is based on the principle of _ _ .
A.
Comparative cost advantage
B.
Comparative disadvantage
C.
Production possibility advantage
D.
Equal cost
Answer»
A. Comparative cost advantage
194.
Which of the following is not an argument for protectionism .
A.
to protect infant industries
B.
to increase the level of imports
C.
to protect small industries
D.
to improve the balance of payments
Answer»
B. to increase the level of imports
195.
A tariff is a tax on _ _ .
A.
domestic goods and services
B.
foreign goods and service
C.
quality of goods
D.
None of the above
Answer»
B. foreign goods and service
196.
Protectionism
A.
increase the quality of imports
B.
decrease the government revenue
C.
increase the government earnings from tax
D.
decrease the government earnings from tax
Answer»
C. increase the government earnings from tax
197.
Which of the following is an argument far free trade _ .