McqMate
These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: General Knowledge (GK) , Union Public Service Commission (UPSC) .
| 451. |
Who said 'Supply creates its own demand'? |
| A. | Adam Smith |
| B. | J.B.Saw |
| C. | Marshall |
| D. | Ricardo |
| Answer» B. J.B.Saw | |
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Explanation: "Supply creates its own demand" is the formulation of Say's law by John Maynard Keynes. The rejection of this doctrine is a central component of The General Theory of Employment, interest and Money (1936) and a central tenet of Keynesian economics. Say's law, or the law of market, is an economic principle of classical economics named after the French businessman and economist Jean-Baptiste Say (1767-1832), who stated that "products are paid for with products" and "a glut can take place only when there are too many means of production applied to one kind of product and not enough to another |
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| 452. |
Investment is equal to : |
| A. | gross total of all types of physical capital assets |
| B. | gross total of all capital assets minus wear and tear |
| C. | stock of plants, machines and equipments |
| D. | None of the above |
| Answer» B. gross total of all capital assets minus wear and tear | |
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Explanation: Capital formation is frequently thought of as a measure of total "investment", in the sense of that portion of capital actually used for investment purposes and not held as savings or consumed. But in fact, in national accounts, the concept of gross capital formation refers only to the accounting value of the "additions of non- financial produced assets to the capital stock less the disposals of these assets". "Investment" is a broader concept that includes investment in all kinds of capital assets, whether physical property or financial assets. |
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| 453. |
'Gold' is mainly related to - |
| A. | Local market |
| B. | National market |
| C. | International market |
| D. | Regional market |
| Answer» C. International market | |
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Explanation: Gold is mainly related to the international market as of all the precious metals, it is the most popular as an investment. Gold has been used throughout history as money and has been a relative standard for currency equivalents specific to economic regions or countries, until recent times. Gold price has shown a long term correlation with the price of crude oil. |
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| 454. |
Value-added means value of - |
| A. | output at factor cost |
| B. | output at market prices |
| C. | goods and services less depreciation |
| D. | goods and services less cost of intermediate goods and services |
| Answer» D. goods and services less cost of intermediate goods and services | |
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Explanation: Value added is an economic term to express the difference between the value of goods and the cost of materials or supplies that are used in producing them. It is a measure of economic activity which eliminates the duplication inherent in the sales value figure which results from the use of products of some establishments as materials or services by others. So it is of goods and services less cost of intermediate goods and services. |
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| 455. |
In India, disguised unemployment is generally observed in - |
| A. | the Agricultural sector |
| B. | the Factory sector |
| C. | the Service sector |
| D. | All these sectors |
| Answer» A. the Agricultural sector | |
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Explanation: As the word suggests, disguised unemployment refers to a situation when a person is apparently employed, but in effect unemployed. It is a phenomenon of concealed unemployment, not visible to the open eyes. Here it is not possible to identify as to who are unemployed, as all "appear to be working." Disguised unemployment is especially seen in the field of agriculture. Most of the people are observed to be engaged in agriculture; however, in reality a sufficient number of them are unemployed. Their contribution regarding production is negligible. |
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| 456. |
Excise duty on a commodity is payable with reference to its - |
| A. | production |
| B. | production and sale |
| C. | production and transportation |
| D. | production, transportation and sale |
| Answer» A. production | |
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Explanation: An excise or excise tax (sometimes called a duty of excise special tax) is an inland tax on the sale, or production for sale, of specific goods or a tax on a good produced for sale, or sold, within a country or licenses for specific activities. Excises are distinguished from customs duties, which are taxes on importation. Excises are inland taxes, whereas customs duties arc border taxes. |
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| 457. |
"Smart Money" term is used for - |
| A. | Credit Card |
| B. | Internet Banking |
| C. | eBanking |
| D. | Cash with Public |
| Answer» A. Credit Card | |
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Explanation: Credit cards are sometimes considered as smart money since they enable transactions without the need for physical cash and that, too, in a convenient manner. It is plastic money that is used to pay for products andservices at over 20 million locations around the world. In pure economic terms, Smart Money refers to investments made by people experienced in matters of finance. |
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| 458. |
Which of the following brings out the 'Consumer Price Index Number' for Industrial workers? |
| A. | RBI |
| B. | The Labour Bureau |
| C. | Commerce Department |
| D. | NITI Aayog |
| Answer» B. The Labour Bureau | |
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Explanation: The Consumer Price Index Numbers for Industrial Workers CPI (IW) are being compiled, maintained and disseminated by the Labour Bureau since its inception in October, 1946. These index numbers are being utilized for fixation and revision of wages and de-termination of variable Dearness Allowances payable to workers in organized sectors of the economy. These index numbers are compiled by the Bureau on month to month basis. |
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| 459. |
'Green Banking' means : |
| A. | Banks financing agriculture |
| B. | Banks financing irrigation projects |
| C. | Banks financing farmers |
| D. | Banks financing pro environmental projects |
| Answer» D. Banks financing pro environmental projects | |
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Explanation: Green Banking refers to practices and guidelines that make banks sustainable in economic, environment, and social dimensions. Green banking is also known as environment- friendly banking, ethical banking or sustainable banking. A conventional bank becomes a green bank by directing its core operations towards the betterment of the environment. |
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| 460. |
A currency having a falling exchange rate due to continuing balance of payments deficit is called a- |
| A. | Soft currency |
| B. | Hard currency |
| C. | Scarce currency |
| D. | Surplus currency |
| Answer» A. Soft currency | |
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Explanation: Soft currency is a currency with a value that fluctuates as a result of the country’s political or economic uncertainty which may be due to balance of payments problem. Currencies from most developing countries are considered to be soft currencies. Often, governments from these developing countries will set unrealistically high exchange rates, pegging their currencies to a currency such as the U.S. dollar |
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| 461. |
A speculator who enters into a purchase transaction with a view to sell in the near future when the price would have risen is called a - |
| A. | Bear |
| B. | Bull |
| C. | Bison |
| D. | Boar |
| Answer» B. Bull | |
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Explanation: Investors who take a bull approach purchase securities under the assumption that they can be sold later at a higher price. A "bear" is considered to be the opposite of a bull. |
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| 462. |
Bank rate is that rate on which - |
| A. | Any bank lends money to an individual |
| B. | State Bank of India gives loan to the rural banks |
| C. | Central Bank of Country lends money to the commercial banks |
| D. | Rural bank gives loan to cooperative societies |
| Answer» C. Central Bank of Country lends money to the commercial banks | |
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Explanation: Bank rate, also referred to as the discount rate, is the rate of interest which a central bank charges on the loans and advances to a commercial bank. Repo (Repurchase) rate is the rate at which the central bank lends short- term money to the banks against securities. A reduction in the repo rate will help banks to get money at a cheaper rate. The reverse repo rate is the rate at which the banks park surplus funds with reserve bank, while the repo rate is the rate at which the banks borrow from the central bank. |
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| 463. |
Devaluation usually causes the internal prices to : |
| A. | fall |
| B. | rise |
| C. | remain unchanged |
| D. | None of the above |
| Answer» C. remain unchanged | |
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Explanation: Devaluation reduces the export price in term of foreign currencies in the world market. As a result the exports are increased so as to increase the revenue of the country. When the exports are increased all efforts are made to increase the production of the country. However, devaluation of currency is in relation to external currencies and external trade. It has effects on a country's international trade by alluring traders. But, internal prices remain unaffected. |
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| 464. |
Which among the following is not a non-customs duty obstacle in the world trade? |
| A. | Quantity restriction |
| B. | Establishment of Standard of labour in manufacturing |
| C. | Determination of import duty uniformly |
| D. | Restrictions on goods quality |
| Answer» C. Determination of import duty uniformly | |
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Explanation: Non-tariff barriers to trade include import quotas, special licenses, unreasonable standards for the quality of goods, bureaucratic delays at customs, export restrictions, limiting the activities of state trading, export subsidies, countervailing duties, technical barriers to trade, sanitary and phyto- sanitary measures, rules of origin, etc. Determination of import duty uniformly is comes under the sovereign duty of a nation. It is internal development. |
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| 465. |
seller or buyer protects his business or holdings from changing prices and takes action against it. It is known as - |
| A. | defence |
| B. | betting |
| C. | inter-trading |
| D. | mortgage |
| Answer» A. defence | |
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Explanation: It is known as defence, It is a type of resistance against danger, attack, or harm to business or holding. A seller or buyer resorts to defence as a means of protection. |
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| 466. |
Which one of the following does not deal with export promotion? |
| A. | Trade Development Authority |
| B. | Minerals and Metals Trading Corporation |
| C. | Cooperative Marketing Societies |
| D. | Slate Trading Corporation of India |
| Answer» C. Cooperative Marketing Societies | |
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Explanation: According to the Reserve Bank of India, co-operative marketing is a co-operatove association of cultivators formed primarily for the purpose of helping the members to market their produce more profitably than is possible through private trade. Under the system of co- operative marketing whole responsibility of marketing is taken up by the farmers themselves, organized on co-operative basis. The area of operation of marketing society is usually fixed with reference to local conditions - area based or commodity based. The commodity-based societies related to grapes, oranges, banana, pomegranate, etc. |
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| 467. |
Which of the following sets belongs to Central tax? |
| A. | Excise duty, Sales tax and Custom duty |
| B. | Excise duty, Custom duly and Income tax |
| C. | Income tax, Custom duty and House, Lax |
| D. | Custom duty, Entertainment tax and Income tax |
| Answer» B. Excise duty, Custom duly and Income tax | |
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Explanation: The Central Indian Government that is officially named as the "Union Government" is responsible for the imposition of both direct taxes as well indirect taxes. Listed below are some of the taxes that are levied by the India Government: Banking Cash Transaction Tax; Capital Gains Tax; Corporate Income Tax: Fringe Benefit Tax; Personal Income Tax; and Securities Transaction Tax. The indirect taxes are: Customs Duty; Excise Duty and Service Tax. |
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| 468. |
ho defined 'Rent' as that portion or produce of the earth which is paid to the landlord for the use of original and indestructible power of the soil? |
| A. | Ricardo |
| B. | Marshall |
| C. | Keynes |
| D. | Plgou |
| Answer» A. Ricardo | |
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Explanation: In his The Principles of Political Economy and Taxation (1821), David Ricardo stated: "Rent is that portion of the produce of the earth, which is paid to the landlord for the use of the original and indestructible powers of the soil. It is often, however, confounded with the interest and profit of capital, and, in popular language, the term is applied to whatever is annually paid by a farmer to his landlord. |
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| 469. |
Economies of a firm are : |
| A. | An increase in its profits |
| B. | A reduction in its selling expenses |
| C. | Its dominance of the market |
| D. | Saving in it's production costs |
| Answer» D. Saving in it's production costs | |
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Explanation: Economics of a firm includes how it combines labour and capital so as to lower the average cost of output, either from increasing, decreasing, or constant returns to scale for one product line or from economies of scope for more than one product line. It includes producing more units of a good or a service on a larger scale, yet with (on average) less input costs. |
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| 470. |
Nature of unemployment in agriculture in India is - |
| A. | only seasonal |
| B. | only disguised |
| C. | Both (1) and (2) |
| D. | None of the above |
| Answer» C. Both (1) and (2) | |
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Explanation: Seasonal employment refers to a situation where a number of persons are not able to find jobs during some months of the year. Example: Agriculture is a seasonal activity. There is an increased demand for labour at the time of sowing, harvesting, weeding and threshing. In between there is little or no demand for labour. Besides, disguised unemployment is also seen in agriculture in India. |
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| 471. |
The monetary policy is India is formulated by - |
| A. | Central Government |
| B. | Industrial Financial Corporation of India |
| C. | Reserve Bank of India |
| D. | Industrial Development Bank of India |
| Answer» C. Reserve Bank of India | |
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Explanation: Monetary policy is the process by which monetary authority of a country, generally a central bank controls the supply of money in the economy by exercising its control over interest rates in order to maintain price stability and achieve high economic growth. In India, the central monetary authority is the Reserve Bank of India (RBI). is so designed as to maintain the price stability in the economy. |
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| 472. |
The system of "Memorandum of Understanding” (MoU) was introduced in - |
| A. | 1989 - 90 |
| B. | 1990 - 91 |
| C. | 1987 - 88 |
| D. | 1988 - 89 |
| Answer» C. 1987 - 88 | |
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Explanation: The System of Memorandum of Understanding was introduced in the Public Sector Enterprises during the year 1987-88 in India. It was based on the report of the Arjuna Sengupta Committee (1984). |
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| 473. |
The upper limit of investment in plant and machinery for small-scale industries has been fixed currently at - |
| A. | Rs. 35 lakhs |
| B. | Rs. 45 lakhs |
| C. | Rs. 60 lakhs |
| D. | Rs. 1 crore |
| Answer» D. Rs. 1 crore | |
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Explanation: The upper limit of investment in plant and machinery for small-scale industries has been fixed at Rs. one crore. |
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| 474. |
What is USP in marketing field? |
| A. | Uninterrupted power supply |
| B. | Universal standards of production |
| C. | Us Programme based |
| D. | Exclusive marketing features |
| Answer» D. Exclusive marketing features | |
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Explanation: The Unique Selling Proposition (a.k.a. Unique Selling Point, or USP) Is a marketing concept that was first proposed as a theory to understand a pattern among successful advertising campaigns of the early 1940s. It states that such campaigns made unique propositions to the customer and that this convinced them to switch brands. The term was invented by Rosser Reeves of Ted Bates & Company. |
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| 475. |
When too much money is chasing too few goods, the situation is - |
| A. | deflation |
| B. | inflation |
| C. | recession |
| D. | stagflation |
| Answer» B. inflation | |
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Explanation: Demand-pull inflation is asserted to arise when aggregate demand in an economy outpaces aggregate supply. It involves inflation rising as real gross domestic product rises and unemployment falls, as the economy moves along the Phillips curve. This is commonly described as "too much money chasing too few goods". More accurately, it should be described as involving "too much money spent chasing too few goods", since only money that is spent on goods and services can cause inflation. |
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| 476. |
When there is an official change in the exchange rate of domestic currency, then it is called |
| A. | Appreciation |
| B. | Depreciation |
| C. | Revaluation |
| D. | Deflation |
| Answer» B. Depreciation | |
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Explanation: Revaluation is a calculated adjustment to a country's official exchange rate relative to a chosen baseline. The baseline can be anything from wage rates to the price of gold to a foreign currency. In a fixed exchange rate regime, only a decision by a country's government (i.e. central bank) can alter the official value of the currency. It is opposite of devaluation. |
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| 477. |
Inflation redistributes income and wealth in favour of : |
| A. | Pensioners |
| B. | Poor |
| C. | Middle class |
| D. | Rich |
| Answer» D. Rich | |
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Explanation: A group of economists including Keynes is of the opinion that 'inflation, in one form or the other, is a factor which helps economic growth. Usually, it is argued that inflation tends to redistribute income and wealth. The redistributive effect of inflation is always in favour of profit-earning class, that is to say, It redistributes income always from the wage- recipient class towards the profit-recipient class in the community. As a result, the saving ratio will increase because the marginal propensity to save of the profit earners is generally high as against the high margin-al propensity to consume of the wage- earners because of their near-subsistence level of income. |
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| 478. |
Money market is a market for - |
| A. | Short term fund |
| B. | Long term fund |
| C. | Negotiable instruments |
| D. | Sale of shares |
| Answer» A. Short term fund | |
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Explanation: The money market is where financial instruments with high liquidity and very short maturities are traded. It is used by participants as a means for borrowing and lending in the short term, with maturities that usually range from overnight to just under a year. Some of the common money market instruments are: commercial paper, municipal notes, interest rate swaps, etc. |
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| 479. |
MUDRA Bank has been launched to help - |
| A. | Small business |
| B. | Marginal farmers |
| C. | Poor women |
| D. | Rural sector |
| Answer» A. Small business | |
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Explanation: Micro Units Development and Refinance Agency Bank (or MUDRA Bank)is a new institution setup by the Government of India to provide the funding to the non-corporate small business sector. It will provide its services tosmall entrepreneurs outside the service area of regular banks, by using last mile agents. |
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| 480. |
Industrial exit policy means - |
| A. | forcing foreign companies to leave India |
| B. | forcing business units to move out of congested localities |
| C. | allowing manufacturers to shift their line of products |
| D. | allowing business units to close down |
| Answer» D. allowing business units to close down | |
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Explanation: The term 'exit' is the obverse of the term 'entry' into industry. It refers to the right or ability of an industrial unit to withdraw from or leave an industry or in other words to close down. The proposal to introduce an exit policy was first mooted in 1991 when it was felt that without labor market flexibility, efficient industrialization would be difficult to achieve. |
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| 481. |
Capital formation in an economy depends on - |
| A. | Total Income |
| B. | Tot al demand |
| C. | Total savings |
| D. | Total production |
| Answer» C. Total savings | |
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Explanation: Capital formation refers to capital accumulation, referring to the total "stock of capital" that has been formed, or to the growth of this total capital stock. It also refers to a measure of the net additions to the (physical) capital stock of a country (or an economic sector) in an accounting interval, or, a measure of the amount by which the total physical capital stock increased during an accounting period. |
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| 482. |
If the tax rate increases with the higher level of income, it shall be called - |
| A. | Proportional tax |
| B. | Progressive tax |
| C. | Lump sum tax |
| D. | Regressive tax |
| Answer» B. Progressive tax | |
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Explanation: A progressive tax is a tax by which the tax rate increases as the taxable base amount increases." Progressive" describes a distribution effect on income or expenditure,referring to the way the rate progresses from low to high, where the average tax rate is less than the marginal tax rate. It can be applied to individual taxes or to a tax system as a whole; a year, multi-year, or lifetime. Progressive taxes attempt to reduce the tax incidence of people with a lower ability-to-pay, as they shift the incidence increasingly to those with a higher ability-to-pay. |
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| 483. |
New capital issue is placed in - |
| A. | Secondary market |
| B. | Grey market |
| C. | Primary market |
| D. | Black market |
| Answer» C. Primary market | |
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Explanation: The primary market is that part of the capital markets that deals with the issuance of new securities. Companies, governments or public sector institutions can obtain funding through the sale of a new stock or bond issue. This is the market for new long term equity capital. The primary market is the market where the securities are sold for the first time. Therefore it is also called the new issue market (NIM). |
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| 484. |
If a country devalues its currency, its - (1) |
| A. | Exports become cheaper and imports become costlier |
| B. | (2) Exports become costlier and imports become cheaper. |
| C. | Exports value is equivalent to imports value |
| D. | No effect on exports and imports |
| Answer» A. Exports become cheaper and imports become costlier | |
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Explanation: Devaluation means official lowering of the value of a country's currency within a fixed exchange rate system, by which the monetary authority formally sets a new fixed rate with respect to a foreign reference currency. Devaluation causes a country's exports to become less expensive, making them more competitive in the global market. This, in turn, means that imports are more expensive, making domestic consumers less likely to purchase them. |
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| 485. |
'Residex' is associated with - |
| A. | Share prices |
| B. | Price inflation |
| C. | Mutual fund prices |
| D. | Land prices |
| Answer» D. Land prices | |
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Explanation: The RESIDEX was first launched in 2007 by the National Housing Bank (NHB) to provide an index of residential prices in India across cities and over time. It is the first housing price index in India. It was launched in order to fill price information gap and to streamline the process of development of property in various cities across the country. |
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| 486. |
Which one of the following is not a function of the central bank in an economy? |
| A. | Dealing with foreign exchange |
| B. | Controlling monetary policy |
| C. | Controlling government spending |
| D. | Acting as a banker's bank |
| Answer» C. Controlling government spending | |
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Explanation: A central bank, reserve bank, or monetary authority is a public institution that manages a state’s currency, money supply, and interest rates. Central banks also usually oversee the commercial banking system of their respective countries. |
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| 487. |
In a period of inflation and price rises the supply of money remains - |
| A. | the same |
| B. | increases |
| C. | decreases |
| D. | increases or decreases pro-portionately. |
| Answer» B. increases | |
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Explanation: Money supply is the total amount of monetary assets available in an economy at a specific time. The relation between money and prices is historically associated with the quantity theory of money. There is strong empirical evidence of a direct relation between long-term price inflation and money-supply growth, at least for rapid increases in the amount of money in the economy. |
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| 488. |
Which of the following groups suffer the most from inflation? |
| A. | Debtros |
| B. | Creditors |
| C. | Business class |
| D. | Holders of real assets |
| Answer» B. Creditors | |
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Explanation: Inflation, or the general rise of price levels in an economy, has many deleterious effects. It leaves the economy as a whole poorer relative to pre-inflation levels of wealth (individual and societal). Inflation reduces the value of each unit of currency and thus leaves the holder of that currency with lower purchasing power. Generally speaking, those who benefit from higher inflation are debtors and those who suffer from it- creditors. If one has substantial debt, each dollar one has to repay would be worth less than when it was borrowed. |
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| 489. |
What is "narrow money"? |
| A. | The sum of currency in circulation and the demand deposits in banks |
| B. | The sum of MI money and the time deposits |
| C. | The sum of currency in circulation with the public and the cash reserves held by banks |
| D. | The market value of the stocks held by all the holders excluding the promoters |
| Answer» A. The sum of currency in circulation and the demand deposits in banks | |
| 490. |
Legal Tender Money is - |
| A. | accepted only by Government |
| B. | accepted by people and Government as per the law |
| C. | not accepted for business purposes by law |
| D. | not accepted by Government |
| Answer» B. accepted by people and Government as per the law | |
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Explanation: Legal tender is a medium of payment allowed by law or recognized by a legal system to be valid for meeting a financial obligation. So it is accepted by people and government on a legal basis. Paper currency and coins are common forms of legal tender in many countries. |
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| 491. |
Bank rate is the rate of interest: |
| A. | At which public borrows money from Commercial Banks |
| B. | At which public borrows money from R.B.I. |
| C. | At which Commercial Banks borrow money from R.B.I. |
| D. | At which Commercial Banks borrow money from the public |
| Answer» C. At which Commercial Banks borrow money from R.B.I. | |
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Explanation: Bank Rate is the interest rate at which a nation's central bank lends money to domestic banks. Often these loans are very short in duration. Managing the bank rate is a preferred method by which central banks can regulate the level of economic activity. Regulation of the economy through management of the money supply is referred to as monetary policy. |
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| 492. |
Which of the following can be used for checking inflation temporarily? |
| A. | Increase in wages |
| B. | Decrease in money supply |
| C. | Decrease in taxes |
| D. | None of these |
| Answer» B. Decrease in money supply | |
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Explanation: An open market operation (also known as OMO) is an activity by a central bank to buy or sell government bonds on the open market. India's Open Market Operation is much influenced by the fact that it is a developing country and that the capital flows are much different than those in the other developed countries. Economists claim that an increase in money supply alone constitutes inflation. |
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| 493. |
he annual record for all the monetary transactions of a country with other countries of the world is known as - |
| A. | Balance of trade |
| B. | Balance of monetary-receipts |
| C. | Balance of payments |
| D. | Balance Sheet |
| Answer» C. Balance of payments | |
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Explanation: Balance of payments (BoP) accounts arc an accounting record of all monetary transactions between a country and the rest of the world. These transactions include payments for the country's exports and imports of goods, services, financial capital, and financial transfers. The BoP accounts summarize international transactions for a specific period, usually a year, and are prepared in a single currency, typically the domestic currency for the country concerned. |
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| 494. |
A country's balance of trade is unfavorable when — |
| A. | exports exceed imports |
| B. | imports exceed exports |
| C. | terms of trade become unfavorable |
| D. | None of these |
| Answer» B. imports exceed exports | |
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Explanation: The balance of trade, or net exports is the difference between the monetary value of exports and imports of output in an economy over a certain period. It is the relationship between a nation's imports and exports. A positive balance is known as a trade surplus if it consists of exporting more than is imported: a negative balance is referred to as a trade deficit or, informally, a trade gap. |
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| 495. |
Which one of the following categories of workers is termed as cultivators? |
| A. | Those who own land and cultivate |
| B. | Those who lease in land and cultivate |
| C. | Those who cultivate the land of others |
| D. | Those who own land and lease in from others or institutions and cultivate |
| Answer» C. Those who cultivate the land of others | |
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Explanation: Agricultural laborers are those who cultivate the land of others but own no (or very little) land of their own. Owner cultivators are those who own and cultivate their own land. Landowners are those who own land but do not cultivate it themselves. So basically, a cultivator is an agricultural labourer who tills the land of others. |
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| 496. |
The reserves held by Commercial Banks over and above the statutory minimum, with the RBI are called - |
| A. | Cash reserves |
| B. | Deposit reserves |
| C. | Excess reserves |
| D. | Momentary reserves |
| Answer» C. Excess reserves | |
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Explanation: In banking, excess reserves are bank reserves in excess of the reserve requirement set by a central bank. They are reserves of cash more than the required amounts. Holding excess reserves has an opportunity cost if higher risk-adjusted interest can be earned by putting the funds elsewhere; the advantage of holding some funds in excess reserves is that doing so may provide enhanced liquidity and therefore more smooth operation of payment system. |
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| 497. |
J. B. Say's Law of Market was not accepted by - |
| A. | Adam Smith |
| B. | Marshall |
| C. | Malthus |
| D. | David Ricardo |
| Answer» B. Marshall | |
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Explanation: Malthus opposed what has come to be described as Say's Law: that supply creates its own demand. He rejected the proposition that the demand for commodities will automatically provide a motive for sufficient investment and production to satisfy such demand, or that investment and production would alone and automatically lead to an adequate demand to absorb supply. He argued that production and consumption were impelled by very different motives. Demand adjusted slowly, according to 'habit and tastes' and hence if productivity increased significantly, demand would not |
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| 498. |
The time element in price analysis was introduced by : |
| A. | J.M. Keynes |
| B. | Alfred Marshall |
| C. | J.S. Mill |
| D. | J.R. Hicks |
| Answer» B. Alfred Marshall | |
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Explanation: Marshall, who propounded the theory that price is determined by both demand and supply, also gave a great importance to the time element in the determination of price. He introduced time period analysis into pricing process to bring out the varying influence of each of two forces over price of the product in different time periods. He said, "as a general rate", "the shorter the period which one considers the greater must be the share of our attention which is given to the influence of demand on value, and the longer the period more important will be the influence of cost of production on value." |
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| 499. |
Selling cost have to be incurred in case of - |
| A. | Perfect Competition |
| B. | Monopoly |
| C. | Monopolistic Competition |
| D. | None of the given options |
| Answer» C. Monopolistic Competition | |
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Explanation: Selling costs are the expenses on advertisement, salesmanship, free sampling, free service, door-todoor canvassing, and so on. There is no selling problem under perfect competition where the product is homogeneous. Under monopolistic competition where the product is differentiated, selling costs are essential to push up the sales. They are incurred to persuade a buyer to purchase one product in preference to another. |
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| 500. |
Inflation is a situation characterized by |
| A. | Too much money chasing too few goods |
| B. | Too few money chasing too much goods |
| C. | Too many people chasing too few goods |
| D. | Too many people chasing too little money |
| Answer» A. Too much money chasing too few goods | |
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Explanation: Demand-pull inflation is asserted to arise when aggregate demand in an economy outpaces aggregate supply. It involves inflation rising as real gross domestic product rises and unemployment falls, as the economy moves along the Phillips curve. This is commonly described as "too much money chasing too few goods." |
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