McqMate
These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Economics (CBCS) .
Chapters
| 101. |
Cost of living increases when business cycle is |
| A. | Expanding |
| B. | Contracting |
| C. | At peak |
| D. | At lowest point |
| Answer» C. At peak | |
| 102. |
All but one are the endogenous factors of business cycle |
| A. | War |
| B. | Changes in government spending |
| C. | Money supply |
| D. | Fluctuations in investment |
| Answer» A. War | |
| 103. |
Fall in the interest rate is a typical feature of |
| A. | Recovery |
| B. | Boom |
| C. | Depression |
| D. | Contraction |
| Answer» C. Depression | |
| 104. |
During depression __________industry suffer from excess production capacity |
| A. | Capital goods |
| B. | Consumer durable goods |
| C. | Non-durable goods |
| D. | Both (a) and (b |
| Answer» D. Both (a) and (b | |
| 105. |
The lowest level of economic activity is called |
| A. | Contraction |
| B. | Trough |
| C. | Recovery |
| D. | None of them |
| Answer» B. Trough | |
| 106. |
Which of the following is notthe feature of business cycle? |
| A. | Business cycle follow perfectly timed cycle |
| B. | Business cycle vary in intensity |
| C. | Business cycle vary in length |
| D. | Aggregate economic activity |
| Answer» A. Business cycle follow perfectly timed cycle | |
| 107. |
At the time of Great Depression of 1930s, the global GDP fell by around |
| A. | 12 % |
| B. | 14 % |
| C. | 15 % |
| D. | 10 % |
| Answer» C. 15 % | |
| 108. |
Which of the following describes best a typical trade cycle? |
| A. | Economic expansions are followed by economic contractions |
| B. | Inflation is followed by rising income and employment |
| C. | Economic expansions are followed by economic growth and development |
| D. | Stagflation followed by rising employment |
| Answer» A. Economic expansions are followed by economic contractions | |
| 109. |
During upswing, the unemployment rate and output |
| A. | Rises; falls |
| B. | Rises; rises |
| C. | Falls; rises |
| D. | Falls ; falls |
| Answer» A. Rises; falls | |
| 110. |
If any unemployment exists during expansion phase of business cycle, it is |
| A. | Voluntary and frictional |
| B. | Technological and structural |
| C. | Frictional and structural |
| D. | Structural and involuntary |
| Answer» C. Frictional and structural | |
| 111. |
The most probable outcome of increase in aggregate demand is |
| A. | Expansion of economic activity |
| B. | Contraction of economic activity |
| C. | Stable economic activity |
| D. | Volatile economic activity |
| Answer» A. Expansion of economic activity | |
| 112. |
Economic recession is characterized by all of the following except |
| A. | Decline in investment, employment |
| B. | Increase in the price of inputs due to increased demand for inputs |
| C. | Investors’ confidence is shaken |
| D. | Demand for goods, service decline |
| Answer» B. Increase in the price of inputs due to increased demand for inputs | |
| 113. |
Understanding business cycle is important for business managers because |
| A. | They affect the demand for their products |
| B. | They affect their profits |
| C. | To frame appropriate policies and forward planning |
| D. | All of the above |
| Answer» D. All of the above | |
| 114. |
Which indicators change before the economy itself changes |
| A. | Lagging |
| B. | Coincident |
| C. | Leading |
| D. | Concurrent |
| Answer» C. Leading | |
| 115. |
Which indicators change after the economy as a whole changes |
| A. | Lagging |
| B. | Coincident |
| C. | Leading |
| D. | Concurrent |
| Answer» A. Lagging | |
| 116. |
A variable that occur simultaneously with the business cycle movements is |
| A. | Leading indicator |
| B. | Lagging indicator |
| C. | Coincidentindicator |
| D. | Cyclical indicator |
| Answer» C. Coincidentindicator | |
| 117. |
The principle of accelerator explains the process by which |
| A. | An increase (or decrease) in the demand for consumption goods leads to an increase (or decrease) in the investment on capital goods |
| B. | The ratio between induced investment and an initial change in consumption expenditure |
| C. | An increase (or decrease) in the investment on capital goods leads to an increase (or decrease) in the demand for consumption goods |
| D. | None of the above |
| Answer» A. An increase (or decrease) in the demand for consumption goods leads to an increase (or decrease) in the investment on capital goods | |
| 118. |
Inflation is a situation when |
| A. | Prices of some goods rise |
| B. | General price level rises continuously |
| C. | Prices double every year |
| D. | Prices rise and fall |
| Answer» B. General price level rises continuously | |
| 119. |
An inflation caused by an enhanced wages of labour is |
| A. | Demand-pull inflation |
| B. | Cost-push inflation |
| C. | Hyperinflation |
| D. | Stagflation |
| Answer» B. Cost-push inflation | |
| 120. |
Inflation in under-developed country is basically caused by |
| A. | Mass poverty |
| B. | Less production |
| C. | Lack of technical know-how |
| D. | Market imperfection |
| Answer» D. Market imperfection | |
| 121. |
According to Keynes, inflationary gap is caused by |
| A. | excess supply |
| B. | excess demand |
| C. | deficiency of demand |
| D. | deficiency of supply |
| Answer» B. excess demand | |
| 122. |
Stagflation implies a situation of |
| A. | High inflation and high unemployment |
| B. | Low unemployment and low inflation |
| C. | High inflation and low unemployment |
| D. | Low inflation and high unemployment |
| Answer» A. High inflation and high unemployment | |
| 123. |
Demand- Pull inflation is caused by an |
| A. | Increase in the aggregate effective demand for goods and services |
| B. | Increase in the money incomes of the factors of production |
| C. | Increased investment in the economy |
| D. | All of the above |
| Answer» A. Increase in the aggregate effective demand for goods and services | |
| 124. |
Which of the following is a monetary measure to control inflation in an economy? |
| A. | Increase in money supply |
| B. | Demonetization of currency |
| C. | Increase in government expenditure |
| D. | All of the above |
| Answer» B. Demonetization of currency | |
| 125. |
In Keynesian view, inflation is |
| A. | The rise in the price level after the point of full employment |
| B. | A rise in the price level before the point of full employment |
| C. | Too much money chasing too few goods |
| D. | All of the above |
| Answer» A. The rise in the price level after the point of full employment | |
| 126. |
“Inflation is a state in which the value of money is falling i.e., prices are rising”.Who said this? |
| A. | Hansen |
| B. | Keynes |
| C. | Crowther |
| D. | Fisher |
| Answer» C. Crowther | |
| 127. |
If inflation is allowed to continue without any check, it is known as |
| A. | Supressed inflation |
| B. | Normal inflation |
| C. | Open inflation |
| D. | Deflation |
| Answer» C. Open inflation | |
| 128. |
When both prices and money income fall, the situation is called |
| A. | Disinflation |
| B. | Recession |
| C. | Deflation |
| D. | Anti-inflation |
| Answer» C. Deflation | |
| 129. |
Inflation in a developed country usually sets in |
| A. | Before the point of full employment |
| B. | After the point of full employment |
| C. | at the point full employment |
| D. | None of the above |
| Answer» B. After the point of full employment | |
| 130. |
During inflation, who suffers the most? |
| A. | Wage and salary earners |
| B. | Creditors |
| C. | Debtors |
| D. | Businessman |
| Answer» A. Wage and salary earners | |
| 131. |
When government interrupts price rise, there is |
| A. | Suppressed inflation |
| B. | Reflation |
| C. | Open inflation |
| D. | Deflation |
| Answer» A. Suppressed inflation | |
| 132. |
The phenomenal rise in prices accompanied by increased real income is known as |
| A. | inflation |
| B. | deflation |
| C. | reflation |
| D. | None of the above |
| Answer» C. reflation | |
| 133. |
Which of the following measure proves effective in reducing the rate of inflation? |
| A. | Decreased personal consumption |
| B. | Evaluation of currency |
| C. | Increased taxation |
| D. | All of the above |
| Answer» C. Increased taxation | |
| 134. |
Inflation can be controlled by applying: |
| A. | Monetary and fiscal policies |
| B. | Monetary and labour policy |
| C. | Fiscal and Commercial Policies |
| D. | All of the above |
| Answer» A. Monetary and fiscal policies | |
| 135. |
During inflation |
| A. | Lenders lose, borrowers gain |
| B. | Borrowers lose, lenders gain |
| C. | Borrowers and lenders both lose |
| D. | All sections of the society gain |
| Answer» A. Lenders lose, borrowers gain | |
| 136. |
Which people are most likely to gain during inflation? |
| A. | Those living on pension |
| B. | Those living on their savings |
| C. | Those who are repaying borrowed money |
| D. | Those who have lent money |
| Answer» C. Those who are repaying borrowed money | |
| 137. |
Inflation leads to |
| A. | Distribution of income equal |
| B. | Distribution of income unequal |
| C. | No effect on distribution of income |
| D. | Affects only industrial sector |
| Answer» B. Distribution of income unequal | |
| 138. |
Inflation in an under-developed economy generally sets in |
| A. | Before the point of full employment |
| B. | After the point of full employment |
| C. | At the point of full employment level |
| D. | All of the above |
| Answer» A. Before the point of full employment | |
| 139. |
Which of the following measure is adopted to reduce inflation? |
| A. | Reduction in bank rate |
| B. | Reduction in Repo rate |
| C. | Increase in government expenditure |
| D. | Cuts in government spending |
| Answer» D. Cuts in government spending | |
| 140. |
According to the monetarists, inflation is caused by |
| A. | Supply shocks |
| B. | Expansionary fiscal policies |
| C. | Expansionary monetary policies |
| D. | Government regulations |
| Answer» C. Expansionary monetary policies | |
| 141. |
Theoretically, one can distinguish a demand- pull inflation from a cost-push inflation by comparing |
| A. | How fast prices rise relative to wages |
| B. | The unemployment rate with its natural rate level |
| C. | When prices rise relative to wages |
| D. | None of the above |
| Answer» B. The unemployment rate with its natural rate level | |
| 142. |
Demand-pull inflation arises when |
| A. | Policymakers set a very high unemployment target |
| B. | A persistent budget deficit is financed by money creation |
| C. | The deficit is financed by selling bonds to the public |
| D. | All of the above |
| Answer» B. A persistent budget deficit is financed by money creation | |
| 143. |
Government may pursue inflationary monetary policies |
| A. | To promote high employment |
| B. | To accommodate demands of workers for higher wages |
| C. | To finance a persistent budget deficit |
| D. | All of the above |
| Answer» D. All of the above | |
| 144. |
Governments may end up with a high money growth rate and high inflation as a result of policies designed to |
| A. | Lower unemployment |
| B. | Finance persistent government budget deficits through money creation rather than by issuing bonds |
| C. | Redistribute wealth from debtors to creditors |
| D. | Both ( a) and (b |
| Answer» D. Both ( a) and (b | |
| 145. |
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 of the above |
| Answer» D. All of the above | |
| 146. |
Which of the following can be undertaken to control inflation? |
| A. | Control on public expenditure |
| B. | Control on hoarding and black-marketing |
| C. | Effective control on credit |
| D. | All of the above |
| Answer» D. All of the above | |
| 147. |
Which of the following is phenomenon that leads to Hyperinflation? |
| A. | It is a situation when aggregate demand in an economy outpaces aggregate supply |
| B. | It is a situation of persistent rise in inflation along with dip in growth and increase in unemployment |
| C. | It is a situation caused by an increase in prices of inputs like labour, raw material etc |
| D. | It is a situation when a nation experiences very high and accelerating inflation |
| Answer» D. It is a situation when a nation experiences very high and accelerating inflation | |
| 148. |
Inflationary gap said to exist when |
| A. | Real GDP >Potential GDP |
| B. | Real GDP <Potential GDP |
| C. | Real GDP= Potential GDP |
| D. | Unemployment rate> natural rate of unemployment |
| Answer» A. Real GDP >Potential GDP | |
| 149. |
Phillip’s curve shows the relationship between the rate of |
| A. | Unemployment and output growth |
| B. | unemploymentand increase in money wages |
| C. | Employment and inflation |
| D. | All of the above |
| Answer» B. unemploymentand increase in money wages | |
| 150. |
According to Phillips curve unemployment will return to the natural rate when: |
| A. | Nominal wages are equal to expected wages |
| B. | Real wages are back at equilibrium level |
| C. | Nominal wages are growing faster than inflation |
| D. | Inflation is higher than the growth of nominal wages |
| Answer» B. Real wages are back at equilibrium level | |
Done Studing? Take A Test.
Great job completing your study session! Now it's time to put your knowledge to the test. Challenge yourself, see how much you've learned, and identify areas for improvement. Don’t worry, this is all part of the journey to mastery. Ready for the next step? Take a quiz to solidify what you've just studied.