Civil Economics Objectives

UGC NET ECONOMICS OBJECTIVES QUESTIONS
1. (a) A, B and C (b) B and C (c) A and C (d) A and B Ans. (d) 3. Match List I (Market Type) with List-II (Implication) and select the correct answer using the codes given below the lists: List-I List-II The shift in the SS curve to SS is due to an imposition of a tax. Which of the following areas in the diagram shows excess burden of the tax? (a) ODIY (b) SDA (c) FGA (d) CAD Ans. (c) 2. Consider the following statements: A. The number of firms is large both under perfect competition and monopolistic competition. B. There is freedom of entry and exit in both perfect competition and monopolistic competition. C. In both perfect competition and monopolistic competition, every firm is a price taker and quantity adjuster. Which of the statements given above are correct? (Market Type) (Implication) A. Perfect competition 1. Collusion of firms B. Monopoly 2. Excess capacity C. Monopolistic competition Uniform price D. Oligopoly 4. Blocked entry Code: (a) A and C ABCD (b) A and B (a) 2 4 3 1 (c) A only (b) 3 1 2 4 (d) B only (c) 2 1 3 4 Ans. (b) (d) 3 4 2 1 Ans. (d) 6. Which of the following is not a necessary condition of perfect competition? 4. In the Kinked Demand Curve Model, suppose MC curve shifts upward in the discontinuous range of MR curve. Which one of the following is correct? At equilibrium, (a) price rises but quantity remains the same (b) price and quantity both remain the same (c) quantify rises but price remains the same (d) price and quantity both rise Ans. (b) 5. Consider the following statements: Short run profit is maximum under perfect competition when A. second order condition is satisfied. B. MC curve cuts MR curve from below. C. MC curve cuts MR curve from above. Which of the statements given above is/are correct?
3.
ASSISTANT PROF. SACHIDANANDA SAHOO, IIIT, BBSR

(a) Large number of firms in the industry producing homogeneous products (b) Free entry and free exit of firms (c) Need for incurring selling costs to attract consumers (d) Absence of artificial restrictions by the government Ans. (c) 7. Consider the following statements: A. The shape of a unitary elastic demand curve is a rectangular hyperbola. B. The shape of a perfectly elastic demand curve is a rectangular hyperbola. C. Perfectly inelastic demand curve is parallel to the price axis. D. Perfectly elastic demand curve is parallel to the quantity axis. Which of the statements given above are correct? (a) A and B (b) A, C and D (c) B and C (d) B and D Ans (b) 8. Which one of the following statements is correct? A straight line demand curve (cutting both the axis) is elastic (a) throughout the length of the demand curve (b) at the mid-point (c) below the mid-point towards the demand axis (d) above the mid-point towards the price axis Ans. (d) 9. Under perfect competition, supply curve is identified as which one of the following? (a) Rising portion of marginal cost curve (b) Rising portion of average total cost curve (c) Rising portion of average variable cost curve (d) Portion of marginal cost above the average variable cost curve Ans. (d) (a) Costs of raw materials 10. Which one of the following is the correct sequence of magnitude of minima in ascending order in marginal cost (MC) curve, average cost (AC) curve and average variable cost (AVC) curve? (a) MC, AVC, AC (b) AVC, AC, MC (c) MC, AC. AVC (d) AC, MC, AVC Ans. (a) 11. Consider the following statements: (b) Salaries of the managerial staff (c) Wages of labour engaged on daily basis (d) Cost of fuel for operating machines engaged in production. Ans. (c) 13. Suppose a fisherman has a fishing net and a boat. He alone hunts fish in sea for which he has to pay no license fee etc. Fish, caught by him, will have which one of the following? A. The vertical distance from average cost (AC) curve to average variable cost (%&VC) curve is average fixed cost (AEC). B. AVC curve, AC curve and marginal cost (MC) curve are U shaped. C. AFC curve is horizontal to X axis. Which of the statements given above are correct? (a) 1 and 2 (b) 2 and 3 (c) 1 and 3 (d) 1, 2 and 3 Ans. (a) 12. Short-run marginal cost of a firm does not contain any element of which of the following?

(a) Zero economic cost of production as he makes no outof-pocket payment to anybody and is working of his own (b) Negative economic cost of production because he enjoys fishing and has to make no payment (c) Positive cost of production due to his sacrificing the opportunity of working elsewhere and renting out fishing net and boat etc (d) Infinite cost of production Ans. (a) 14. Income consumption line of the Consumer Theory is analogous in Production Theory to which one of the following? (a) Expansion path (b) Isoquant line (c) Ridge line (d) Isocost line Ans. (a) 15. Which of the following is not correct in respect of CobbDouglas production function? (a) It was originally based on the empirical study of US manufacturing industry. (b) It is a linearly homogeneous production function, taking into account two factors, labour and capital, for the entire output of the manufacturing industry. (c) It tells us that output depends upon labour and capital, and that part of output which cannot be According to the law of variable proportions; total product is maximum when A. marginal product becomes zero. B. marginal product curve cuts average product curve from above. C. slope of marginal product curve is zero. D. tangent of the total product curve is parallel to the horizontal axis. (b)Y changes but X remains the same (c) X changes but Y remains the same (d) X and Y both change necessarily by different proportion Ans. (a) 17. Consider the following statements: explained by labour and capital, is attributed to the residual. (d) It is based on the assumption of operation of law of diminishing returns. Ans. (d) 16. Which one of the following statements is correct? If the elasticity of substitution between two factors X and Y be zero, then it implies that for a given change in outputs, (a) X and Y will always change by the same proportion Which of the statements given above are correct? (a) A and D (b) C and D (c) A and C (d) B and C Ans. (c) 18. Assertion (A): The monopolist never operates on the portion of the demand curve which is inelastic. Reason (R) When elasticity of demand is less than unity MR is negative. Ans (a) 19. Assertion (A): The Revealed Preference Hypothesis excludes the study of Giffin Paradox Reason (R) Revealed Preference Hypothesis considers only negative income elasticity of demand whereas Giffin Paradox relates to positive elasticity of demand. Ans. (c) 20. Assertion (A): Indifference curve for perfect substitute goods is a downward sloping straight line. Reason (R): For perfect substitute goods, MRS is falling. Ans. (a) 21. Assertion (A): There is no excess capacity under monopolistic competition in the long run. Reason (R): The demand curve under monopolistic competition is downward sloping. Ans. (d)

22. Assertion (A): M curve lies below the VMP curve under imperfect competition. Reason (R): Under imperfect competition MR < P. Ans. (a) 23. Which of the following statements about Pareto Optimum are correct? A. It changes with changes in the distribution of income. B. At the Pareto Optimum, MRS in consumption = MRT in production. C. It is not unique. D. It is obtained under imperfect competition. Select the correct answer using the codes given below: (a) A and B (b) A, B and C (c) A, C and D (d) B and C Ans. (b) 24. Match List- I (Economist) with List -II (Concept) and select the correct answer using the codes given below the lists: List- I List -II (Economist) (Concept) A. Pareto Compensation Principle 1. (c) the stage I for land and stage III for labour (d) the stage I for labour and stage III for land Ans. (b) 26. Which one of the following statements is correct? The Engel Curve for Giffen goods is (a) positively sloped B. Hicks-Kaldor Social Welfare Function C. Bergson Social Optimum 2. (b) negatively sloped (c) vertical 3. (d) horizontal Ans. (b) 27. Which one of the following statements is correct? According to the classical economists, the existence of unemployment at any time is only of temporary nature and can be considered as (a) structural unemployment (b) cyclical unemployment (c) frictional unemployment (d) disguised unemployment Ans. (c) 28. Which one of the following statements is correct? Creeping inflation is a situation in which the rate at which price level rises is: (a) very high (b) the stage II for land and labour (b) high (c) moderately high (d) slow Ans. (d) 29. Which of the following groups are adversely affected by inflation? A. Wage earners in the informal sector. B. Profit earners.
D. Scitovsky 4. Double Criterion Compensation Code: A BCD (a) 3 1 2 4 (b) 2 4 3 1 (c) 3 4 2 1 (d) 2 1 3 4 Ans. (a) 25. Which one of the following statements is correct? In a production process with two factors, land and labour, if the marginal productivity of land is negative, then it is in (a) the stage I for land and stage II for labour

C. Salary earners with salaries indexed to inflation D. Pensioners with fixed pensions. Select the correct answer using the codes given below: (a) A and B (b) C and D (c) A and D (d) B and C Ans. (a) 30. Which one of the following is a qualitative credit control method? (a) Open market operations (b) Bank-rate (c) Variable cash reserve ratio (d) Moral suasion Ans. (d) 31. What kind of change is to be made in (i) Cash reserve ratio, and (ii) Bank rate, to control inflation? (a) (i) should increase but (ii) should decrease (b) (ii) should increase but (ii) should decrease (c) Both should increase (d) Both should decrease Ans. (c) 32. Which one of the following pairs is called an open market operation? (a) Selling and buying of securities or bills by the central bank (b) Selling and buying of foreign exchange (c) Selling and buying of shares by the foreign institutional investors (d) Selling and buying of gold in the open market by commercial banks Ans. (a) 33. The money multiplier in an economy increases with which one of the following? (a) Increase in the cash reserve ratio (b) Increase in the statutory liquidity ratio (c) Increase in the banking habit of the population (d) Increase in the population of the country Ans. (c) 34. In the context of the figure above which of the following statements is/are correct? A. Investment is autonomous. B. Saving is autonomous. C. Investment is dependent on income. D Saving is dependent on income. Select the correct answer using the codes given below: (a) B and C (b) A and D (c) B only (d) A only Ans. (b) 35. consider the following consumption saving functions: A. C = 200+0.8Y B. S = 200+0.2Y C. C = 150+0.8Y D. S = -150+0.2Y Which of the above are consistent pairs of functions? (a) A and B (b) A and D (c) B and C (d) C and D Ans. (d)

36. There are 2 assets A and B in which one can invest his savings of Rs. 1,000/. Assume that there is no risk and interest rate is 10%. Asset A gives a return of Rs. 100/- in perpetuity Asset B gives Rs. 200/. at the end of year 1 and Rs. 900/- at-the end of the year 2. Which one of the following statements is correct? (a) Present value of A and B are the same. (b) Present value of B is higher than that of A. (c) Present value of A is higher than that of B. (d) Information is inadequate to determine the present value of A and B Ans. (c) 37. Which one of the following statements is correct? Value of output and value-added can be distinguished if we know (a) the value of intermediate inputs (b) the value of net indirect taxes (c) the value of imports (d) the value of consumption of fixed capital Ans. (a) 38. Given: % Change in nominal GNP = 1.8 D. Wealth effect J.M. Keynes Code: ABCD (a) 4 3 1 2 4. % change in population = 0.5 % change in price level = 1.3 What is the approximate percentage change in real per -capita GNP? (a) Zero (b) 0.5 (c) 1.0 (d) 1.3 Ans. (a) 39. Match List- I (Concept) with List -II (Economist) and select the correct answer using the codes given below the lists: List I List II (Concept) (Ec onomist) A. Liquidity trap Friedman B. Demonstration effect Pigou 41. Approach paper to 11th five plan, issued by the Planning Commission refers to the merger of which one of the following pairs of government programmes? (a) Sarva Shiksha Abhiyan with Mid-day Meal Programme (b) Jawahar Rojgar Yojana with Mid-day Meal Programme (c) Sarva Shiksha Abhiyan with National Rural Employment Guarantee Programme (d) Shram Shakti Yojana with Jawahar Rojgar Yojana Ans. (a) 42. Which one of the following statements is correct? J.M. (b) deduct income taxes and deduct transfer payments (c) add income taxes and add transfer payments (d) add income taxes and deduct transfer payments Ans. (a) To derive disposable income from national income, one has to (a) deduct income taxes and add transfer payments. (b) 1 2 4 3 (c) 4 2 1 3 (d) 1 3 4 2 Ans. (a) 40. Which one of the following statements is correct?
1. M.
2. A.C.
C. Permanent income hypothesis 3. J. Duesenberry

Keynes assumed that supply of money as a function of rate of interest is (a) perfect elastic (b) highly elastic (c) unitary elastic (d) perfectly inelastic Ans. (a) 43. Who developed the Time Preference Theory of interest? (a) Irving Fisher (b) N. Senior (c) J.R. Hicks (d) J.M. Keynes Ans. (a) 44. (c) Excess supply in both goods and money market (d) Excess demand in both goods and money market Ans. (b) 45. Which one of the following is the most important determinant of speculative demand for money? (a) Income (b) Interest rate (c) Profits (d) Prices Ans. (d) Ans. (b) 46. Which one of the following equations was used by Fischer to exp the Quantity Theory of Money ? (Symbols have their usual meanings) (a) MV= PT (b) MP = VT (c) MP = PT (d) PV = MT Ans. (a) In the graph given above, what does the point B indicate? (a) Excess supply in the goods market and excess demand in the money market (b) Excess demand in the goods market and excess supply in the money market 47. If Y is the total money income of the community M is the money supply and P is the price level, than how is Vy (The income velocity of money) defined as? (a) Vy = M/Y (b) Vy = Y/M (b) Octroi at cheek points on roads. 49. There are a number of banks in a market. The initial total primary deposit is Rs. 1,000. Every bank is required to maintain a 10% reserve legally The transactions are completely made through cheque and no transaction is made in cash. W1{at will be the total credit creation in the market? (a) Rs. 1,000 (b) Rs 5,000 (c) Rs. 10,000 (d) None of these Ans. (c) 50. Which one of the following is a source of non-tax revenue for governments? (a) Import duty on cars (c) Vy = Y/ (MP) (d) Vy = PY/M Ans. (d) 48. When shall an increase in money supply have a small effect on nominal Gross Domestic Product? (a) If the velocity is decreasing (b) If the velocity is unchanged (c) If the velocity is increasing (d) If the Government spending is also increasing

(c) Entrance fee to museums, (d) Excise duty or beverages Ans. (c) UPSC Economics MCQ Quiz MCQ Quiz : Indias Economy Economics (Solved) UPSC Civil Services: Economics Prelims Papers est based on Past Exams Questions UPSC Economics MCQ Quiz 1. What does infant mortality rate refer to? (a) The ratio of number of children who die before their fifth birthday out of every 1000 live births (b) The ratio of number of children who die before their first birthday out of every 100 live births (c) The ratio of number of children who die before their fifth birthday out of every 100 live births (d) The ratio of number of children who die before their first birthday out of everyl000 live births Ans. (d) 2. Which among the following is not a committed expenditure of the Government of India? (a) Interest payments (b) Pay and allowances (c) Transfers to States and Union Territories (d) Loans and advances to States and Union Territories Ans. (d) 3. Consider the following statements: A. Annual Survey of Industries (ASI) extends to the entire country B. ASI covers all factories registered under Sections 2m (i) and 2m (ii) of the Factories Act 1948. Which of the statements given above is/are correct? (a) A only (b) B only (c) Both A and B (d) Neither A nor B Ans. (b) 4. Who was the Chairman of the committee appointed in 2006 for setting out a roadmap towards fuller capital account convertibility? (a) S.S. Tarapore (c) C. Rangarajan (d) M. Narasimham (d) O.P. Sodhani Ans. (a) 5. In which of the following years, was the trade balance favorable to India? (a) 1970-71 and 1974-75 (b) 1972-73 and 1976-77 (c) 1972-73 and 1975-76 (d) 1971-72 and 1976-77 Ans. (b) 6. Consider the following statements: A. The Fifth Economic Census was conducted by CSO in the year 2007. B. Intelligent Character Recognition (ICR) technology is being used for detailed processing of the data collected in the Fifth Economic Census. Which of the statements given above is/are correct? (a) A only (b) B only (c) Both A and B (d) Neither A nor B Ans. (b) 7. During which of the following years, average growth/rate (at constant prices) of agriculture and allied sectors negative? (a) 2002-03 (b) 2003-04 (c) 2005-06 (d) 2006-07 Ans. (a) 8. Which of the following are the goals of Santa Shiksha Abhiyan (SSA)? A. All children of 6-14 years age in school/EGS (Education Guarantee Scheme) Centre/bridge course by the year 2015. B. Bridge all gender and social category gaps at primary stage by the year 2007 and at elementary education level by the year 2010. C. Universal retention by the year 2020. Select the correct answer using the codes given below: (a) A and B (b) B and C (c) A and C (d) A, B and C Ans. (a) 9. Consider the following: A. Kennedy Round of negotiations. B. Uruguay Round of negotiations. C. Tokyo Round of negotiations. Which is the correct chronological sequence of the above? (a) A, B, C (b) C, A, B (c) A, C, B (d) B, A, C Ans. (a) 10. Why is demographic dividend likely to be manifested in India in future? (a) Population in the age group between 8-15 years is likely to increase (b) Population of children below 7 years is likely to increase (c) Population in the age group of 15-64 years is likely to increase (d) Population in the age group above 65 years is likely to increase Ans. (c) 11. Which one of the following is not the target stipulated in the Tenth Five-Year Plan? (a) Creating 50 million job

opportunities (b) Reduction in poverty ratio from 26 percent to 21 percent (c) Reducing gender gaps in literacy and wages rates by 50 percent (d) Doubling per capita income in 8 years Ans. (d) 12. Consider the following items which are assigned weight in calculating wholesale price index in India 1. Primary articles 2. Fuel, power light and lubricants 3. Food products 4. Chemicals and chemical products Which one of the following is the correct order of the above items in descending order in terms of their weight in the price index? (a) 1-2-3-4 (b) 1-2-4-3 (c) 4-3-2-1 (d) 1-3-2-4 Ans. (b) 113. Consider the following components of financial saving of the household sector in India 1. Currency 2. Deposits 3. Shares and debentures 4. Insurance funds Which one of the following is the correct order of the aforesaid items in descending order in terms of their contribution to the financial saving of the household sector in the year 2005-06? (a) 1-2-3-4 (b) 2-1-3-4 (c) 2-4-1-3 (d) 4-2-l-3 Ans. (b) 14. What is the approximate share of SSIs in gross industrial value added in the Indian economy? (a) 25% (b) 30% (c) 40% (d) 45% Ans. (d) 15.Consider the following sectors, contributing to Indias real GDP during the year 200506: 1. Agriculture and allied activities 2. Industry 3. Construction 4. Community social and personal services Which one of the following is the correct descending order in respect of their contribution? (a) 1-4-3-2 . (b) 1-2-4-3 (c) 3-4-2-1 (d) 3-2-1-4 Ans. (c) 16. The 12th Finance Commission has recommended to bring down the revenue deficit of the centre and states to zero by which year? (a) 2006- 07 (b) 2007- 08 (c) 2008- 09 (d) 2009 -10 Ans. (c) 17. In which of the following years, the share of FIL (net) flows into Indian economy was the highest? (a) 1999-2000 (b) 2000-01 (c) 2003-04 (d) 2004-05 Ans. (d) 18. Among different items of import of capital goods to India during the year 2005-06, which one of the following was the highest in the value terms ? (a) Machine tools (b) Electronic goods including computer software (c) Transport equipments (d) Project goods Ans. (a) 19. Among the items of export of agricultural and allied products from India during the year 200506, which one of the following was the highest in the value (a) Tea (b Coffee (c) Rice (d) Marine products Ans. (c) 20. Consider the follow important sources of tax revenue for the Central Government 1. Corporation tax 2. Taxes on income other than corporation tax 3. Union excise duties 4. Service tax Which one of the following is the correct order of the aforesaid taxes in descending order in terms of their yield as proposed in the Union Budget 2006-07? (a) 1-2-3-4 (b) 1-3-2-4 (c) 2-3-1-4 (d) 4-2-3-1 Ans. (b) 21. The Twelfth Finance Commission has recommended States share in the divisible pool of taxes at what percentage? (a) 26.5 percent (b) 28.5 percent (c) 29.5 percent (d) 303 percent Ans. (c) 22. Consider the following statements about the National Agricultural Insurance Scheme (NAIS): 1. The scheme has been implemented from Rabi 19992000 season. 2. The scheme is availab1a nonloanee farmers only. Which of the statements given above is/are correct? (a) 1 only (b) 2 only (c) Both 1 and 2

(c Neither 1 nor 2 Ans. (a) 23. In the total deployment of gross bank credit, which one of the following sectors had the maximum share as in March, 2006? (a) Agriculture and allied activities (b) Services (c) Personal loan (d) Trade Ans. (a) 24. As per use-based classification, which one of the following sectors had recorded highest growth in the year 200506? (a) Basic goods (b) Capital goods (c) Consumer goods (d) Intermediate goods Ans. (b) 25. In which one of the following years, the National Food Processing Policy was formulated? (a) 2003 (b) 2004 (c) 2005 (d) 2006 Ans. (c) 26. Consider the following statements: Accelerated Irrigation Benefit Programme (AIBP) was modified in the year 2004 to provide 1. the central assistance in the form of 70 percent loan and 30 percent grant for non-special category states. 2. the central assistance in the form of 10 percent loan and 90 percent grant for special category states. 3. the central assistance in the form of conversion of the loan to grant if projects are completed on schedule. Which of the statements given above is/are correct? (a) 1 only (b) 1 and 3 (c) 2 and 3 (d) 1, 2 and 3 Ans. (d) 27. The Command Area Development Programme (CADP) has been renamed as which one of the following? (a) Command Area Development and Water Management Programme (b) Command Area Development and Forest Conservation Programme (c) Command Area Development and Pollution Control Programme (d) None of the above Ans. (a) 28. Consider the following statements: A. The coverage of Integrated Child Development Programme is limited and often the youngest children in the 0-3 year age group get left out of its ambit. B. According to ICMR, at any given time, 7-15% of Indian children suffer from mental disorder Which of the statements given above is/are correct? (a) A only (b) B only (c) Both A and B (d) Neither A nor B Ans. (b) 29. Which group of infrastructure industry has the highest gap in targets and achievements of production during the year 200607? (a) Fished Steel (b) Crude Petroleum (c) Power (d) Fertilizers Ans. (a) 30. The National Horticulture Mission (NHM) has aimed at doubling the horticultural production. For this, the target year is (a) 2010 (b) 2011 (c) 2012 (d) 2015 Ans. (c) 31 Consider the following agreements: A. ISLFTA. (India -Sri Lanka Free Trade Agreement). B. SAFTA (South Asia Free Trade Area). C. CECA (Comprehensive Economic Co-operation Agreement between India and Singapore). D. SAPTA (South Asia Preferential Trade Area). Which one of the following is the correct chronological sequence of the above agreements? (a) A, C, B, D (b) D, A, B, C (c) B, A, D, C (d) A, B, C, D Ans. (a) 32. Which region of India has the lowest Thermal Plant Load Factor (PLF) for thermal power generation in the year 2006-207? (a) Northern (b) Western (c) North-Eastern (d) Southern Ans. (c) 33. Consider the following statements: A. Varsha Bima, the rainfall insurance scheme, is managed by the Agricultural Insurance Company of India Ltd. (ATCIL). B. The scheme was introduced during the 2007 south-west monsoon period. Which of the statements given above is/are correct? (a) A only (b) B only (c) Both A and B (d) Neither A nor B Ans. (a)
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34. Thx on Banking Cash Transactions (withdrawals) over a certain threshold in a single day w introduced in the Union Budget of which year? (a) 2002-03 (b) 2004-05 (c) 2005-06 (d) 2006-07 Ans. (c) 35. Who among the following has suggested migration to accrual accounting system from cash based accounting system in India? (a) I.V. Reddy (b) R.H. Patil (c) D.N. Ghosh (d) C. Rangarajan Ans. (c) 36. In which of the following years was the tax revenue as a percentage of GDP the lowest? (a) 2002-03 (b) 2003-04 (c) 2004-05 (d) 2005-06 Ans. (a) 37. Which one of the following is the proportion of rain-fed agriculture to the net sown area in India? (a) 40% (b) 50% (c) 60% (d) 72% Ans. (a) 38. Consider the following statements about industrial relations on the basis of Economic Survey: A. There was a constant decline in the number of strikes and lockouts during 2000-OS in India. B. The maximum number of strikes and lockouts in the year 2006 were experienced by Kerala, followed by Tamil Nadu and West Bengal. Which of the statements given above is/are correct? (a) A only (b) B only (c) Both A and B (d) Neither A nor B Ans. (a) 39. What is a strategy which makes an all-out effort to provide the masses of people in India access to basic facilities such as health, education, clean drinking water, etc., termed as? (a) Inclusive growth strategy (b) Exclusive growth strategy (c) Rapid growth strategy (d) Balanced growth strategy Ans. (a) 40. Which of the following sectors has the largest percentage share in Indias total exports for the period April 2006 October 2007? (a) Chemicals and related goods (b) Engineering goods (c) Gems and jewellery (d) Textiles including readymade garments Ans. (b) 41. It Which sector has attracted highest FDI inflows during the period from August 1991 to September2006 (in % share)? (a) Services sector (b) Electrical equipments (c) Telecommunications (d) Transportation industry Ans. (b) 42. Which one of the following statements is correct? (a) External Debt / GDP ratio has declined consistently after the year 2003 (b) External Debt / GDP ratio has fluctuated after the year 2003 (c) External Debt/GOP ratio has increased after the year 2003 (d) External Debt/GDP ratio has remained constant after the year 2003 Ans (a) 43. NSSO regularly collects rural retail prices on monthly basis from selected markets for compilation of Consumer Price Index Number. Which one of the following is the correct pair of samples collected for the purpose? (a) 403 villages and 39 urban centers (b) 503 villages and 49 urban centers (c) 603 villages and 59 urban centers (d) 703 villages and 69 urban centers Ans. (c) 44. Which one of the following is not proposed in the approach paper to the 11th Five Year Plan as important new social interventions? (a) Provide freedom and resources to select institutions so that they attain global standards by the year 2011-12. (b) Grant old age pension to the widows, handicapped and deserted and separated women. (c) Ensure adequate representation of women in elected bodies, State Legislatures, and the Parliament. (d) Provide emergency obstetrics care facilities within 2 hours travel from every habitat. Ans. (d) 45. Which of th following statements pertaining to the strategy to raise agricultural output during the 11th Five Year Plan, are correct? A. Double the rate of growth of irrigated area. B. Improve water management, rain water harvesting and watershed development. C. Provide easy access to credit at affordable rates. Select the correct answer using the codes given below: (a) A and B (b) B and C
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(c) A and C (d) A, B and C Ans. (a) 46.. With one area of infrastructure is not included in Bharat Nirman Scheme (200509)? (a) Irrigation (b) Rural roads (c) Rural health (d) Rural housing Ans. (c) 47. Which of the following is/are not monitorable target(s) for the 11th Five Year Plan? A. Accelerate growth rate of GDP to 10% by the end of the plan and then maintain it in the 12th Five Year Plan. B. Double per capita income by 201647. C. Create 20 million new work opportunities. Select the correct answer using the codes given below: (a) A only (b) B only (c) C only (d) B and C Ans. (c) PSC Economics Solved Questions For prelims Economics For UPSC IAS Prelims Exam Economics Objective Solved papers MCQ Online Economics Test 1. Prebisch-Singer thesis enunciates which of the following? 1. International trade has been operating as a mechanism of international inequalities and has, therefore, retarded the development of less developed countries. 2. The strategy of import substitution as a means to achieve self-sufficiency in industrial production, has led to ma! allocation of resources and a very bad effect on industrial productivity. Select the correct answer by using the code given below (a) l only Ans. (d) (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2 Ans. (a) 2. If the supply of a commodity is very inelastic in the exporting country and demand for the same is fairly elastic in the importing country, the imposition of tariff will have which one of the following? (a) A very large protective effect (b) No protective effect at all (c) A very large revenue effect (a) External assistance (d) A very small protective effect (b) Foreign direct investment Ans. (a) (c) Borrowing from the IMF 3. If an Indian exporter exports to Bangladesh Rs. 50,000 worth of goods payable in three months, the balance of payment for India will show which one of the following? (a) Current account credit goes up and capital account debit also goes up by Rs. 50,000 each (b) Current account credit goes down and capital account debit goes up by Rs. 50,000 each (d) Commercial borrowings Ans. (b) 6. Exchange rates are kept same in all the parts of market by using which one of the following? (a) SDRs (b) Arbitrage (c) Fledging (d) Speculation 5. Which one of the following is considered as non-debt creating foreign investment inflow? 4. Devaluation makes Balance of Payments worse in the short-run and then improves it in the longrun. What is this phenomenon known as? (a) Marshall -Lerner condition (b) J-curve effect (c) Money illusion effect (d) Backwash effect Ans. (b) (c) Current account credit goes down and capital account debit also goes down by Rs. 50,000 each (d) Current account credit goes up and capital account debit goes down by Rs. 50,000 each
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Ans. (b) 7. An over-valued currency in the foreign exchange market will have which one of the following impacts in India? (a) Make imports costlier and exports cheaper (b) Will ha4e no effect on cost of imports (c) Give protection to domestic industry against foreign competition (d) Make imports cheaper and exports costlier Ans. (d) 8. The inflationary impact of the inflow of foreign capital in India is neutralized by the Reserve Bank of India by which one of the following methods? (a) Permitting outflow of foreign exchange (b) Sale of securities in the open market (c) Facilitating imports of essential commodities (d) Permitting depreciation of Indian rupee in the foreign exchange market Ans. (b) 9. Which one of the following is the correct sequence in the process of economic integration between different countries? (a) Common marketFree trade areaCustom union Economic union (b) Free trade areaCustom unionCommon market Economic union (c) Free trade areaCommon marketCustom union Economic union (d) Common marketFree trade areaEconomic union Custom union Ans. (b) 10. Under Gold Standard, how can a surplus in a countrys balance of payments be eliminated? (a) By inflow of gold and a rise in general price level (b) By outflow of gold and a rise in general price level (c) By inflow of gold and a fall in general price level (d) By outflow of gold and a fall in general price level Ans. {d) 11. Which one of the following governs the theory which brings parity with respect to convertibility of currency into gold content? (a) Mint parity of exchange (b) Special Drawing Rights (c) Floating exchange rate (d) Multiple exchange rate Ans. (a) 12. In order to reduce the balance of payment deficits of the member countries, which one of the following schemes was introduced by the World Bank in 1980? (a) Buffer stock loans (b) Supplementary loans (c) Structural adjustment loans (d) Gold loans Ans. (c) 13. Special Drawing Rights (SDRs) introduced by the IMP are in which form? (a) Gold (b) Both silver and gold (c) Paper currency (d) Book-keeping entry only Ans. (d) 14. Which one of the following does not constitute a part of the jurisdiction of WTO? (a) Trade related tariff and nontariff barriers (b) Trade related intellectual property rights (c) Agreement related to agriculture (d) Regional trade agreements Ans. (d) 15. Assertion (A) A balance of payments deficit is always and every where a monetary phenomenon.
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Reason (R): A balance of payments deficit cannot be corrected through changes in money supply Codes: (a) Both A and R are individually true and R is the correct explanation of A (b) Both A and R are individually true but R is not the correct explanation of A (c) A is true but R is false (d) A is false but R is true Ans. (c) 16. Which one of the following is not a component of foreign aid of a country? (a) Bilateral grant (b) Multilateral grant (c) Loans from international financial institutions (d) Commercial borrowing Ans. (d) 17. What is the assumption that economic growth will percolate down to all sectors, known as? (a) Dispersal theory (b) Trickle down theory (c) Pump priming (d) Decentralized growth theory Ans. (b) 18. In plan models, which type of model is generally used to check consistency among various sectors? (a) Harrod -Domar model (a) Land (b) Input-output model (b) Labour (c) Linear programming model (c) Capital (d) Solow model (d) Organisation Ans (b) Ans. (b) 19. Consider the following A dual economy implies 1. the existence of domestic and export markets. 2. modern industry and commercial agriculture coexisting with subsistence farming and traditional handicrafts. Which of the statements given above is/are correct? (a) 1 only (b) 2 only (c) Both 1 and 2 Ans. (a) (d) Neither 1 nor 2 Ans. (b) 20. Theory of linkages is most appropriate for which kind of development models? (a) Balanced growth models (b) Unbalanced growth models (c) Population growth models (d) One sector growth models Ans. (b) 23. Inverted-U hypothesis of Kuznets is associated with movement of which one of the following? (a) Consumption inequality (b) Wealth inequality (c) Income inequality (d) Tax inequality Ans. (c) 24. Match List-I with List-II and select the correct answer by using the code given below the lists: 22. Which one of the following is the correct expression for the actual rate of growth (g)? (a) g = s/c (b) g = s x c (c) g = s + c (d) g = Where s = the ratio of saving to income c = actual incremental capitaloutput ratio 21. With which one of the following is backward bending supply curve usually associated.
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List-I List -II Ans. (b) (Model) (Proposition) A. Marxist model of economic development 1.Give importance to non-economic variables B. Harrod-Domar growth model 2. Flexible capital-output ratio is assumed C. Solows growth model 3. Productive capacity is equal to aggregate demand D. Kaldors growth model 4. Structural Mal adjustment in a growing economy 1. Electrical Equipments Code: 2. Service Sector ABCD 3. Food Processing Industries (a) 4 2 3 1 4. Metallurgical Industries (b) 1 3 2 4 (c) 4 3 2 1 (d) 1 2 3 4 Ans. (c) 25. Which one of the following is a component of disequilibrium mentioned often in the context of trade and development? (a) Revenue gap Ans. (a) (b) Savings-investment gap (c) Income gap Which one of the following is the correct sequence in ascending order in terms of their share in attracting FDI inflows in India? (a) 4-3-2-1 (b) 1-2-3-4 (c) 2-1-3-4 (d) 1-2-4-3 (c) A condition on which the past conditions of an individual or economy affects future condition (d) A slow path of progress of the economy Ans. (c) 30. What are the sufficient conditions for operation of stage theories of growth? 1. Well-integrated commodity and money markets. 2. Highly developed transport facilities 3. Well-trained workforce and an efficient bureaucracy 4. Existence of a federal structure. 26. The Feldman Mahalanobis growth model, which one of the following strategies is followed? (a) Emphasize the consumer goods first and then the investment goods (b) Emphasize the investment goods first and consumer goods later (c) Emphasize both the above sectors simultaneously (d) Put emphasis on foreign trade only Ans. (c) 27. Consider the following sectors: (a) Labour productivity depends on level of nutrition (b) Labour productivity is independent of number of labourers (c) Capital productivity is maximum (d) Capital and labour productivities are equal Ans. (b) 29. How is Path dependency defined as? (a) A condition of the past affecting the past situation (b) A comparatively fast path of progress of economy (d) Expenditure gap 28. What is the major underlying assumption of efficiency wage models?
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Select the correct answer by using the codes given below (a) 1, 2, and 4 (b) 2, 3, and 4 (c) 1, 3, and 4 (c) 1, 2, and 3 Ans. (d) 31. What is the correct sequence of the Marxian stage theory of growth? 1. Slavery 2. Primitive Communism 3. Socialism 4. Communism 5. Feudalism 6. Capitalism Select the correct answer by using the codes given below (a) 123456 (b) 215634 (c) 12563-4 (d) 215643 Ans. (b) 32. Capital fundamentalism refers to which one of the following? (a) Capital structure of a country (b) Accelerated capital accumulation for development (c) A capitalistic system of economy (d) Growth of capital expenditure Ans. (b) 33. To make meaningful international comparisons of income and living standards, which one of the following is most appropriate? (a) A measure of purchasing power parity (b) A measure of per capita income (c) An index of poverty (d) An index of infrastructure development Ans. (a) 34. If the Paasches index is 196 and Fishers index is 210, what is the value of the Laspeyre index? (a) 220 (b) 215 (c) 225 (d) 230 Ans. (c) 35. consider the following statements The coefficient of correlation. 1. is not affected by a change of origin and scale. 2. lies between a and + ct Which of the statements given above is/are correct? (a) 1 only (b) 2 and 3 (c) l and 3 (d)1, 2 and 3 Ans. (c) 36. In a certain distribution, the following results were obtained X = 45, Median = 48, Coefficient of skew ness = 0.3. What is the value of standard deviation? (a) 20 (b) 25 (c) 28 (d) 30 Ans. (d) 37. The first quartile derived from set of observations is 27 and its quartile deviation is 17. What is its third quartile? (a) 59 (b) 61 (c) 65 (d) 57 Ans (b) 3. is a relative measure of linear association between two or more variables.
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38. What is a cumulative percentage curve called? (a) Frequency density curve (b) Ogive curve (c) Lorenz curve (d) Frequency polygon Ans. (b) 39. Assertion (A) : Fishers index number is an ideal one. Reason (R) : In the Fishers index number, the upward bias of Laspeyres index and downward bias of Paasches index are balanced to a great extent. Codes: (a) Both A and Rare individually true and R is the correct explanation of A (b) Both A and R are individually true but R is not the correct explanation of A (c) A is true but R is false (d) A is false but R is true Ans. (c) 40. Match List-I with List-II and select the correct answer using the code given below the lists: List I List-II (d) Urban female (Type of Unemployment) (Associated Fact) Ans. (a) B. Structural Unemployment 2. Marginal productivity is zero C. Seasonal Unemployment 3. Use of obsolete technology for production D. Disguised Unemployment 4. Population pressure on land Code: ABCD (a) 4 2 1 3 (b) 1 3 4 2 (c) 4 3 1 2 (d) 1 2 4 3 Ans. (b) 41. According to the 60th Round of NSSO Survey on Employment and Unemployment, unemployment rate on current daily status basis (number of person days per 1000 person days) was highest for which one of the following categories? (a) Rural male (c) Urban male (b) Rural female (a) S. Chakravarty Committee (b) D.T, Lakdawala Committee (c) K.N. Wanchoo Committee (d) R.C. Dust Committee Ans. (b) 43. Which one of the following countries has the highest life expectancy at birth? (a) Pakistan (b) India (c) Nepal (d) Sri Lanka Ans. (d) 44. According to Census-2001 data, what is the urban population as percentage of total population of India? (a) 23.3% (b) 25.7% (c) 27.8% (d) 28.9% Ans. (c) 45. Which category of the target groups is not included in the SHG bank linkage programme for micro-finance to agriculture? (a) Unemployed non-agricultural labourers A. Frictional Unemployment 1.Non-availability of job 42. Which one of the following committees was set up to review the concept of poverty line?
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(b) Agricultural and nonagricultural labourers (c) Small and marginal farmers (d) 2 and 3 (d) Artisans and craftsmen Ans. (a) Ans. (a) 46. Consider the following components of money supply in India 1. Currency in circulation. 2. Bankers deposits with the RBI 3. Other deposits with the RBI 4. Demand deposits of banks Which of the above are the components of Reserve Money? (a) l and 3 (b) l, 2 and 3. (c) 1, 2 and 4 (d) 2, 3 and 4 Ans. (B) 47. Consider the following statements for Indian Millennium Deposits (IMDs) scheme. 1. The scheme was launched by the Reserve Bank of India. 2. It was intended for NRIs and resident Indians both. 3. The tenure of IMDs was 5 years. Which of the statements given above is/are correct? (a) 3 only 2. Decline in incremental capitaloutput ratio is to be achieved through creating new capacities. Which of the statements given above is/are correct? (a) 1 only (b) 2 only (c) Both (d) Neither 1 nor 2 Ans. (a) Codes: 49. In which of the following y was the highest growth of general index of industrial production in India registered? (a) 2001-02 (b) 2002-03 (c) 2003-04 (d) 2004-05 Ans. (d) 50. Growth rate in NNP at factor cost (at constant prices) has been highest during which Five-Year Plan? (a) Both A and R are individually true and. R is the correct explanation of A (b) Both A and It are individually true but R is not the correct explanation of A (c) A is true but R is false (d) A is false but R is true Ans. (c) 2. Consider the following statements relating to marginal rate of technical substitution (MRTS). 48. Consider the following statements in respect of the Tenth Plan 1. This plan has specific monitorable targets in respect of poverty. Ans. (b) Economics Objective Solved Questions for exams : Micro Economics Economics Solved Model Paper Solved Question Papers of Micro Economics Multiple Choice Questions for Economics Free online Economics MCQ Quiz 1. Assertion (A): An oligopolist faces demand curve which has a kink at the level of the prevailing price. Reason (R): The segment of the demand curve above the prevailing price level or kink is highly inelastic and the segment of the demand curve below the prevailing price level is elastic. (d) Fifth Plan (c) Seventh Plan (b) 2 only (c) 1 and 2 (a) Ninth Plan (b) Eighth Plan
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1. The MRTS in case of an isoquant measures the rate at which one input is substituted for the other. 2. The M of input X for input Y at a point on an isoquant is equal to the positive slope of the isoquant at that point. 3. The MRTS equals to the ratio of the marginal product of input V to the marginal product of input X. Which of the statements given above are correct? (a) 1 and 2 (b) 2 and 3 (c) 1 and 3 (d) 1, 2 and 3 Ans. (c) 3. When is an isoquant L shaped? (a) When the two factors are complementary (b) When the two factors are perfect substitutes (c) When the two factors are used in fixed proportions (d) When the two factors are imperfect substitutes Ans. (c) 4. A firms average total cost is Its 60, its average variable cost is Rs. 55 and its output is 50 units. What is its total fixed cost? (a) Less than Rs. 200 Consider the following statements 1. The slope and elasticity of demand is same on the demand curves MN and QR, at the price P0 2. The slopes are same but elasticity of demand is more on demand curve MN than demand curve QR, at price (b) Between Rs. 200 and Rs. 300 (c) More than Rs. 300 (d) Firm has no fixed cost Ans. (c) 5. Under constant returns to scale, which one of the following is the nature of the long -run average cost curve? (a) Parallel to output axis (d) 2 and 3 (b) Upward rising Ans. (b) (c) Downward sloping (d) Identical to short-run average cost curve Ans. (a) 6. In the figure shown below, MN and QR are two straight line demand curves parallel to each other. 7. When the negative income effect is greater than substitution effect, it is the case of which one of the following? (a) Giffen goods (b) Inferior goods (c) Luxury goods (d) Normal goods Ans. (d) 8. Which one of the following statements is correct? Consumption possibility frontier is same as (a) the indifference curve (b) the budget line (c) the production possibility frontier (d) the demand curve Ans. (b) 9. Which one of the following statements is not correct? 3. Elasticities of demand are same but slope of demand curve MN is less than that of QR at the price P Which of the statements given above is/are correct? (a) 1 only (b) 2 only (c) 1 and 3
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(a) Normal goods have a positive income elasticity of demand (b) Inferior goods have a negative income elasticity of demand (c) Necessity has an income elasticity of demand that is less than one (d) Luxury goods have an income elasticity of demand that is equal to one Ans. (d) 10. A firm has certain initial equilibrium price, when demand function QD = 50 3P and supply function is 20 + 3P. If the firms demand function is shifted to C = 68 3P, what is the initial equilibrium price and the new equilibrium price, respectively? (a) 5 and 6 (b) 5 and 8 (c) 6and 8 (d) 8 and 5 Ans. (b) 11.Cournot model assumes which of the following? 1. There are two firms operating in the market. 2. The firms face a kinked demand curve. 3. Each firm acts on the assumption that their competitors will not react to her decision to change output. Select the correct answer by using the code given below (a) (b) 2 and 3 (c) l and 3 (d)1, 2 and 3 Ans. (c) 12. Which one of the following statements is correct? The Sweezy mode of oligopoly assumes that price elasticity of demand (a) is higher for a price increase than for a price decrease (b) is lower for a price increase than for a price decrease (c) cannot change for a price increase or price decrease (d) cannot change for a price decrease Ans. (a) 13. Which one of the following statements is correct? (a) Demand for factors of production is an independent demand (b) Demand for factors of production is a derived demand (c) Demand for factors of production is a reciprocal demand (d) Demand for factors of production is same as the demand for commodities Ans. (b) 14. What is the principle which is applied to redress the imbalance between distribution and welfare, known as? (a) Principle of taxation (b) Compensation principle (c) Principle of effective demand (d) Principle of supply Ans. (b) 15. The inconsistency of which one of the following criteria is labelled as Scitovsky Paradox? (a) Little Criterion (b) Pareto Criterion (c) Bergson Criterion (d) Kaldor Flicks Criterion Ans. (d) 16. consider the following statements The distribution of two commodities between two individuals is Pareto optimal if 1. one individual cannot be made better off without making the other worse off. 2. the individuals are on their consumption contract curve. Which of the statements given above is/are correct? (a) 1 only (b) 2 only
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(c) Both 1 and 2 (d) Neither 1 nor 2 Ans. (c) 17. What is maximizing the level of satisfaction with the given level of inputs and technology, called? (a) Technical efficiency (b) Allocative efficiency (c) Economics of scale (d) X- efficiency Ans. (d) 18. Which one of the following statements is correct? An increase in money supply in Keynesian framework results in (a) a higher level of income and a higher rate of interest (b) a lower level of income and a lower rate of interest (c) a higher level of income and a lower rate of interest (d) a lower level of income and a higher rate of interest Ans. (c) 19. Which one of the following statements is correct? A fall in the money supply results in the (a) rightward shift in the IS curve (b) rightward shift in the LM curve (b) locus of the commodity market equilibrium (c) locus of the labour market equilibrium (d) locus of both money and labour market equilibrium Ans. (b) 21. Which one of the following statements is correct? According to Keynes, fresh investment would be possible only if (a) the marginal efficiency of capital exceeds the rate of interest (b) the marginal efficiency of capital is less than the rate of interest (c) the marginal efficiency of capital is positive (d) the marginal efficiency of capital is negative Ans. (a) 22. Which one of the following statements is correct? Autonomous investment is (d) leftward shift in the LM curve only Ans. (d) 20. Which one of the following statements is correct? The IS function indicates the Ans. (d) (a) locus of the money market equilibrium 23. Consider the following statements 1. The MPC is higher in a poor country and lower in a rich country. 2. Higher the MPC, higher will be the value of multiplier. 3. Lower the M lower will be the value of multiplier. Which of the statements given above are correct? (a) 1 and 2 (b) 1 and 3 (c) 2 and 3 (d) 1 2 and 3 Ans. (a) 24. Match List-I with List-II and select the correct answer by using the code given below the lists List I List -II (Economist) (Concept) (b) functionally related to both income and interest rate (c) functionally related to income alone (d) independent of income and interest rate (c) leftward shift in both the LM curve and the IS curve (a) functionally related to interest rate
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A. A. C. Pigou Liquidity Preference B. J.M. Key Real Balance Effect C. J.R. Hicks-A.H. Hansen 3. Ratchet Effect D. J.S. Duesenberry IS-LM Analysis Code: ABCD (a) 2 1 4 3 (b) 4 3 2 1 (c) 2 3 4 1 (d) 4 1 2 3 Ans. (a) 25. In the diagram given above, which one of the following is indicated by the point A lying below the IS curve? (c) Permanent income and permanent consumption (d) Transitory income and transitory consumption Ans (c) 27. Which one of the following statements is correct? Crowding our in an economy can be avoided if (a) government finances its expenditure by new money supply (b) government finances its expenditure by taxes (c) government finances its expenditure by buying outstanding bonds (d) government finances its expenditure by raising cash reserve ratio (a) Permanent income and transitory income (b) Permanent income and transitory consumption (a) Excess demand in the commodity market (b) Excess supply in the money market 2. (c) Excess supply in the commodity market (d) Equilibrium income and interest 4. Ans (a) 26. In the. permanent income hypothesis of consumption, components of which one pair has a proportional relationship? Ans. (c) 28. Which one of the following statement is correct? According to Says law of market. (a) demand creates its own supply (b) supply creates its own demand (c) demand and supply are always equal (d) demand and supply are never equal Ans. (b) 29. Which one of the following statements in respect of the National Income Accounting is correct? (a) Budget deficit is equal to savings-invest gap (b) Budget deficit is more than savings-investment gap (c) Budget deficit is less than savings-investment gap (d) Budget deficit is always zero Ans. (d) 30. Which of the following is/are included in National Income Accounting? 1. Purchase of shares and bonds. 2. Value of residential investment. 3. Value of production for self consumption.
1.
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4. Value of intermediate goods. Select the correct answer by using the codes given below: (a) l and 2 (b) 2 only (c) 2 and 3 (d) 3 and 4 Ans. (c) 31. Consider the following statements 1. The equilibrium between the aggregate demand and aggregate supply may take place at a point of less-than-full employment in an economy. 2. The .size of deficient demand is inversely proportional to the deflationary gap. Which of the statements given above is/are correct? (a) 1 only (b) 2only (c) Both 1 and 2 (d) Neither 1 nor 2 Ans. (a) 32. Assertion (A) : Gross National Product will always be more than the Gross Domestic Product. Reason (R): To get Gross National Product, not factor income from abroad is added to Gross Domestic product Codes: (a) Both A and R are individually true and R is the correct explanation of A (b) Both A and R are individually true but R is not the correct explanation of A (c) A is true but R is false (d) A is false but R is true Ans. (d) 33. what is the empirically fitted relationship between the rate of change of money wages and rate of unemployment, known as? (a) Baumals Hypothesis (b) Keynesian Model (c) Friedmans Model (d) Phillips Curve Ans. (d) 34. In the simplified version of Friedmans quantity theory of money, velocity of circulation of money depends on which of the following? (a) Rate of interest and rate of price change (b) Rate of interest and rate of change of income (c) Rate of change of money supply and rate of change of consumption (d) Rate of change of price and rate of: change of investment Ans. (b) 35. Consider the following assets 1. Cash held by public 2. Equity shares of banks 3. Deposits of banks 4. RBI bonds Which of the above assets are considered as part of money supply? (a) 1 and 2 (b) 1 and 3 (c) 2 and 3 (d) 1, 3 and 4 Ans. (b) 36. which one of the following is stated by the quantity theory of money? (a) An increase in the nominal money supply causes a proportional increase in the price level (b) An increase in the real money supply causes a proportional increase in the price level (c) An increase in the nominal money supply causes a proportional increase in real GNP (d) An increase in the real money supply causes a proportional increase in real GNP Ans. (a) 37. Consider the following statements 1. Bond price and interest rate are positively related.
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2. Bond price and interest rate are negatively related. 3. Credit creation varies directly with Cash Reserve Ratio (CER). 4. Credit creation varies inversely with Cash Reserve Ratio (CRR). Which of the statements given above are correct? (a) 1 and 2 (b) 1 and 4 (c) 2 and 3 (d) 2 and 4 Ans. (d) 38. Suppose, due to an open market purchase of government securities, reserves in the commercial banks increase by Rs. 1,000. If the reserve ratio is 20 percent, what will be the increase in money supply? (a) Its. 5,000 (b) Rs. 4,000 (c) Rs. 2,000 (a) steadily over a period of time (d) Rs. 1,000 Ans. (c) 39. Which one of the following is not a component of demand-pull inflation? (a) An increase in government expenditure with no change in tax rate (b) A downward shift h savings function (c) A rise in the money wage rate (b) at a. constant rate in relation to GNP (c) in a step by step manner (d) at a lower rate in relation to GNP Ans. (c) 42. As compared to traditional budgeting, in case of Performance and Programme Budgeting System (PPBS), which According to Peacock and Wiseman, public expenditure grows (d) An upward shift of investment function Ans. (c) 40. Assertion (A) Indirect taxes promote inequality in the distribution of income. Reason (R): Poor bear more burden of indirect taxes. Codes: (a) Both A and Rare individually true and R is the correct explanation of A (b) Both A and R are individually true but R is not the correct explanation of A (c) A is true but R is false (d) A is false but R is true Ans. (a) 41. which one of the following statements is correct? (b) spending on all programmes is re-examined and justified each year rather than following add-on every year (c) it is purely an evaluation of existing budget and there is nothing new in it (d) it focuses on centralization of expenditure Ans. (b) 44. Which one of the following statements is correct? The revenue from the imposition of an advolarem tax and that of a unit tax in a perfectly competitive market which results in the same price rise, are (a) more for advolarem tax (b) more for unit tax one of the following statements is correct? (a) It stresses on outcome only (b) It stresses on expenditure allocation only (c) It stresses more on outcome and less on expenditure allocation (d) It stresses less on outcome and more on expenditure allocation Ans. (c) 43. Which one of the following statements is coned? Zero-base budgeting implies that (a) it emphasizes physical targets rather than financial targets
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(c) equal for both the taxes (d) zero for both the taxes Ans. (c) (a) 20 percent of National income 45. in which one of the following groups of taxes, do impact and incidence of tax coincide? (a) Income tax and corporation tax (b) Income tax and excise duties (c) Corporation tax and custom duties (d) Excise duties and sales tax Ans. (a) (a) Canon of equality 46. The concept of optional taxation, based on whatever criteria, has to. cover decisionmaking at which of the following levels? 1. The aggregate amount of taxations and its division between direct and indirect taxations. 2. The composition and rate schedules of direct and indirect taxes. 3. The composition and revenue schedules of indirect taxes. 4. The composition and revenue schedules of direct taxes. Select the correct answer by using the code given below: (a) 1 and 4 (b) 1 and 3 (c) 1 and 2 (d) 2, 3 and 4 (c) Canon of convenience (b) Canon of certainty (d) Canon of productivity Ans. (d) 49. Which curve shows that how much of its import commodity is required by a nation in exchange for various quantities of its export commodity? (a) Offer curve (b) indifference curve (c) Demand curve (d) Production possibility curve Ans. (a) 50. Which of the following is/are correct in respect of opportunity cost theory? exam prep MCQ Economics model Test paper for UGC DSSB RAS UPSC Exams This Economics model test paper/Sample paper is only for those students who have studied Economics in Graduation level / BA Level ,as the questions are bit tough and not intended as general GK questions testing exam preparation exam material macro economics for test prep Like UGC NET Exam RAS Exam DSSB PGT TGT Test UPSC Exams PSC Exams of Various Public Service Commissions 1.Keynesian Liquidity Preference theory explains the: (a) operation of the money market in an economy. (I interaction between the real and monetary sectors. (c) motivation of a speculator. (d) process of adjustment in money and capital markets for (b) 25 percent of National Income (c) 30 percent of National Income (d) 35 percent of National Income Ans. (b) 48. Which one of the following is not the Canon of taxation as stated by Adam Smith? Ans. (c) 47. According to Cohn Clark, what is taxable capacity? 1. A straight line production possibility curve indicates constant opportunity cost. 2; The production possibility curve under increasing cost would be concave to the origin. Select the correct answer by using the code given below: (a) l only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2 Ans. (c)
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bringing about changes in the interest rate. Ans: a Q.2. Which one of the following conditions is assumed by Euler in his adding up theorem? Elasticity of substitution is: (a) equalto zero. (b) greater than zero but less than one. (c) greater than one. Ans: b Q. 3. The cars used by the police department of the government for patrolling should be treated as: (a) final goods because these are sold by business sector to government. (b) consumers goods because these are not re- sold by the government. (c) capital goods because these add to the capital formation in the country. (d) intermediate goods because police services are consumed through the use of these cars. Ans: d Q.4 Which one of the following consumption functions corresponds to the income multiplier, R= 4? (a) C=24+0.5 Y (b) C=240+0.25Y (c) C= 24+ 0.55Y (d) C = 240 + 0.75Y Ans: d 5. Given that GNP at market prices = Rs. l92866 crores Consumption of fixed capital = Rs. 13371 crqres Net factor income from abroad = Rs-975 crores the NDP at market prices will be: (a)Rs. 178520 crores (b) Rs. 207212 crores 6. In the theory of investment decision the most appropriate Internal Rate of Return (IRR) is the one which makes the: (a) net present value, the maximum. (b) gross present value, the maximum. (c) net present value, zero. (d) gross present value, zero. Ans: c Q. 7. In Keynes General Theory, investment and savings are brought to equality primarily through changes in the: (a) rate of interest. (b) income velocity of money. (c) national income (d). level of prices. Ans: c Q. 8 During a recession, consumers typically react to falling incomes by: (a) increasing the fraction of consumption devoted to durable goods. (b) reducing the fraction of durables quickly before incomes fall further. (c) reducing the worn-out durables quickly before incomes goods. (d) reducing the fraction of nondurables and services more quickly than purchases of durables. Ans: b Q. 9. Consider the following statements: 1. Points to the left of the IS curve indicate excess supply of goods. 2. Points to the right of the LM curve indicate excess demand for money. 3. ?oints to the right of the IS Q 11. The author of employment multiplier is: (a) Lord Beveridge (c) R. V Kahn (b) J. M . Keynes (d) J.R. Hicks Ans: c Q. 12 In a two sector economy, the saving and investment functions are as follows: S=10+0.2Y I= 3+0.1 Y What will be the equilibrium level of income? (a) 70 (b) 80 (c) 90 (d) 100 Ans: a Q. 13 The IS-LM model has been formulated by: (a) J.R. Hicks (b) E Modigliani (c)P.A. Samuelson (c)Rs. 180470 Crores (d) Rs. 205262 crores Ans: a curve indicate excess supply of money. 4.. Points to the right of the IS curve indicate excess supply of goods. Of these statements (a)2 and 4 are correct (b)1 and 3 are correct (c)2 and 3 are correct (d)1, 2 and 3 are correct Ans: a Q.10 . Suppose, MPC falls. The IS curve shifts to the left. Then what happens ceteris paribus? (a) The level of equilibrium becomes lower (b) The level of equilibrium becomes higher (c) There is no change in equilibrium (d) Only the rate of interest becomes lower Ans: a
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(d) J.M. Keynes Ans: a Directions The following item consist of two statements, one labelled the Assertion (A) and the other labelled the Reason (R,). You are to exam inc these two statements carefully and decide if the Assertion (A) and the Reason (R) are individually true and if so, whether the Reason is a correct explanation of Assertion. Select your answer to these using the codes given below Q. 14. Assertion (A): The level of employment in an economy, according of Keynes, is a function of GNP. Reason (R): GNP is determined by aggregate demand, which in turn depends upon consumption of the households and investment decisions of business. Codes: (a) Both A and R is true and R is the correct explanation of A. (b) Both A and R are true But R is not the correct explanation of A. (c) A is true but R is false. (d) A is false but R is true. Ans: a Q. 15. Which one of the following structural changes in the composition of National Income of India would characterize economic development? (a) A large proportion of income from agriculture relative to other sectors. (b) A small proportion of income from the tertiary sector compared to that from agriculture. (c) A larger proportion of income from industry as compared to that from agriculture. (d) A smaller portion of income from industry as compared to that from the tertiary sector. Ans: b Q. 16. Which of the following methods were used by the conventional series in computing National Income in India? 1. Output method. 2. Expenditure method. 3. Income method. Select the correct answer using the codes given below: Codes: (a) 1 and 2 (b) l and 3 (c) 2 and 3 (d) 1,2 and 3 Ans: b Q. 17. Between 1951-52 and 1955-56 and 1985-86 and 198990, the share of agriculture in the GDP of India decreased from about 55% to about 33% and that of the tertiary sector increased from nearly 29% to 39%. This indicates that the (a) productivity of land has been on the decline. (b) the productivity of labour has been increasing. (c) secondary sector has done much better than the primary and tertiary sectors. (d) output of tangible commodities has not been increasing as fast as the GDP. Ans: d Q. 18 What is the correct sequence of the following? 1. Marrohkesh Declaration. 2. Smithsonian Agreement. 3. Keynes Plan. Select the correct answer using the codes given below: (a)1,2,3 (b)2,3,1 (c)3,2,1 (d)3,1,2 Ans: c Q. 19. The following economists are associated with the Exploitation Dependency Theory: 1. Paul Baran 2. A.G. Frank 3. S. Amin 4. G. Palma Which one of the following is the correct chronological order of them? (a) 1,2,3,4 (b) 2,1,3,4 (c)2,1,4,3 (d) 1,2,4,3 Ans: b Q 20. According to Hirschman, convergent series comprises investment projects the appropriate more external economies then they create and divergent series comprises investment projects that create more external economies than what they appropriate. In terms of this,investments in power and transport is: . (a)convergent series. (b)divergent series. (c)respectively convergent and divergent series. (d)both convergent series with diminishing returns. Ans: b Q. 21 According to neoclassical theory of distribution, constancy of wage share, in national income would come about only when elasticity of factor substitution: (a) equals one. (b) is greater than one. (c) is less than one (d) is zero. Ans: a Q. 22. The Compensation criterion that state X is socially preferable to state Y, if those who gain from X can compensate the losers and still be in a better position than at Y has been proposed by:
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(a) Bergson (b) Pareto (c) Kaldor (d) Walras Ans: c Q. 23. According to Pigou, National Dividend will be the maximum when: (a) marginal cost is minimized. (b) net social marginal productivity is maximized. (c) net private marginal productivity is maximized. (d) net social marginal productivity becomes equal to net private marginal productivity. Ans: d Q. 24. A consequence of the Kaldor-Hicks compensation principle is that a change in the economic policy leads to an improvement in social welfare if the: (a) gainers can compensate the losers for their loss and still remain better-off themselves than they were before. (b) losers can profitably bribe the gainers to induce them to stay in the initial position. (c) gainers can just compensate the losers out of their gains. (d) Losers do not oppose the change. Ans: a Q. 25. Transfer payments by the government are not included in the net domestic product because: (a) these are gifts from the government to the recipients. (b) their opportunity cost is zero. (c) such payments may not ultimately reach the recipients. (d) no corresponding production of goods and services has taken place to match the payment of such funds. Ans: d Q. 26. Liquidity preference refers to: (a) the extent to which investors prefer to keep their assets in money. (b) RB Is shareholdings in other financial institutions. (c) communitys preference for gold. (d) communitys effective demand for capital goods. Ans: a Q. 27. Which of the following method(s) are used to compute national income in India? 1. Net output method. 2. Net income method. 3. Expenditure method. Select the correct. answer using the codes given below: Codes: (a)2 alone (b) 1 and 2 (c)3 alone (d) l,2 and 3 Ans: d 28. Assuming that Change in investment I= 20 Marginal propensity to save (MPS)= 0.5 Marginal propensity to investment (MP) = 0. The change in income Y will be equal to: (a) 25 (b) 50 (c) 100 (d) 200 Ans: b Q. 29. Consider the following statements Intersection of the IS and L M Curves corresponds to: 1. equilibrium in the real sector. 2. equilibrium in the monetary sector. 3. liquidity trap necessarily 4. Walrasian general equilibrium. Of these statements (a) 1 and 3 are correct (b) 1 and 2 are correct (c) 2, 3 and 4 are correct (d) 1,2,3. and 4 are correct Ans: b Q. 30. Consider the following statements The study of national income accounts is of great importance because it: 1. reveals the changes in the size and composition of the national product. 2. provides us with information about the distribution of national income in the society among various groups. 3. reveals the manner in which national expenditure is divided between consumption and investment. Of these statements (a)1 and 2 are correct (b)2 and 3 are correct (c)1 and 3 are correct (d) 1,2 and 3 are correct Ans: d Q. 31. Consider the following types of income: 1. Personal income. 2. Private income. 3. Disposable income 4. National income The correct sequence in descending order of their magnitude is: (a) 4,2,1,3 (b) 4,2,3,1 (c) 2,4,3,1 (d) 2,4,1,3 Ans: a Q. 32. Disposable personal income is: (a) the sum of wages, salaries, commissions, bonuses and other forms of employee earnings before deduction of any taxes of social security contributions, net income from royalties and rentals, interest income and profits of a corporation, partnership of proprietorship.
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(b) disposable income plus personal taxes; or current personal income receipts after deducting social security contributions but before deduction of personal taxes. (c) a concept of receipts rather than a concept of earnings and is computed after taxes and social security contributions. One must add receipts that are not payments for current productive purposes and one must deduct all earnings not currently received and all taxes and social security contributions. (d) the concept of individuals income as the money value of his earnings from productive services currently rendered by him or by his property after deduction of personal taxes and social security contributions. Ans: d Q. 33. Given the total investment expenditure, an increase in the propensity to save will lead to a (a) fall in the quantity of income. (b) fall in income. (c) rise in interest rate. (d) rise in income. Ans: d Q. 34. The national income of a country for a given period is equal to the: (a) total value of goods and services produced by the nationals (b) sum of total consumption and investment expenditure. (c) sum of personal income of all individuals. (d) money value of final goods and services produced. Ans: b Q. 35. Gross National Sayings measure the (a) amount of GNP not consumed. (b) excess of income over consumption plus the net taxes. (c) sum of retained earnings and depreciation amounts: (d) excess of disposable income over consumption. Ans: b Q. 36. Social Accounting system in India is classified into which one of the following sets of sectors? (a) Enterprise, households and government (b) Assets, liabilities and debt position (c) Public sector, private sector and joint sectors (d) Income, product and expenditure Ans: c Q. 37. For a closed economy having no foreign trade which one of the following is correct? (a) GDP= GNP (b) GDP > GNP (c) GDP <gnp (d) GDP < or = GNP Ans: a</gnp Q. 38. According to the permanent income hypothesis. the (a) long-run aggregate Average Propensity to Consume (APC) equals the long-run aggregate Marginal Propensity to Consume (MPC) (b) long-run aggregate APC is greater than the long- run aggregate MPC. (c) long-run aggregate APC is less than the long-run aggregate MPC. (d) APC of every individual is equal irrespective of different will be encouraged. Ans: a Q. 39. If there is an expectation of a rise in the price level, investment will be encouraged because: (a) there will be an increased production of capital goods (b) there will be arise in the prospective return from capital. (c) the people save more and interest rate will fall. (d) None of these Ans: b Q. 40 . Which of the following statements explain the difference between NNP (Net National Product) and NMP. (Net Material Product)? 1. NNP includes services. 2. NNP excludes services. 3. NMP includes services. 4. NMP excludes services. Select the correct answer using the codes given below Codes (a) l and 4 (b) 2 and 4 (c)l and 3 (d) 2 and 3 Ans: a Q. 41. According to Keynes, marginal propensity to consume: (a) can never exceed unity. (b) may exceed unity when dissaving occurs. (c) can never exceed the average propensity to consume. (d) is the reciprocal of the marginal propensity to save. Ans: c Q. 42. Super multiplier refers to: (a) interaction of the mu1t and the accelerator. (b) reciprocal of the marginal propensity to consume. (c) capital output ratio (d) budget multiplier. Ans: a Q. 43. In the liquidity preference theory of interest of Keynes nioney acts as a link between the present and the future in the case of:
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(a) transactions demand for money. (b) precautionary demand for money (e) business demand for money. (d) speculative demand for money. Ans: d Q. 44 . In 1970-71 the NDP measured at the prices prevailing in that year, amounted to Rs. 34368 Crores. In 1976-77 while this NDP measured at the prices prevailing in that year amounted to Rs. 66561 crores, at 1970-71 prices it amounted to Rs. 40395 crores. The rise in real NDP is (a) insignificant (b) Rs. 6027 crores (c) Rs.31193crores (d) Rs. 66561 crores Ans: b Q. 45. Assertion (A): A rise in the aggregate demand and aggregate supply of goods and services raises national income. Reason (R) : National income represents the value of aggregate. production in monetary terms. (a) Both A and R are true and R is the correct explanation of A. (b) Both A and R are true but R is not the correct explanation of A; (c) A is true but R is false. (d) A is false but R is true. Ans: b Q.46 Excess of ex-ante saving over ex-ante investment means that: (a) income will fall. (b) income will rise. (c) income will rise and inventories will remain the same. (d) price will rise and inventories will accumulate. Ans: a Free Economics Online Practice Test 3.Capital Deepening refers to which one of the following: (a) Going for more fixed capital Economics Quiz, Economics Test, Economics Question Bank Free Economics Online Practice Test Model test paper and Multiple choice Questions Quiz on indian Economy and theory of economics 1. Under which one of the following conditions, does product exhaustion theorem hold? (a) Increasing return to scale (b) Decreasing return to scale (c) Constant return to scale (d) Constant return to factors of production 2. Public goods are characterized by: 1. collective consumption. 2. divisibility. 3. non-exclusion. 4. rival-consumption. Select the correct answer using the code given below (a) 1 and 2 (b) 1 and 3 (c) 1and 4 (d) 2 and 4 (d) the economy experiences underemployment equilibrium 5. Which one of the following is explained-by Fei-Rariis model? (a) The inter-relationship between the agricultural and the industrial sectors (b) Planning methods when labour is in short supply (c) Growth process of the industrial sector (d) A neo-classical framework of growth analysis 6. Consider the following statement: 1. The Solow model explains a capita/labour ratio which does not grow under equilibrium condition. 2. Substituting capital for labour is possible in the Solow model. (b) workers are underpaid despite doing full time job (c) there is a co-existence of unemployment and inflation (b) Emphasis on social overhead capital (c) A constant capital-output ratio (d) An increasing capital-output ratio 4. Disguised underemployment refers to the situation when: (a) people seems occupied on a full time basis even though the services they render require less than full time?
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Which of the statements-given above is/are correct? (a) 1 only (b) 2 only (c)Both 1 and 2 (d) Neither 1 nor 2 7. Consider the following statements: 1. Dualism refers to the existence and persistence of increasing divergences between rich and poor nations and rich and poor people at various Levels. 2. Dualism is the political division of the society into two broad groups of the rightists and the leftists in modem democracy. Which of the statements given above is correct? (a)1 only (b) 2 only equilibrium price? (c) Both 1 and 2 (a) Rs. 30. (d) Neither 1 nor 2 (b) Rs. 20 8. Directions: The following item consists of two statements, one labelled as the Assertion (A) and the other as Reason (R) You are to examine these two statements carefully and select the answer using the code given below. Assertion (A) : The doctrine of unbalanced growth is based on creation of imbalances in the economy in a conscious manner. Reason (R) : Unequal development of various sectors (c) Rs. 25 (d) Rs. 26 10. Market failure occurs because of: I. Externality 2. Asymmetric information 3. Perfect competition Select the correct answer using the code given below often generates conditions for rapid development. Code: (c)1 and 2 (a) Both A and R are individually true and R is the correct explanation o & (b)Both A and R are individually true, but R is not correct explanation bf A (c) A is true, but R is false (d) A is false, but R is true 9. Suppose the market demand function of a perfect competitive industiy is given by Q(d) = 4,750 50P and market supply function is given by Q(s) = 1,750+ 50P. Price is expressed in rupees. Which one of the following is equal to the market (d)2 and 3 11. If personal income is Rs. 57,000 ; personal income tax Rs. 9,000; consumption Rs. 43,000; interest payment Rs 10,000; personal saving Rs. 40,000; then the disposable personal income would be equal to: (a)Rs. 50,000 (b) Rs. 47,000 (c)Rs. 48,000 (d) Rs. 40,000 12. A discriminating monopolist charges a (a) higher price in the, submarket where price elasticity of demand is high (b) higher price in the sub-market where price elasticity of demand is low (c) lower price in the sub where price elasticity of demand is low (d) higher price in the sub-market where demand is low 13. In the long run, the cost and output relationship depends on which one of the following? (a) 1,2and3 (b) I only
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(a) Return to scale (b) Fixed proportion of the variables (c) Return to the variable factor (d) Return to the fixed factor 14. Consider to following statements with respect to a duopoly market with firms AandB: I. If both firms act as followers, then they will have reaction functions 2. If Firm A acts as leader and firm B acts as follower, then firm A will not have any reaction function. 3. If both firms act as leaders, then the outcome is economic warfare. Which of the statements given above are correct? (a) 1 and 2 (b) 1 ,2 and 3 (c) 1 and 3 (d) 2 and 3 15. Consider the following: According to Ricardian theory of distribution I. rent is price determined. 2. land is supposed to have various alternative used. 3. marginal land earns no rent, (c) 2 and 3 4. rent is a surplus in the sense that it is an excess over transfer earnings. Which of the statements given above are correct? (a) 1,2and 4 disequilibria are corrected by: (b) 1,3 and 4 1. changes in the exchange rates. (c) 2 and3 (d) 1 and 4 16 If two commodities perfectly/substitutable (competitive), the direction of change of the cross elasticity of demand between then be? (a) zero (b) positive (c) negative (d) infinity 17. From which of the following axioms does the property that indifference curves for a consumer cannot intersect each other follow? I. Axiom of non-satiation 2. Axiom of transitivity 3. Axiom of reflexivity 4. Axiom of convexity select the correct answer using the code given below (a) 1 and 3 (b) 1and 4 (d) A condition that the expected returns on deposits of any two countries are equal when measured in the same currency 20. Which one of the following best describes the nineteenth century gold standard system? 2. international flow of money and reserves. Which of the statements given above is/are correct? (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2 19. Which one of the following is implied by interest parity? (a) Interest rates are at par in all the countries (b) Movements in spot rates and forward fates in the foreign exchange market are same (c) Potential holders of foreign currency deposits view them as not equally desirable assets (d) 1 and 2 18. Consider the following statements Under flexible exchange fate system, balance of payments
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(a) Regulated system with floating exchange rates (b) Automatic system with fixed exchange rates (e) Regulated system with fixed exchange rates (d) Automatic system with floating exchange rates 21 Consider the following statements regarding the features of the World Bank: 1. The Board of Governors is the supreme body. 2. The voting power of the Governor of a member country is related to the financial contribution of the country concerned. 3. It gives short-term loan to its members to correct their temporary balance of payments disequilibrium. Which of the statements given above is/are correct? (a)1 only (b) 1and 2 (c) 2and3 (d) l,2 and 3 22. Which of the following is/are the reasons for the collapse of Bretton-Woods system? I. The refusal by the U.S. Treasury to convert short-term liability into gold. 2. The U.S. move to make dollar inconvertible. 3. The devaluation of U.S. dollar in 1973. Select the correct answer using the code given below (a) 1 only (b) 1 and 2 (c)2 and 3 3. Bank loans. (d) l,2 and 3 23. Tariffication refers to: (a) replacement of quotas by tariffs only (b) replacement of all existing non-tariff restrictions by tariff (c) scaling dow.of tariffs in general (d) obtaining sanction to increase tariff rates 24. Which of the following are the components of foreign capital? 1. Grants and loans. 2. External commercial borrowings. 3. Foreign direct investment. 4. Deposits from non-residents. Select the correct an using the code given below (a) 1,2,3 and 4 (b) 1,2 and 4 (c) l and 2 (a) The nominal rate of interest exceeds real rate of interest Select the correct answer using the code given below (a) 1 and2 (b) 2and3 (c) l and 3 (d)1,2and3 26. Which one of the following is represented by the intersection of the IS curve and the LM curve? (a) Only a flow equilibrium (b) Only a stock equilibrium (c) A stock-cum-flow equilibrium (d) Moving away from equilibrium 27. Which one of the following situations occurs during the period when borrowers and lenders expect inflation? (d)3 and 4 25. Under loanable funds theory of interest, which of the following are included in the supply of loanable funds? 1. Current savings. 2. Funds released from embodiment in working capital.
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(b) The real rate of interest exceeds the nominal rate of interest (c) The nominal rate of interest equals the real rate of interest (d) Nominal and real rates of interest become zero 28. With whom, among the following, is the theory that the rate of interest is also a factor for transaction demand for money, associated? (a) Baumol and Tobin (b) Pigou (c) Keynes (a) l and 3 (d) Samuelson (b) 1,2and4 29. According to Friedman, on which of the following does the velocity of circulation of money depend? I. Market interest rate on bonds. 2. Rate of change in general price level. 3. Ratio of physical non-human wealth to human wealth. 4. Ratio of savings to investment. Select the correct answer using the code given below (a) 1 and 3 (b) l, 2 and 4 (c) l, 2 and 3 (d) 4 only (d) create demand-pull inflation if there is unemployment 32. When one of the following is not correct in the context of IS and LM framework of the theory of interest? 35. According to the classical theory of employment, deviations from the state of full employment are of: (a) permanent nature (b) purely temporary nature (c) l, 2 and 3 (d) 2 and 4 31. In the standard Keynesian ISLM model, a decrease in minimum cash reserve ratio will: (a) create demand-pull inflation in full-employment (b) create cost-push inflation in full-employment (c) create mark up inflation in full-employment 30. Consider the following statements: I. Lower the currency-deposit ratio, higher the money multiplier. 2. Lower the reserve-deposit ratio, higher the money multiplier. 3. Larger the monetary base, higher is the money supply. 4. Larger the monetary base, lower is the money supply. Which of the statements given above are correct? (a) It integrated money interest and income into a general equilibrium model of product and money market (b) Investment and interest are the two important variable in the model (c) The theory is propounded by JR. Hicks (d) IS represents the money market equilibrium and LM represents the product market equilibrium 33. The accelerator model predicts that the changes in investment is determined by the changes in: (a) inventory (b) capital (c) interest (d) output 34. Given, MPC = 0.8 and the threshold consumption = 100, which one of the following is the corresponding saving function? (a)100+0.2Y (b)-100+0.8Y (c) -100+ 0.2Y (d) 400+ 0.2Y
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(c) imaginary situations (d) normal situations (a)l and 2 36. Effective demand is that level of demand at which: (a) aggregate demand is fore than aggregate supply (b) aggregate demand is less than aggregate supply (c) aggregate demand is equal to aggregate supply (d) output is maximum 37. In national income accounting, which one of the following is the difference between gross aggregates and net aggregates? (a) The value of net indirect taxes (b) The value of consumption of fixed capital (c) The value of intermediate consumption (d) The value of final consumption expenditure 38. Consider the following statements relating to gross investment in the national income accounts: 1.It includes the items relating to residential arid non-residential construction. 2.It takes care of spending on producers durable goods. 3.It includes changes in business inventories. (b)2 and 3 (c)l and 3 (b) permanent income (d) l, 2 and 3 (c) transitory income 39. Consider the following statements: I. Pigou held the view that employment depends upon money wages and could be substantially increased by curtailing wages. 2. Keynes held the view that employment depends upon the level of effective demand which can be increased by leaving money intact. - Which of the statements given above is correct? (a)1 only (b) 2 only (c)Both 1 and 2 (d) Neither 1 and 2 40. Which one of the following is related to the theory that supply created its own demand and therefore full employment I s a natural situation? (a) Says law (b) Pigous law of employment (c) Giffen paradox (d) Keynesian theory of employment Select the correct answer using the code given below (a) 1 only (b) 2 only (d) expected life income 42. According to Keynes, which one of the following is meant by liquidity preference? (a) Refraining from saving (b) Desire to hold cash (c) A preference to hold assets like bonds and securities which are liquid (d) Increasing savings in terms of precious metals 43. The currency notes in circulation as well as the proportion of total money supply held in the form of currency are influenced by which of the following? I. The physical volume of trade and transactions. 2. The level of prices in the economy. 3. The development of bank and banking habits of the people. consumption is related to (a) price expectation over ones life time Which of the statements given above are correct? 41. The life cycle hypothesis of consumption implies that
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(c) 1,2 and3 (d) 1 and 3 44. Imposition of a tariff will change the income distribution of the tariff-imposing country in favour of the scarce factor and against the abundant factor. This is known as: (a) Leontief paradox (b) Lerner paradox (c) Stolper-Samuelson theorem (d) Metzler-paradox Directions : The following two (2) items consist of two statements, one labeled as the Assertion (A) and the other as Reason (R). You are to examine these two statements carefully and select the answers to these items using the code given below. Code: (a) Both A and R tare individually true and R is the correct explanation of A (b) Both A and R are individually true, but R is not the correct explanation of A (c) A is true, but R is false (d) A is false, but R is true 45. Assertion (A) The money creation multiplier is equal to the reciprocal of the minimum reserve ratio: Reason (R): The banking system as a whole can grant new credit 1c 2. A tax on personal income reduces disposable income. 3. According to Says Law, demand creates its own supply. Which of the statements given above are correct? (a)1 and 2 (b)2 and 3 (c)1 and 3 (d) 1,2 and 3 48. Which of the following are included in broad money (M 3) in India? I. Currency with the public. 2. Demand deposits with banks. 3. Time deposits with banks. 4. Other deposits with RBI. Select be correct answer using the code given below 46. Assertion (A): Inflationary gap is caused by excess demand. Reason (R) : Excess demand is due to scarcity of supply of money. 47. Consider the following statements: I. Bond price and interest rate vary indirectly. up to an amount of excess reserves. (a)l,2 and 3 (b) 1 and2 (c)3 and 4 (d)l,2,3and4 49. Consider the following statements: In competitive markets, incidence of tax 1. is shared by buyers and sellers. 2. on buyers increases if elasticity of supply increases. 3. is fully borne by buyers if elasticity of demand is zero. 4. is independent of elasticities. Which of the statements given above are correct? (a) l and 2 (b) l,2 and 3 (c)3 and 4 (d)2 and 4 50. Which one of the following is not a tax sacrifice principle? (a) Equal absolute sacrifice (b) Equal proportional sacrifice (c) Equal marginal sacrifice (d) Equal average sacrifice Answers:
2b
3a
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4a 5a 6c 7d 8a 9a 10b 11c 12b 13a 14b 15b 16a 17d 18c 19a India economics Model question papers and previous years old question papers based Based on Previous Years Question Papers UPSC Free online test economics BA graduate level Objective practice Questions Indian economics and economic theory Directions : The following two (2) items consist of two statements, one labeled as the Assertion (A) and the other as Reason . You are to examine these Two statements carefully and select the answers to these items using the code given below. (a) Both A and R are individually true and It is the correct explanation of A (b) Both A and R are individually true, but It is not the correct explanation of A (c) A is true, butR is false (d) A is false, but R is true 1. Assertion (A) Marginal cost curve is U-shaped. Reason (R) : The law of variable proportions operates in production sphere. 20b 21b 22a 23b 24a 25c 26c 27c 28a 29c 30c 31a 32d 33d 34c 35b 2. Assertion (A) A firm under monopolistic competition incurs extra expenditure advertisement. Reason (R) There is free entry and free exit of firms under monopolistic competition. 3. The production function for a commodity is given by Q = 10 LK, where Q the quantity of Output, L is the quantity of Labour and K is the quantity of Capital. Given the above information, which one of the following is the nature of return to scale throughout the function? (a) Constant return to scale (b) Decreasing return to scale only (c) Increasing return to scale only (d) Both decreasing and increasing return to scale 4. Consider the following statements: 1. In case of imperative planning, the market mechanism is entirely replaced by a command hierarchy, while in case of indicative planning, it is looked upon as a way to improve the functioning of market system. 2. In case of imperative planning, all economic activities belong to the public sector, while in case of indicative planning they belong to the private sector 36c 37b 38d 39c 40a 41d 42b 43c 44b 45a 46a 47a 48d 49b 50d
Which of the statements given above is/are correct? (a)1 only (B) 2 only (c)Both I and 2 (d) Neither 1 nor 2 5. Which one of the following shares in the net proceeds of shareable Central taxes has been recommended for the States by the 12th Finance Commission? (a)29.00 per cent (b) 28.50 per cent (c)30.50 per cent (d) 31.25 per cent 6. Usual Principal Status unemployment is calculated with reference to which one of the following periods? (a)One week (b) One month (c)One year (d) Five year 7. Who, among the following, were the pioneers in estimating poverty in India for rural and urban areas separately? (a) P.K. Bardhan and U.S. Minhas (B) V.M. Dandekar and N. Rath (c) M. Ahluwalia and PD. Ojha (d) E.P.W. DaCosta and N. Rath
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8. Disguised unemployment generally exists in: (a)manufacturing sector (B)agriculture (c)small scale industries (d) urban societies 9. Which of the following statements is/are correct? A rise in per capita income does not automatically imply an increase in economic welfare because 1. distribution of income is not known. 2, rate of growth is not known. 3. it suffers from the limitations of averages. Select the correct answer using the code given below (a)1 only (b) 2 only (c)1 and3 (d) l,2and3 10. Which of he following initiatives is/are identified by the 11th Five Year Plan for accelerating the National egovernance programme? 1. Making digital signatures mandatory for e-commerce, egovernment, and e-banking initiatives. 2. Promoting technologies such as wireless fidelity (WiFi) for providing the last mile connectivity to the place where copper wiring is not possible. Select the correct answer using the code given below (a)1 only (b) 2 only (c)Both 1 and 2 (d) Neither 1 nor 2 11. Consider the following statements: 1. Countries with high per capita income do have high physical quality of life index (PQLI). 2. Countries with high PQLI need 1b 2a not necessarily have high per capita income. Which of the statements given above is/are correct? (a)1 only (b) 2 only (c)Both 1 and 2 (d) Neither 1 nor 2 12. Consider the following: A good index number is one which satisfies 1.Unit test. 2. Time-reversal test. 3. Factor-reversal test. Which of the statements given above is/are correct? (a)1 only (b) 2 only (c)2and3 (d)1,2and3 13.The correlation coefficient is independent of (a)scale only (b) origin only (c)both scale and origin (d) vertex 14.. Which one of the following is referred to as lack of peakedness? (a)Skewness (b) Kurtosis (c)Moments (d) Mode 15 . The inequality of income can be measured by using: (a) Mean (h) Mean Deviation (c) Standard Deviation (d) Lorenz Curve 16 . Which one of the following is the value of mode if mean is equal to 12 and median is equal to 14? (a) 16 (b) 26 (c) 15 (d) 13 17. The weighted average of price relatives, using base values as weights, is same as the (a) Laspeyres quantity index (b) Paasches price index (c) Laspeyres price index (d) Kellys price index 18. If every item in a set of data is multiplied by a constant, which of the following measures will remain unchanged? (a) Arithmetic mean (b) Geometric mean (c) Variance (d) Coefficient of variation 19. Elasticity of substitution in the case of linear-homogeneous production function equals to: (a)unity (b) more than unity (c)less than unity (d) zero 20. Consider the following statements The kinked demand curve analysis helps to explain price inflexibility (rigidity) because ft implies that an oligopolist would: I. gain few additional customers from a price reduction since the firms competitors would also reduce price. 2. lose many of its customers if it raised itu prices since rivals would not follow suit. 3. often find that MR = MC at the same output level even after costs had increased. Which of the statements given above is/are correct? (a) 1 only (b) 1 and2 (c)2and3 (d) 1,2and3 5c 6c
3a 4a
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7b 8b 9d 10c 11c India economics questions test exercises MCQ Objective Quiz economics questions test worksheets practice test Basic economic principles and facts Basic Economics MCQs with Answers Multiple choice questions economics? 1. Which of the following are the measures of Integrated Slum Development Programme adopted in India in the 11 Five Year Plan? 1. Creating and updating database on slums. 2. Using land as a resources for housing and shelter development for slum dwellers. 3. Asking slum dwellers to apply for house loan from government. 4. Granting tenure security to slum dwellers. Select the correct answer using the code given below (a)1,2 and 3 (b)1 and 2 (c)2 and 4 (d)1,2 and 4 Ans. (d) 2. Demographic divide refers to a rise in population (a) between the age group of I to 14 years (b) between the age group of 15 to 64 years (c) between the age group of 65 to 74 years (d) above 74 years Ans. (b) 3. The total public sector outlay in the Eleventh Five Year Plan (Central, State and Union Territories) is estimated at about: 12c 13c 14d 15d 16a (a)Rs. 30 lakh crore (b) Rs. 36 lakh crore (c)Rs. 40 lakh crore (d) Rs. 46 lakh crore Ans. (b) 4. Which one of the following is the prescribed investment limit for medium enterprises in the manufacturing sector as per the Micro,Small and Medium Enterprises Development Act, 2006? (a) More than Rs. 10 lakh and less than Rs. 2 crore (b) More than Rs. 2 crore and less than Rs. 5 crore (c) More than Rs. 5 crore and less than Rs. 10 crore (d) More than Rs. 10 crore Ans. (d) 5. Which one of the following statements regarding Aam Admi Bima Yojana (AABY) is not correct? (a) It was launched in the year 2007 (b) The contribution of the Central Government and State Governments in the premium is in the ratio of 75 : 25 (c) The scheme is applicable to rural landless households (d) It provides insurance against natural death as well as accidental death Ans. (b) 6. Balance on capital account refers to the (a) nations net exports of goods, and services (b) nations net exports of financial claims (c) nations net exports of international official reserve assets 17a 18d 19a 20b
(d) nations sum of net exports of goods, services and financial claims Ans. (a) 7.With which one of the following does the PrebischSinger hypothesis deal? (a) Terms of trade of less developed countries (b) Terms of trade of developed countries (c) Balance of payments of less developed countries (d) Balance of payments of developed countries Ans. (c) 8. The effect of trade with different production possibilities curves and identical indifference curves is to make a country. (a) more specialized in consumption and less specialized in production (b) more specialized in production and less specialized in consumption (c) less specialized both in consumption and in production (d) more specialized both in consumption and in production Ans.(d) 9. consider the following statements: When factor intensity reversal occurs 1. Heckscher-Ohlin trade model fads. 2. factor price equalization theorem fails. 3. elasticity of substitution of one factor for the other is much higher in the production of a commodity.
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Which of the statements given above is/are correct? (a)1 only (b) 2 only (c)1 and3 (d) 1,2 and 3 Ans. (d) 10. Under which one of the following conditions is the gain from international trade maximised? (a) Marginal rate of transformation (MRT) in production is equal to the marginal rate of substitution (MRS) in consumption (b) MRT in production is greater than MRS in consumption (c) MRT in production is less than MRS in consumption (d) MRT in production and MRS in consumption are equal to international price ratio Ans. (a) 11. The Lorenz curve shows the relationship between (a) asset creation and income generation (b) population groups and their respective income shares (c) unemployment and inflation (d) wages, labour hours and leisure Ans. (b) 12. Which of the following are the characteristics of the Traditional Society in Rostows Stage theory? 1. Limited production function. 2. No government intervention. 3. Pre-Newtonian science and technology. 4. Dominance of agricultural activity. Select the correct answer using the code given below (a) 1,2and4 (b) 1,2and3 (c) 1,3and4 (d) 2,3 nd4 Ans. (c) 13. Which one of the following is the difference between value at market prices and value at factor cost for a national aggregate? (a) Value of consumption of fixed capital (b) Value of indirect taxes net of subsidies (c) Value of net factor income earned abroad (d) Value of subsidies net of indirect taxes Ans. (b) 14.Given C=120+0.4Y, I=100, G=56 (Where C =Consumption, I = Investment, G =Government Expenditure and Y = Income); which one of the following is the value of equilibrium income? (a) 366.67 (b) 460.00 (c) 310.00 (d) 266.67 Ans:b 15. According to Life Cycle Hypothesis, consumption is related to which one of the following? (a) Current income (b) Past peak level income (c) Life time expected income (d) Price expectations over ones life time Ans. (c) 16. Keynes states that the aggregate demand function is: (a) an increasing function of the level of employment (b) a decreasing function of the level of employment (c) a constant function of the level of employment (d) not related to the level of employment Ans. (a) 17. Which of the following are the limitations of national income estimation in India? 1. Output of non-monetized sector. 2. Non availability of data about income of small producers or household enterprises. 3. Unreported legal income. 4. Inflation. Select the correct answer using the code given below (a) 1,2,3and4 (b) 1,2and3 (c) 2 and 3 (d) 1 and 4 Ans. (b) 18. Which one of The following is shown by the Phillips Curve? (a) Inverse relationship between real and nominal wages (b) Inverse relationship between the rate of inflation and rate of unemployment (c) Positive relationship between nominal wages and the rate of employment (d) Positive relationship between rate of inflation and nominal wages Ans. (b) 19. If a producer pays the price for each of the inputs that it uses, equal to its value of marginal product, then which one of the following does it earn? (a) Positive supernormal profit (b) Zero supernormal profit (c) Negative supernormal profit (d) Monopoly profit Ans. (b) 20. The costs of factors of production, supplied by the entrepreneur himself are known as (a) implicit costs (b) explicit costs (c) fixed costs (d) variable costs Ans. (b)
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21.Which one of the following taxes/cess is levied by States in India? (a) Tax on motor vehicles (c) Educational cess (b) Tax on hotels (d) Tax on wealth Ans. (a) 22. Which one of the following is capital receipt in government budget? (a) Interest receipts o loans given by the Government to other parties (b) Dividends and profits from public sector undertakings (c) Borrowing of the Government from public (d) Property tax receipts Ans. (a) 23. Which of the following are the characteristics of progressive tax? I. Marginal tax rate should be increasing. 2. Marginal tax rate should be more than average tax rate. 3. Gini coefficient for the posttax distribution of income should be less than that of pre-tax distribution. 4. Tax amount should be lump sum in nature. Select the correct answer using the code given below (a) 1,2,3and4 (b) 1,2and3 (c) 1 and 4 (d)2 and 3 Ans. (a) 24. Consider the following statements regarding argument for free trade: 1. Free trade leads to maximization of output, income and employment. 2. Free trade prevents monopoly. 3. Free trade protects domestic industries. Which of the statements given above is/are correct? (a) 1 only (b) 1 and 2 (c) 2and3 (d) 1,2and 3 Ans. (b) 25. Marshall-Lerner condition states that the foreign exchange market would be stable if the sum of the price elasticities of the demand for imports and the demand for exports is: (a)greater than one (b) less than one (c)equal to one (d) equal to zero Ans. (c) Economics Quiz, Economics Test, Economics Question Bank Economics Quizzes economics questions test english FOR India Graduation level economics questions test economics questions test worksheets economics questions test practice for UPSC PCS and other exams MCQ economics questions test exercises 1. Under monopolistic competition the cross elasticity of demand for the product of a firm will be? (A) Perfectly elastic (B) Perfectly inelastic (C) Highly elastic (D) Highly inelastic 2. Which of the following curves is not U shaped? (A) Average Cost Curve (B) Average Variable Cost Curve (C) Average Fixed Cost Curve (D) Marginal Cost Curve 3.Loss of information occurs during? (A) Collection of data (B) Presentation of data (C) Classification of data (D) Interpretation of data 4. Which of the following indices is based on only base year quantities? (A) Laspeyres index (B) Fishers index (C) Kelleys index (D) Pasches index 5. The first State in India- which published its State Human Development Report, is? (A) Kerala (B) Madhya Pradesh (C) Gujarat (D) Andhra Pradesh 6. The Utility Index Number has been developed by? (A) Marshall and Edgeworth (B) Hall and Hitch (C) Neumann and Morgenstern (D) Hicks and Hanson 7. The following theory is treated as the third root of the logical theory of demand? (A) Diminishing marginal utility theory (B) Equi-marginal utility theory (C) Revealed preference theory (D) Theory of consumers surplus 8. Employment elasticity of growth is measured as? (A) Employment growth rate / GDP growth rate (B) Employment growth rate/Population growth rate (C) Employment growth rate/Unemployment growth rate (D) Employment growth rate// Per capita income growth rate 9. The fundamental equation in Harrods growth model is defined?
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(A) In terms of rate of growth of output (8) In terms of rate of growth of technology (C) In relation to the path of capital-labour ratio (D) In terms of rate of change of capital-output ratio 10. The best average for the construction of index number is? (A) Geometric mean (B) Arithmetic mean (C) Harmonic mean (D) Weighted mean 11. The minimum price below which the seller will not sell the goods, is known as? (A) Estimated price (B) Administered price (C) Reserve price (D) Shadow price 12. In the equation C = C0 + alpha,Y, the behavioural coefficient is? (A)C (B) C0 (C)alpha (D)Y 13. Automatic stabilizer is a tool of? (A) Taxation policy (B) Employment policy (C) Population policy (D) Export policy 14. The price of a commodity will increase if the increase in demand is? (A) More than increase in supply (B) Less than increase in supply (C) Equal to the increase in supply (D) Not related to the increase in supply, 15. Which of the following assumptions is not correct for the Lewis model of growth? (A) The economy has two sectors (B) Capitalists reinvest all theirprofits (C) Rural wage is determined by marginal product of labour (D) The supply of rural labour to modern sector is perfectly elastic 16. The Durbin-Watson test is used for? (A) Autocorrelation (B) Multiple correlation (C) Partial correlation (D) Simple correlation 17. The following Industrial Policy Resolution is known as the Economic Constitution of India? (A) Industrial Policy, 1948 (B) Industrial Policy, 1956 (C) Industrial Policy, 1980 (D) Industrial Policy, 1991 18. If two regression lines are perpendicular to each other, the correlation coefficient will be? (A)+1 (B) 1 (C)Zero (D) Indetermined 19. Under the second degree of price discrimination in discriminating monopoly, the buyers are divided into? (A) One single group only of all buyers (B) Two groups only of all buyers (C) Many groups of buyers according to their demand (D) Number of groups which is equal to number of buyers 20.If an economy is purely competitive static economy, then the economic profit will be? (A)Minimum (B) Maximum (C)Zero (D) Negative 21.Who is known as the Architect of Indian Planning? (A) Dadabhai Naoroji (B) M. Visvesaraia (C) P. C. Mahalanobis (D) Ardeshir Dalal 22. The entertainment tax in India was first introduced in the State of? (A)Bengal (B) Bihar (C) Rajasthan (D) Maharashtra 23. The Laffer curve shows the relationship between? (A) Per capita income and environmental pollution (B) Rate of unemployment and rate of inflation (C) Tax rate and tax revenue (D) Economic growth and income inequality 24. The shape of the indifference curve indicates? (A) Income of the consume (B) Taste of the consumer (C) Prices of the commodities (D) Quality of the commodities 25. Which of the following has highest quantitative value in a positively skewed distribution? (A)Mean (B) Median (C)Mode (D) First quartile 26. Which of the following is also known as mixed sample? (A) Systematic sample (B) Stratified sample (C) Random sample (D) Multi-stage sample 27.According to Harvey Leibenstein, two types of incentives work in underdeveloped countries? (A) Positive-sum incentives and Negative-sum incentives (B) Zero-sum incentives and negative-sum incentives (C) Positive-sum incentives and Multiple-sum incentives (D) Zero-sum intcentives and Positive-sum incentives 28. During recent past, the highest GDP growth rate has
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been achieved in the year? (A)2005-06 (B) 2006-07 (C)2007-08 (D) 2008-09 29 A factor of production is used by a producer at that stage where the marginal production of the factor is? (A) Increasing, but positive (B) Increasing, but negative (C) Decreasing, but positive (D) Decreasing, but negative 30. The doctrine of consumers surplus is based on? (A) Indifference curve analysis (B) Revealed preference analysis (C) Law of substitution (D) Law of diminishing marginal utility 31. Big-mac index is based on? (A) Official exchange rate (B) Real effective exchange rate (C) Nominal effective exchange rate (D) Purchasing power parity exchange rate 32. The New Tax Code which is pro posed to come into effect from April 1st, 2011 covers? (A) Direct taxes only (B) Indirect taxes only (C) Both direct and indirect taxes (D) State level taxes only 33. In the Union Budget 2009-10, total amount of interest payments is estimated? (A) More than Rs. 1.0 lakh crore (B) More than Rs. 1.5 lakh crore (C) More than Rs. 2.0 lakh crore (D) More than Rs. 2.5 Iakh crore 34. Which of the following is related with monopoly? (A)Advertisement cost (B) Selling cost (C) Price discrimination (D) Product differentiation 35.The modern money is not? (A) Token money (B) Fiat money (C) Fiduciary money (D) Full bodied money 36.The outcome budget is a? (A) Pre-outlay instrument (B) Post-outlay instrument (C) Pre-expenditure instrument (D) Post-expenditure instrument 37. In the theory of kinked demand curve, the lower segment of the demand curve is? (A) Perfectly inelastic (B) Perfectly elastic (C) Highly elastic (D) Less elastic 38. The catJse of difference between: GDP and NDP is? (A) Net foreign income (B) Depreciation (C) Subsidies (D) Net indirect tax 39. Arithmetic mean of deviation is always? (A) A positive value (B) A negative value (C) Equal to zero (D) Equal to one 40. Which one of the following is an item of current account of the balance of payments? (A) Foreign investment (B) External commercial borrowings (C) Foreign grants (D) Non-resident Indian deposits 41. Charliers check for accuracy is used for? (A)Mean (B)Median (C)Correlation (D) Standard deviation 42.The empirical study of economic theories is considered under? (A) Aggregate economics (B) Applied economics (C) Social economics (D) Welfare economics 43 Elinor Ostrom, the first woman to win the Nobel Prize in economics in 2009. has been awarded for her contribution in the field of? (A) Resolving business conflicts (B) Inflationary trends (C) Management of common property (D) Capital market analysis 44. The Kuznets curve shows the relationship between? (A) Economic growth and income inequality (B) Unemployment and inflation (C) Tax rate and tax revenue (D) Economic growth and inflation 45. Slutskys substitution effect is based on? (A) Cost variation (B) Cost difference (C) Compensating variation (D) Compensating difference 46. The correlation coefficient is independent of? (A) Change of scale only (B) Change of origin only (C) Both the changes of scale and origin (D) Neither the change of origin nor the change of scale 47. The data represented through arithmetic line graph help in understanding? (A)Trend (B) Randomness (C) Cyclicity (D) Seasonality 48. Select the correct statements regarding the Balanced Growth theory Statements: 1 It is a static concept 2. It is a dynamic concept 3. It recognises the significance
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of economic independence 4. It recognises the significance of economic interdependence. Code (A) 1 and 4 (B) 2and 3 (C)1 and 3 (D) 2 and 4 49. For setting up new industrial parks and in established industrial parks, the Foreign Direct Investment under automatic route has been allowed? (A) Upto 26percent (B) Upto 49 per cent (C) Upto 74 per cent (D) Upto 100 per cent 50.The Eulers theorem is satisfied only with? (A) Homogeneous function (B) Heterogeneous function (C) Endogeneous function (D) Exogeneous function Answers: 1C 2C 3A 4A 5A 6C 7C 8A 9D 10A 11C 12C 13A 14A 15C 16A 17B 18C 19C 20C 21B 22A 23C 24B 25A 26B 27A 28B 29C 30D 31D 32A 33C 34C 35D 36A 37D 38B 39C 40C 41A 42D 43C 44A 45B 46C 47A 48D 49D 50A economics mcq questions BA Level India economics questions bank of objective question Practice Test Paper Model Test paper . 1. Frequency density of a class is defined as (A) Frequency of the class/Interval of the class (B) Frequency of the class/ Cumulative frequency for the class (C) Cumulative frequency for the class/Frequency of the class (D) Frequency of the class/ Frequency of the previous class 2. Which of the following is statistics? (A) Profit of a firm has gone up (B) The production of wheat has increased (C) The temperature of Delhi is 5 degree more than the temperature of Mumbai (D) The birth rate has declined in India 3. At end March 2009, Indias total foreign exchange reserves stood at? (A) Approximately $ 150 billion (B) Approximately $ 200 billion (C) Approximately $ 250 billion (D) Approximately $ 300 billion 4.A firm is called maximum efficient firm if it has? (A) Minimum Total Cost (B) Minimum Average Cost (C) Minimum Variable Cost (D) Minimum Marginal Cost 5. Implicit cost may be considered as? (A) Social cost (B) Private cost (C) Normal cost (D) Variable cost 6 The Mid-day Meal scheme is covered under the Ministry of? (A) Human Resource Development (B) Health and Family Welfare (C) Social Justice and Empowerment (D) Consumer Affairs, Food and Public Distribution 7. Which of the following associate bank has been taken over by the State Bank of India in 2008? (A) State Bank of Travancore (B) State Bank of Hyderabad (C) State Bank of Mysore (D) State Bank of Saurashtra 8. Which of the following demand curves is not a constant elasticity curve? (A) Vertical (B) Horizontal (C) Linear (D)Rectangular hyperbola
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9. The following theory of profit has been given by J. A. Schumpeter? (A) Risk theory of profit (B) Uncertainty bearing theory of profit (C) Innovation theory of profit (D) Dynamic theory of profit 10. The formula for determination of number of classinterval for a frequency distribution is given by? (A) Connor (B) Spur (C) Sturges (D) Secrist 11. In the Union Budget, the term Primary Deficit means? (A) Revenue Deficit Interest Payment (B) Fiscal Deficit Interest Payment (C) Revenue Expenditure Revenue Receipts (D) Total Expenditure Total Borrowing 12. As a measure to unearth black money, the demonetisation of Rupees 1000 currency notes in India was done in the year? (A)1968 (B) 1978 (C)1988 (D)1998 13. The Lead Bank scheme was launched in India on the recommendation of? (A) M. Narasimhan (B) F. K. F. Nariman (C) D. T. Lakdawala (D) V. M. Dandekar 14. Firms have chronic excess production capacity in? (A) Duopoly (B) Oligopoly (C) Pure competition (D) Monopolistic competition 15. In a two sector model when consumption is equal to 40 + 0.90 Y and investment is equal to 50, the equilibrium output will be equal to? (A) 500 (B) 700 (C) 900 (D) 1100 16. The positional average is shown by ? (A) Mean deviation (B) Standard deviation (C) Mean (D) Median 17. The shutdown point is that level of output of a firm where? (A) MC=AFC (B) MC=AVC (C) MC=TFC (D) MC=TVC 18. Which of the following functions is not a component of Kaldors model of grow? (A) Employment function (B) Technical progress function (C) Saving function (D) Investment function 19. Walras Law states that the sum of the excess demand for money, bonds and current output must be? (A) Less than zero (B) Equal to zero (C) Equalto one (D) More than zero 20. For a unitary elastic demand curve, when price increases ,the amount spent by a consumer on a /good? (A) Decreases (B) Increases (C) Remains unchanged (D) Becomes zero 21. Correlation coefficient is significant if it is? (A) Less than 6 times of pro able error (B) More than 6 times of probable error (C) Equal to probable error (D) Equal to standard error 22. The term rainy day used by Keynes is related with? (A) Effective demand (B) Precautionary demand (C) Investment multiplier (D) Inflationary gap 23. Root mean square of all the deviations is known as? (A) Mean deviation from median (B) Mean deviation from mode (C) Standard deviation (D) Quartile deviation 24. If there is perfect correlation between two variables, then the regression lines are? (A) Parallel (B)Perpendicular (C)Coincidental (D)Intersectional 25. A producers surplus is equal to? (A) ARMC (B) ARAC (C) AR-MR (D) TRTC 26. According to 2001 census, the total number of persons living in urban slums was approximately? (A)1 crore (B) 2 crore (C)3crore (D) 4 crore 27. The tax called CENVAT is related to? (A) Central Sales Tax (B) Union Excise Duty (C) Corporate Tax (D) Custom Duty 28. The price and quantity,both are indeterminate under? (A) Pure competition (B) Perfect competition (C) Monopoly (D) Bilateral monopoly
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29. Which of the following is not an example of Internal Economies? (A) Economies of superior technology (B) Economies of division of labour (C) Economies of competition (D) Economies of management 30. Which of the following type of facts are not Considered under the study of statistics (A) Quantitative facts (B) Qualitative facts (C) Comparative facts (D) Relative facts 31. The statistical calculations in classified data are based on? (A) The actual values of observations (B) The upper class limits (C) The lower class limits (D) The mid-points of the classes 32. The concept of merit goods has been introduced by? (A)Buchanan (B) Musgrave (C)Samuelson (D) Tiebout 33. The Child Labour (Prohibition and Regulation) Act, 1986 prohibits the employment of Children below the age of? (A) 10 years (B) 12 years (C) 14years (D) 16years 34.The Prime Lending Rate of Commercial Banks are decided by? (A)Positive (B) Negative (C)Zero (D) Infinite 35. The cross elasticity of demand for substitute commodities is always? (A)Positive (B) Negative (C)Zero (D) Infinite 36. The K-factor analysis is related with? (A)Economic growth rate (B)Tends in foreign trade (C)Causes of mortality (D)Infrastructure facilities 37. The knife-edge equilibrium in Harrods model is an equality between? (A) G and Gw (B) Gw and Gn (C) G and Gn (D) G,Gw and Gn 38.Stratified sampling is preferred, where? (A) Population is homogeneous (B) Population is heterogeneous (C) Random sampling is not possible (D) Small samples are required 39. Pure interest is? (A) Equal to the gross interest (B) Less than gross interest (C) More than gross interest (D) Not related to gross interest 40. Which of the following is totally different from logical multiplier? (A) Instant multiplier (B) Lagless multiplier (C) Static multiplier (D) Dynamic multiplier 41.Availability hypothesis explains a countrys (A) Production capacity (B) Natural resources availability (C) Commodity composition of foreign trade (D) Consumption pattern 42. For a Giffen good (A) Income effect is positive and substitution effect is negative (B) Income effect is negative and substitution effect is positive (C) Income effect and substitution effect both are positive (D)Income effect and substitution effect both are negative 43. To meet the objective of inflation control, the Central Bank should adopt following policy measures (A) Increase in cash reserve ratio, along with purchase of securities under open market operations (B) Increase in cash reserve ratio, along with sale of securities under open market operations (C) Decrease in cash reserve ratio, alongwith purchase of securities under pen market operations (D) Decrease in cash reserve ratio, alongwith.sale of securities under open market operations 44. The relative measures of dispersion are generally called? (A) Dispersion coefficient (B) Dispersion multiplier (C) Dispersion accelerator (D) Dispersion variable 45. Which of the following is not expressed by a transformation curve? (A) Choice (B) Scarcity (C) Factor price (D) Opportunity cost 46. The central theme of the World Development Report, 2009 pub lished by the World Bank is? (A) Agriculture for development (8) Development and next generation (C) A better investment climate for every one (D) Reshaping economic geography 47. Under the first degree of price discrimination in discriminating monopoly, the consumers surplus will be?
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(A)Zero (B) Maximum (C) Minimum (D) Indeterminate 48.A rational consumer moves to a higher indifference curve due to? (A) Monotonic preference (B) Polytonic preference Answers: 1A 2C 3C 4B 5B 6A 7D 8C 9C 10C 11B 12B 13B 14D 15C (C) Convex preference (D) Concave preference 49. When was the concept of core sector introduced in Indian industries ? (A)1970 (B) 1980 (C)1990 (D) 2000 16D 17B 18B 19B 20C 21B 22B 23C 24C 25B 26D 27B 28D 29C 30B 31D 32B 33C 3. Four heads of expenditure of the Union Budget 2009-10 are given below 1. Plan expenditure 2. Non-plan expenditure 3. Revenue expenditure 4. Capital expenditure Arrange the expenditure heads in descending order using the codes given below (A)2,3,4,1 (B) 3,4,2, 1 (C)3,2,1,4 (D) 2,1,4,3 4. In the year 2007-08 the per capita NNP at current prices was? (A) More than Rs. 20,000 (B) More than Rs. 30,000 (C) More than Rs. 40,000 (D) More than Rs. 50,000 50 .Which is the apex bank for micro finance in India? (A) State Bank of India (B) Industrial Development Bank of India (C) Small Industries Development Bank of India (D) National Bank for Agriculture and Rural Development 34B 35A 36C 37D 38B 39D 40D 41B 42B 43B 44A 45C 46B 47A 48C 49A 50D
Multiple choice questions on indian economics Economics Mcqs Practice Multiple-choice Questions for Economics economics questions bank economics mcq questions 1.The concept of costing margin in the pricing theory was introduced by? (A)Andrews (B) Baumol (C)Cournot (D) Williamson 2.The Keynesian theory of employment provides the solution of? (A) Frictional unemployment (B) Disguised unemployment (C) Cyclical unemployment (D) Seasonal unemployment
5. Mathematics was first used economic theory by? (A)Weiser (B) Walras (C)Cournot (D) Pigou 6. Indias foreign exchange rate system is? (A) Free float (B) Managed float (C) Fixed (D) Fixed target of band 7. The terms NEER and REER are related with? (A) Foreign exchange rate (B) External economic resources: (C) National and regional economic equality (D) Environmental regulation
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8. For the calculation of percentile, the data should be arranged in? (A) Ascending order (B) Descending order (C) Random order (D) Either random or descending order 9. As per BASEL-II norms, a banks capital to risk weighted assets ratio (CRAR) should be at least? (A) 8% (B) 10% (C) 12% (D) 14% 10. The shape of a frequency curve cannot be? (A) U-shaped (B) V Shaped (C) J-shaped (D) S-shaped 11. According to the Planning Cornmission, for infrastructure development during Eleventh Five Year Plan, the required investment is? (A) Approximately $ 250 billion (B) Approximately $ 500 billion (C) Approximately $ 750 billion (D) Approximately $ 1000 billion 12. Indias first port-based Special Economic Zone named Inter national Container Transshipment Terminal (ICTI) is being set-up at? (A)Kandla (B) Kochi (C)Goa (D) Tuticorin 13. Which of the following is pure unitless number? (A) Mathematical average (B) Statistical average (C) Absolute measure of dispersion (D) Relative measure of dispersion 14.The user cost of capital is? (A) The real rate of interest plus the rate of depreciation (B) The nominal rate of interest plus the rate of depreciation (C) The real rate of interest only (D) The nominal rate of interest only 15. The number of items reserved for the exclusive manufacture by micro and small enterprises is currently? (A) Less than 25 (B) Less than 50 (C) Less than 75 (D) Less than 100 16.A new housing price index RESIDEX has been launched by? (B) Planning Commission (C) Housing Development Finance Corporation (D) National Housing Bank (A) Central Statistical Organization 17.Which one of the following is not a feature of current Indian Planning? (A) Structural Planning (B) Indicative Planning (C) Functional Planning (D) Decentralised Planning 18.The concept of disinvestment was introduced by? (A) Friedman (B) Kaldor (C)Keynes (D) Myrdal 19. Which of the following is average of second order? (A) Arithmetic mean (B) Geometric mean (C) Second quartile (D) Standard deviation 20.. Which average is most affected by the extreme observations? (A) Arithmetic mean (B) Geometric mean (C) Median (D) Mode 21.If the covariance of two variables is equal to the product of the standard deviations of the variables, then the correlation coefficient will be? (A) -1 (B)+1 (C) 0 (D) Between 0 and -1 22 The term Animal Spirit was used by Keynes for? (A) Consumption (B) Investment (C) Income (D) Interest 23. The index of Financial Inclusion has been launched for the first time in 2008 by? (A) Confederation of Indian Industries (CII) (B) Federation of Indian Chamber of Commerce and Industry (FICCI) (C) National Council of Applied Economic Research (NCAER) (D) Indian Council for Research on International Economic Relations (ICRIER) 24.The elasticity of factor substitution for constant elasticity substitution production function is always? (A) Zero (B) One (C) A positive value (D) A negative value 25.The Revealed Preference theory assumes? (A) Weak ordering (B) Strong ordering (C) Constant ordering (D) Multiple ordering 26. Which of the following is not an item of transfer payment? (A)Pension (B) Scholarship
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(C)Dividend (D) Subsidy 27 The United Nations Millennium Development Goals are to be reached by the year? (A) 2010 (B) 2015 (C) 2020 (D) 2025 28.The number of women entrepreneurs in small scale industrial region is highest in the state of? (A) Karnataka (B) Kerala (C) Maharashtra (D) Tamil Nadu 29. Which of the following is not an effect of lump sum tax imposed on monopolist? (A) Output sold is unchanged (B) Price is unchanged (C) Profit reduces (D) Incidence of tax is wholly on buyer 30. A distributed lag for net investment may be due to? (A) A decrease in the capital output ratio (B) An increase in the capital output ratio (C) Limited, short-run production capabilities in capital goods industry (D) Limited long-run production capabilities in capital goods industry 31. The concept of Adjusted Net Saving has been given by? (A)Hamilton (B) Friedman (C)Keynes (D) Pigou 32. The product of regression coefficients is always? (A) Positive (B) Negative (C) Zero (D) A complex number 33. The nature of classical unemployment is? (A) Disguised (B) Frictional (C)Open (D) Structural 34. Which one of the following properties shows the high degree of dispersion? (A) Homogeneity (B) Consistency (C) Uniformity (D) Variability 35. The New Exploration License Policy (NELP) of the Government of India is related with? (A) Coal and Lignite (B)Uranium and Thorium (C) Diamond and Precious Stones (D) Oil and Gas 36.Full employment is a situation when? (A) Cyclical unemployment is zero (B) Frictional unemployment is zero (C) Seasonal unemployment is zero (D) Disguised unemployment is zero 37.Which Indian Company has been included for the first time in U.S. As index NASDAQ-100? (A)Infosys (B)Tata Motors (C) ICICI Bank (D) Videsh Sanchar Nigam Limited 38.The natural rate of unemploy ment is the sum of? (A) Frictional unemployment and Structural unemployment (B) Frictional unemployment and Cyclical unemployment (C) Structural unemployment and Cyclical unemployment (D) Structural unemployment and Seasonal unemployment 39.The nature of statistical inference is? (A) Inductive (B) Deductive (C) Descriptive (D) Objective 40. Mean deviation is always? (A) Equal to the standard deviation than the standard (B) Less than the standard deviation (C) More than the standard deviation (D) Twice of the standard deviation 41. The coefficient of alienation is known as? (A) Against correlation (B) Against variance (C) Against association (D) Against determination 42. The Divergence Indicator is related with? (A) Wage rate of workers (B) Exchange rate of currencies (C) Profit of firms (D) Market price of shares 43.Which one of the following taxes has not been abolished in recent Union Budgets? (A) Banking Cash Transaction (B) Commodity Transaction Tax (C) Fringe Benefit Tax (D) Securities Transaction Tax 44.The Samuelson-Holt formula provides a measure of? (A) Consumers equilibrium (B) Consumers surplus (C) Elasticity of demand (D) Marginal utility 45. The most liquid asset among the following is? (A) Gold (B) Share (C)Cash (D) Land
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46. Ricardian Equivalence is related with? (A) Low deficit, less saving (B) Low deficit, more saving (C) High deficit, less saving (D) High deficit, more saving 47. The Swiss Formula of World Trade Organisation is related with? (A) Patent of drugs (B) Agricultural subsidy (C) Transboundary services (D) Non-agricultural tariff 48. The Securities and Exchange Board of India has recently made the rating of Initial Public offerings mandatory. The total number of such grades are? (A)Three (B) Four (C)Five (D) Six 49. Consider the following statement Once a person has spent his entire income, he would have maximized his total pleasure from it only if the satisfaction gained from the last item of each commodity bought was the same for the each commodity. The above statement is related to? (A) Gossens First Law (B) Gossens Second Law (C) Gossens Third Law (D) Gossens Fourth Law 50. Which of the following results in an increase in inventory sales ratio? (A) A decrease in the cost of Answers: 1B 2C 3C 4B 5A 6B 7A 8A holding inventory (B) An increase in probability delivery delays for materials (C) A decrease in the probability delivery delays for materials (D) An increase in the cost of: holding inventory 51. Harris-Todaro model is related with? (A) Growth and unemployment (B) Growth and migration (C) Unemployment and migration (D) Unemployment and inflation 52. Density test is used for? (A) Median (B) Mean (C) Mode (D) Quartile 53. In the Keynesian saving function, the parameter is ? (A) Disposable income (B) Total saving (C) Marginal propensity to save (D) Autonomous saving 54. A simple correlation can defined as the tendency of? (A) Independent variation (B) Dependent variation (C) Simultaneous variation (D) Instantaneous variation 55.For implementing a comprehensive Khadi Reform Programme, a financial aid of $ I million over a period of three years has recently been tied up with? (A) International Monetary Fund (B) International Development 9C 10 D 11 B 12 B 13 D 14 A 15 A 16 D 17 C Agency (C) Asian Development Bank (D) International Finance Corporation 56.For n consecutive natural numbers, the following relationship is correct? (A) Mode = Mean (B) Mean = Median (C) Mode > Median (D) Mode < Mean 57. The measure of the degree of association between the values of two random variables is called? (A) Correlation (B) Association (C) Regression (D) Co-variance 58.The current level of maternal morality rate in India is approximately? (A) 150 per one lac live births (B) 250 per one lc live births (C) 350 per one lac live births (D) 450 per one lac live births 59.In any set of numbers, the geometric mean exists only when all numbers are? (A) Positive (B) Negative (C) Zero (D) Positive, zero or negative 60. If correlation coefficient is equal to zero, then variables will be? (A)Associated (B)Correlated (C)Independent ( D) Dependent 18 C 19 D 20 A 21 B 22 D 23 D 24 C 25 B 26 C
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27 B 28 D 29 D 30 B 31 A 32 A 33 C 34 D 35 D 36 A 37 A 38 A Free Economics Online Practice Test Economics Quiz, Economics Test, Economics Question Bank Free Economics Online Practice Test Model test paper and Multiple choice Questions Quiz on indian Economy and theory of economics 1. Under which one of the following conditions, does product exhaustion theorem hold? (a) Increasing return to scale (b) Decreasing return to scale (c) Constant return to scale (d) Constant return to factors of production 2. Public goods are characterized by: 1. collective consumption. 2. divisibility. 3. non-exclusion. 4. rival-consumption. (c) there is a co-existence of unemployment and inflation (d) the economy experiences underemployment equilibrium 39 B 40 B 41 D 42 B 43 D 44 C 45 C 46 D 47 D 48 C 49 B 50 D Select the correct answer using the code given below (a) 1 and 2 (b) 1 and 3 (c) 1and 4 (d) 2 and 4 3.Capital Deepening refers to which one of the following: (a) Going for more fixed capital (b) Emphasis on social overhead capital (c) A constant capital-output ratio (d) An increasing capital-output ratio 4. Disguised underemployment refers to the situation when: (a) people seems occupied on a full time basis even though the services they render require less than full time? (b) workers are underpaid despite doing full time job 51 C 52 C 53 A 54 B 55 C 56 B 57 A 58 B 59 A 60 C
5. Which one of the following is explained-by Fei-Rariis model? (a) The inter-relationship between the agricultural and the industrial sectors (b) Planning methods when labour is in short supply (c) Growth process of the industrial sector (d) A neo-classical framework of growth analysis 6. Consider the following statement: 1. The Solow model explains a capita/labour ratio which does not grow under equilibrium condition. 2. Substituting capital for labour is possible in the Solow model. Which of the statements-given above is/are correct? (a) 1 only (b) 2 only (c)Both 1 and 2 (d) Neither 1 nor 2 7. Consider the following statements:
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1. Dualism refers to the existence and persistence of increasing divergences between rich and poor nations and rich and poor people at various Levels. 2. Dualism is the political division of the society into two broad groups of the rightists and the leftists in modem democracy. Which of the statements given above is correct? (a)1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2 8. Directions: The following item consists of two statements, one labelled as the Assertion (A) and the other as Reason (R) You are to examine these two statements carefully and select the answer using the code given below. Assertion (A) : The doctrine of unbalanced growth is based on creation of imbalances in the economy in a conscious manner. Reason (R) : Unequal development of various sectors often generates conditions for rapid development. Code: (a) Both A and R are individually true and R is the correct explanation o & (b)Both A and R are individually true, but R is not correct explanation bf A (c) A is true, but R is false (d) A is false, but R is true 9. Suppose the market demand function of a perfect competitive industiy is given by Q(d) = 4,750 50P and market supply function is given by Q(s) = 1,750+ 50P. Price is expressed in rupees. Which one of the following is equal to the market equilibrium price? (a) Rs. 30. (b) Rs. 20 (c) Rs. 25 (d) Rs. 26 10. Market failure occurs because of: I. Externality 2. Asymmetric information 3. Perfect competition Select the correct answer using the code given below (a) 1,2and3 (a) Return to scale (b) I only (c)1 and 2 (d)2 and 3 11. If personal income is Rs. 57,000 ; personal income tax Rs. 9,000; (b) Fixed proportion of the variables (c) Return to the variable factor (d) Return to the fixed factor 14. Consider to following statements with respect to a duopoly market with firms AandB: 13. In the long run, the cost and output relationship depends on which one of the following? consumption Rs. 43,000; interest payment Rs 10,000; personal saving Rs. 40,000; then the disposable personal income would be equal to: (a)Rs. 50,000 (b) Rs. 47,000 (c)Rs. 48,000 (d) Rs. 40,000 12. A discriminating monopolist charges a (a) higher price in the, submarket where price elasticity of demand is high (b) higher price in the sub-market where price elasticity of demand is low (c) lower price in the sub where price elasticity of demand is low (d) higher price in the sub-market where demand is low
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I. If both firms act as followers, then they will have reaction functions 2. If Firm A acts as leader and firm B acts as follower, then firm A will not have any reaction function. 3. If both firms act as leaders, then the outcome is economic warfare. Which of the statements given above are correct? (a) 1 and 2 (b) 1 ,2 and 3 I. Axiom of non-satiation (c) 1 and 3 2. Axiom of transitivity (d) 2 and 3 3. Axiom of reflexivity 15. Consider the following: 4. Axiom of convexity According to Ricardian theory of distribution I. rent is price determined. (a) 1 and 3 2. land is supposed to have various alternative used. 3. marginal land earns no rent, 4. rent is a surplus in the sense that it is an excess over transfer earnings. Which of the statements given above are correct? (a) 1,2and 4 disequilibria are corrected by: (b) 1,3 and 4 1. changes in the exchange rates. (c) 2 and3 (d) 1 and 4 2. international flow of money and reserves. (b) 1and 4 (c) 2 and 3 (d) 1 and 2 18. Consider the following statements Under flexible exchange fate system, balance of payments select the correct answer using the code given below (d) A condition that the expected returns on deposits of any two countries are equal when measured in the same currency 20. Which one of the following best describes the nineteenth century gold standard system? (a) Regulated system with floating exchange rates (b) Automatic system with fixed exchange rates (e) Regulated system with fixed exchange rates (d) Automatic system with floating exchange rates 21 Consider the following statements regarding the features of the 16 If two commodities perfectly/substitutable (competitive), the direction of change of the cross elasticity of demand between then be? (a) zero (b) positive (c) negative (d) infinity 17. From which of the following axioms does the property that indifference curves for a consumer cannot intersect each other follow? Which of the statements given above is/are correct? (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2 19. Which one of the following is implied by interest parity? (a) Interest rates are at par in all the countries (b) Movements in spot rates and forward fates in the foreign exchange market are same (c) Potential holders of foreign currency deposits view them as not equally desirable assets
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World Bank: 1. The Board of Governors is the supreme body. 2. The voting power of the Governor of a member country is related to the financial contribution of the country concerned. 3. It gives short-term loan to its members to correct their temporary balance of payments disequilibrium. Which of the statements given above is/are correct? (a)1 only (b) 1and 2 (c) 2and3 (d) l,2 and 3 22. Which of the following is/are the reasons for the collapse of Bretton-Woods system? I. The refusal by the U.S. Treasury to convert short-term liability into gold. 2. The U.S. move to make dollar inconvertible. 3. The devaluation of U.S. dollar in 1973. Select the correct answer using the code given below (a) 1 only (b) 1 and 2 (c)2 and 3 (d) l,2 and 3 23. Tariffication refers to: (a) replacement of quotas by tariffs only (b) replacement of all existing non-tariff restrictions by tariff (c) scaling dow.of tariffs in general (d) obtaining sanction to increase tariff rates 24. Which of the following are the components of foreign capital? 1. Grants and loans. 2. External commercial borrowings. 3. Foreign direct investment. 4. Deposits from non-residents. Select the correct an using the code given below (a) 1,2,3 and 4 (b) 1,2 and 4 (c) l and 2 (d)3 and 4 25. Under loanable funds theory of interest, which of the following are included in the supply of loanable funds? 1. Current savings. 2. Funds released from embodiment in working capital. 3. Bank loans. (b) The real rate of interest exceeds the nominal rate of interest (c) The nominal rate of interest equals the real rate of interest (d) Nominal and real rates of interest become zero 28. With whom, among the following, is the theory that the rate of interest is also a factor for transaction demand for money, associated? (a) Baumol and Tobin Select the correct answer using the code given below (a) 1 and2 (b) 2and3 (c) l and 3 (d)1,2and3 26. Which one of the following is represented by the intersection of the IS curve and the LM curve? (a) Only a flow equilibrium (b) Only a stock equilibrium (c) A stock-cum-flow equilibrium (d) Moving away from equilibrium 27. Which one of the following situations occurs during the period when borrowers and lenders expect inflation? (a) The nominal rate of interest exceeds real rate of interest
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(b) Pigou (c) Keynes (a) l and 3 (d) Samuelson (b) 1,2and4 29. According to Friedman, on which of the following does the velocity of circulation of money depend? I. Market interest rate on bonds. 2. Rate of change in general price level. 3. Ratio of physical non-human wealth to human wealth. 4. Ratio of savings to investment. Select the correct answer using the code given below (a) 1 and 3 (b) l, 2 and 4 (c) l, 2 and 3 (d) 4 only 30. Consider the following statements: I. Lower the currency-deposit ratio, higher the money multiplier. 2. Lower the reserve-deposit ratio, higher the money multiplier. 3. Larger the monetary base, higher is the money supply. 4. Larger the monetary base, lower is the money supply. (d) create demand-pull inflation if there is unemployment 32. When one of the following is not correct in the context of IS and LM framework of the theory of interest? (a) It integrated money interest and income into a general equilibrium model of product and money market (b) Investment and interest are the two important variable in the model (c) The theory is propounded by JR. Hicks (d) IS represents the money market equilibrium and LM represents the product market equilibrium (c) l, 2 and 3 (d) 2 and 4 31. In the standard Keynesian ISLM model, a decrease in minimum cash reserve ratio will: (a) create demand-pull inflation in full-employment (b) create cost-push inflation in full-employment (c) create mark up inflation in full-employment which one of the following is the corresponding saving function? (a)100+0.2Y (b)-100+0.8Y (c) -100+ 0.2Y (d) 400+ 0.2Y 35. According to the classical theory of employment, deviations from the state of full employment are of: (a) permanent nature (b) purely temporary nature (c) imaginary situations (d) normal situations 36. Effective demand is that level of demand at which: (a) aggregate demand is fore than aggregate supply (b) aggregate demand is less than aggregate supply (c) aggregate demand is equal to aggregate supply Which of the statements given above are correct? 33. The accelerator model predicts that the changes in investment is determined by the changes in: (a) inventory (b) capital (c) interest (d) output 34. Given, MPC = 0.8 and the threshold consumption = 100,
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(d) output is maximum 37. In national income accounting, which one of the following is the difference between gross aggregates and net aggregates? (a) The value of net indirect taxes (b) The value of consumption of fixed capital (c) The value of intermediate consumption (d) The value of final consumption expenditure 38. Consider the following statements relating to gross investment in the national income accounts: 1.It includes the items relating to residential arid non-residential construction. 2.It takes care of spending on producers durable goods. 3.It includes changes in business inventories. Which of the statements given above are correct? (a)l and 2 (b)2 and 3 (c)l and 3 (b) permanent income (d) l, 2 and 3 (c) transitory income 39. Consider the following statements: I. Pigou held the view that employment depends upon (d) expected life income 42. According to Keynes, which one of the following is meant by money wages and could be substantially increased by curtailing wages. 2. Keynes held the view that employment depends upon the level of effective demand which can be increased by leaving money intact. - Which of the statements given above is correct? (a)1 only (b) 2 only (c)Both 1 and 2 (d) Neither 1 and 2 40. Which one of the following is related to the theory that supply created its own demand and therefore full employment I s a natural situation? (a) Says law (b) Pigous law of employment (c) Giffen paradox (a) 1 only (d) Keynesian theory of employment 41. The life cycle hypothesis of consumption implies that consumption is related to (a) price expectation over ones life time 44. Imposition of a tariff will change the income distribution of the tariff-imposing country in favour of the scarce factor and against the abundant factor. This is known as: (a) Leontief paradox (b) Lerner paradox (c) Stolper-Samuelson theorem (b) 2 only (c) 1,2 and3 (d) 1 and 3 I. The physical volume of trade and transactions. 2. The level of prices in the economy. 3. The development of bank and banking habits of the people. Select the correct answer using the code given below liquidity preference? (a) Refraining from saving (b) Desire to hold cash (c) A preference to hold assets like bonds and securities which are liquid (d) Increasing savings in terms of precious metals 43. The currency notes in circulation as well as the proportion of total money supply held in the form of currency are influenced by which of the following?
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(d) Metzler-paradox Directions : The following two (2) items consist of two statements, one labeled as the Assertion (A) and the other as Reason (R). You are to examine these two statements carefully and select the answers to these items using the code given below. Code: (a) Both A and R tare individually true and R is the correct explanation of A (b) Both A and R are individually true, but R is not the correct explanation of A (c) A is true, but R is false (d) A is false, but R is true 45. Assertion (A) The money creation multiplier is equal to the reciprocal of the minimum reserve ratio: Reason (R): The banking system as a whole can grant new credit up to an amount of excess reserves. 46. Assertion (A): Inflationary gap is caused by excess demand. Reason (R) : Excess demand is due to scarcity of supply of money. b) Equal proportional sacrifice (c) Equal marginal sacrifice 1C 2B 3A 4A 5A 6C 47. Consider the following statements: I. Bond price and interest rate vary indirectly. 2. A tax on personal income reduces disposable income. 3. According to Says Law, demand creates its own supply. Which of the statements given above are correct? (a)1 and 2 (b)2 and 3 (c)1 and 3 4. is independent of elasticities. (d) 1,2 and 3 48. Which of the following are included in broad money (M 3) in India? (b) l,2 and 3 I. Currency with the public. (c)3 and 4 2. Demand deposits with banks. (d)2 and 4 3. Time deposits with banks. 4. Other deposits with RBI. Select be correct answer using the code given below (a)l,2 and 3 (d) Equal average sacrifice Answers: 7D 8A 9A 10B 11C 12B 13A 14B 15B 16A 17D 18C 50. Which one of the following is not a tax sacrifice principle? (a) Equal absolute sacrifice ( Which of the statements given above are correct? (a) l and 2 (b) 1 and2 (c)3 and 4 (d)l,2,3and4 49. Consider the following statements: In competitive markets, incidence of tax 1. is shared by buyers and sellers. 2. on buyers increases if elasticity of supply increases. 3. is fully borne by buyers if elasticity of demand is zero.
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19A 20B 21B 22A 23B 24A 25C 26C 27C 28A 29C 30C 31A 32D 33D 34C 35B 36C 37B 38D 39C 40A 41D 42B 43C 44B 45A 46A 47A 48D 49B 50D
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General Awareness Economics For bank PO ECONOMICS GENERAL AWARENESS BANK CLERKS /PO Current Affair on Business and Economy for Bank Clerical/ PO Exams 1. A situation where we have people whose level of income is not sufficient to meet the minimum consumption expenditure is considered as (A) Absolute Poverty (B) Relative Poverty (C) Urban Poverty (D) Rural Poverty Ans. (A) 2. Full convertibility of a rupee means (A) Purchase of foreign exchange for rupees freely (B) Payment for imports in terms of rupees (C) Repayment of loans in terms of rupees (D) Determination of rate of exchange between rupee and foreign currencies freely by the market forces of demand and supply Ans. (D) 3. India is called a mixed economy because of the existence of 1. Public Sector 2. Private Sector 3. Joint Sector 4. Cooperative Sector (A) 1, 4 (C) 3, 4 (B) 1, 2 (D) 2, 4 Ans. (B) 4. Revealed Preference Theory was propounded by (A) Adam Smith (B) Marshall (C) P.A. Samuelson (D) J.S. Mill Ans. (C)
5. Gross Domestic Product is defined as the value of all (A) Goods produced in an economy in a year (B) Goods and services produced in an economy in a year (C) Final goods produced in an economy in a year (D) Final goods and services produced in an economy in a year Ans. (D) 6. An exceptional demand curve is one that moves (A) Upward to the right (B) Downward to the right (C) Horizontally (D) Vertically Ans. (A) 7. Production function explains the relationship between (A) Initial inputs and ultimate output (B) Inputs and ultimate consumption (C) Output and consumption (D) Output and exports Ans. (A) 8. In Economics the terms Utility and usefulness have (A) Same meaning (B) Different meaning (C) Opposite meaning (D) None f the above Ans. (B) 9. The present Indian monetary system is based on (A) Gold Reserve System (B) Proportional Reserve System (C) Convertible Currency System (D) Minimum Reserve System Ans. (D) 10. One of the essential conditions of monopolistic competition is (A) Many buyers but one seller (B) Price discrimination (C) Product differentiation (D) Homogeneous product Ans. (C)
11. Greshams law is related to (A) Consumption and demand (B) Supply and demand (C) Circulation of money (D) Deficit financing Ans. (C) 12. In a laissez-faire economy (A) The customers take all the decisions regarding production of all the cornmodities (B) The Government does not interfere in the free functioning of demand and supply forces in the market (C) The private sector takes all the decisions for pricedetermination of various commodities produced (D) The Government controls the allocation of all the factors of production Ans. (B) 13. In calculating National Income which of the following is included? (A) Services of housewives (B) Pensions (C) Income of smugglers (D) Income of watchmen Ans. (D) 14. Who among the following has suggested tax on expenditure? (A) Dalton (B) Kaldor (C) Musgrave (D) Gautam Mathur Ans. (B) 15. Bank-rate is the rate at which (A) A Commercial Bank borrows loans from some other Commercial Bank (B) The Central Bank borrows loans from the Government (C) The Commercial Bank gives loans to the public (D) The Central Bank arediscounts the Commercial bills brought to it by the Commercial Banks Ans. (D)
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Chapter 1:The International Economy

16. The 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 Ans. (C) 17. Which institution is known as soft loan window of the World Bank? (A) International Finance Corporation (B) International Development Agency (C) International Monetary Fund (D) Indian Development Forum Ans. (B) 18. ECOMARC is a symbol related to (A) Exported goods (B) Imported goods (C) Goods safe for environment (D) Best quality Ans. (C) 19. Consider the following reasons of continuous decline in average land-holding size in India 1. Law of inheritance 2. Consolidation 3. Farm mechanization 4. Desire of land ownership Pick out the correct answer from the options given below (A) 1, 2, 3 and 4 (B) 1, 3 and 4 (C) l and 4 (D) 1 and 2 Ans. (C) 20. Which of the following sets belongs to Central tax? (A) Excise duty, Sales tax and Customs duty (B) Excise duty, Customs duty and Income- tax (C) Income-tax, Customs duty and House tax (D) Customs duty, Entertainment tax and Income tax Ans. (B)
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production a. counted in real GDP increases. b. not counted in real GDP increases. c. counted in real GDP decreases. d. not counted in real GDP decreases. 7. Suppose the working age population in Tiny Town is 100 people. If 25 of these people are NOT in the labor force, the ____ equals ____. a. unemployment rate; 25/100 x 100 b. unemployment rate; 25/125 x 100 c. labor force; 75 d. labor force; 25/100 x 100 8. Cyclical unemployment a. is due mainly to job leavers. b. may increase or decrease during an expansion. c. occurs when technology improvements change job requirements. d. fluctuates over the business cycle. 9. If the CPI was 132.5 at the end of 2004 and 137.5 at the end of 2005, the inflation rate over these two years was a. 3.6 percent. b. 3.8 percent. c. 5.0 percent. d. None of the above answers is correct. 10. The technique currently used to calculate the CPI implicitly assumes that over time consumers buy a. relatively more of goods whose relative prices are rising. b. relatively less of goods whose relative prices are rising. c. the same relative quantities of goods as in a base year. d. goods and services whose quality improves at the rate of growth of real income. 11. The supply of real GDP is a function of a. the total expenditures of consumers, investors and government.
Multiple choice questions on selected topics in macroeconomics and international trade and exchange rates, imports and exports. 1. Which of the following is a long-run macroeconomic policy goal? a. reduce unemployment b. increase inflation c. promote steady growth d. eliminate recession 2. Real GDP is a. the best measure we have for total production, though it does have some flaws. b. the worst measure we have of total production because it misses much of what is produced. c. the best measure we have for total production because it doesnt miss anything. d. ignored as a measure of total production because it is does not take account of inflation. 3. If the CPI was 132.5 at the end of 2003 and 140.2 at the end of 2004, the inflation rate over these two years was a. 7.7 percent. b. 5.4 percent. c. 4.4 percent. d. 5.8 percent. 4. If our exports are $1.2 billion and our imports are $1.7 billion, a. the United States is lending to the rest of the world. b. U.S. national saving is too high. c. the United States is borrowing from the rest of the world. d. U.S. investment must decrease. 5. In the expenditure approach to GDP, the largest component is a. government purchases. b. personal consumption expenditures. c. gross private domestic investment. d. net exports.
6. If a larger fraction of the adult population is working, household ASSISTANT PROF. SACHIDANANDA SAHOO, IIIT, BBSR

b. the sum of wages, salaries, corporate profits, rents and interest. c. only the state of technology. d. the quantities of labor, capital and the state of technology. 12. In short-run macroeconomic equilibrium a. real GDP equals potential GDP and aggregate demand determines the price level. b. the price level is fixed and short-run aggregate supply determines real GDP. c. real GDP and the price level are determined by short-run aggregate supply and aggregate demand. d. real GDP is less than potential GDP. 13. ____ economists believe that the economy is self-regulating and will be at full employment as long as monetary policy is not erratic. a. Keynesian b. Monetarist c. Classical d. All 14. The classical dichotomy applies when the economy only when the economy a. is at full employment. b. has less than full employment. c. is in a recession. d. has more than full employment. 15. Because the leisure-real GDP production possibilities frontier is bowed outward, then a. each additional unit of real GDP costs a decreasing amount of forgone leisure. b. as more real GDP is produced, increasingly more productive labor is being used. c. the marginal product of labor is increasing as real GDP increases. d. the slope of the economys production function decreases as real GDP increases. 16. Suppose there is a rise in the real wage rate. As a result, the quantity of labor demanded
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d. growth is often just an illusion fostered by growth accounting. 21. Given the list of assets below, which is the most liquid? a. $500 worth of General Motors common stock. b. $500 worth of General Motors bonds. c. a $500 travelers check. d. a one-ounce gold coin. 22. Which of the following statements concerning commercial banks is true? a. Banks need to maintain cash reserves equal to their deposits. b. Most banks maintain cash reserves equal to a fraction of deposits. c. Cash reserves earn the highest rate of return of any asset for a bank. d. Since the advent of the Federal Reserve, banks do not need to maintain cash reserves. 23. You withdraw $2,000 from your account. Your bank has a desired reserve ratio of 20 percent. This transaction, by itself, will directly reduce a. the quantity of money by $1,600. b. deposits by $1,600. c. the quantity of money by $2,000. d. deposits by $2,000. 24. Suppose you hold $50 to buy groceries weekly and then the price of groceries increases by 5 percent. To be able to buy the same amount of groceries, what must happen to your nominal money holdings? a. They must increase by $5. b. They can decrease by $5. c. They must increase by $2.50. d. They must increase, but the amount of the increase is different than the above answers. 25. If the Fed carries out an open market operation and buys U.S. government securities, the interest rate a. falls and the quantity of money increases.
a. increases. b. decreases. c. does not change because there is no change in the money wage rate. d. increases only if the price level also decreases. 17. Convergence of the income gap has been most dramatic between a. Hong Kong and the United States. b. the Central European countries and the United States. c. Africa and the United States. d. South America and the United States. 18. Which of the following statements regarding human capital is incorrect? a. Human capital is the accumulated skill and knowledge of human beings. b. Education is the only vehicle for the creation of human capital because training simply reinforces what has already beenlearned. c. The accumulation of human capital is the source of both increased productivity and technological advance. d. Writing and mathematics, the most basic of human skills, are crucial elements in economic progress. 19. If Y = real GDP, and L, K and T represent the quantities of labor,capital and technology respectively, then the most appropriate representation of the aggregate production function is a. L = F(K, Y, T). b. Y = F(T, K). c. Y = F(K, T, L). d. T = F(Y, T, L). 20. A central proposition of the new growth theory is that a. growth will cease but prosperity will persist. b. knowledge is not subject to diminishing returns. c. government direction and oversight is necessary for consistent growth.

b. rises and the quantity of money increases. c. falls and the quantity of money decreases. d. rises and the quantity of money decreases. Question about Macroeconomic Multiple Choice Questions 1) For an economy at full employment, an increase in the quantity of money will lead to which of the following sequence of shifts in aggregate demand and supply curves A) Decrease aggregate demand, increase short -run aggregate supply constant long-run aggregate supply (B) Decrease aggregate demand, decrease short -run aggregate supply constant long-run aggregate supply (C) Increase aggregate demand, increase short-run aggregate supply, increase long-run aggregate supply(D) Increase aggregate demand, increase short-run aggregate supply, decrease long-run aggregate supply 2) By itself, an increase in the price of oil shift to be A)short-run aggregate supply curve leftward and does not shift the aggregate curve (B) short-run aggregate supply curve rightward and does not shift the aggregate curve (C) aggregate demand curve leftward and does not shift the short-run aggregate supply curve. (D) ) aggregate demand curve rightward and does not shift the short-run aggregate supply curve 3) The marginal propensity to consume equals 1 minus the A ) marginal propensity to invest (B) ) marginal propensity to save (C) ) marginal propensity to import (D) marginal propensity to pay taxes
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10) With steep short run aggregate supply curve, A) an increase in government spending will not have an impact on the price level (B) fiscal policy will be an effective tool to reduce unemployment without raising price too much (C) an increase in taxes that does not change potential GDP will not decrease real GDP by much (D) There is a large change in real GDP whenever the price level rises 11) Monetary policy affects macroeconomics performance by A) changing aggregate supply (B) creating budget surpluses (C) changing aggregate demand (D) creating budget deficits 12) Suppose that the Feds is using this feedback rule: Every time real GDP exceeds potential GDP is less than potential GDP, contractionary policy is used and whenever real GDP is less than potential GDP, expansionary policy is used GDP equals potential GDP and then aggregate demand increase . As a consequence of the policy action taken is the resulting A) contractionary policy will lower the price level from what it otherwise would be (B) contractionary policy will decrease unemployment from what it otherwise would be (C) expansionary policy will decrease unemployment from what it otherwise would be (D) expansionary policy will lower the price level from what it otherwise would be 13) A foreign student from Hong Kong studying in an American University who has no income from U.S source get a hair cut from a local salon . This hair cut will A) increase the volume of exports from Hong Kong to the U.S (B) decrease the volume of imports from Hong Kong to the U.S (C) increase the volume of exports
purchase (C) autonomous consumption expenditure (D) all of the above 5) In a recession, A) investment is low and the capital stock grows quickly (B) investment is low and the capital stock grows slowly (C)investment is high and consumption is low (D) consumption is high and government spending is low 6) According to the Keynesian theory of business cycle , a(n) A) decrease in profits expectation will decrease investment only and will not change real GDP or consumption expenditure (B) decrease in profits expectation will decrease investment, real GDP and consumption expenditure (C) increase in profits expectation will increase investment only and will not change real GDP or consumption expenditures (D) decrease in sale expectation will affect the price level and not real GDP 7)If the real interest rate is 4% and workers expect real wages to be 2% year higher next year, according to the real business cycle theory worker will work A) more this year and less next year (B) less this year and less next year (C) more this year and more this year (D) less this year and more next year 8) All of the following are government expenditure items except A) interest on government debt (B) transfer payment (C) purchase of corporate bonds (D) purchase of goods and service 9) Suppose the tax rate on interest income is 25%, the real interest rate is 4% , and the inflation rate is 4% . In this case , the real after-tax interest rate is A) .5% (B) 3.5 % (C) 4.0 % (D) 2.0%
4) Which of the following are included in autonomous expenditure? A) investment (B) government ASSISTANT PROF. SACHIDANANDA SAHOO, IIIT, BBSR

from the U.S to Hong Kong. (D) decrease the volume of imports from the U.S to Hong Kong 14) Country A and Country B both consume and produce only food and clothing. Both countries use only labor to produce these two products. A worker in country A can produce 6 units of clothing or 10 units of food each day while worker in country B can produce 4 units of clothing and 8 units of food . Which statement is true . A) The opportunity cost of clothing production in country A is greater than that of country (B) The opportunity cost of food production in country A is greater than that of country B (C) The opportunity cost of food production in country A is the same as than that of country B (D) The opportunity cost of clothing production in country B is less than that of country A 15) A decrease in a country's tariffs will: A) not change its imports or exports (B) increase both its imports and exports (C) increase its imports but not its exports(D) increase its exports but not its imports 16) Which of the following is a factor that determine the amount of dollars supplied in the foreign exchange market? A) The exchange rate (B) U.S interest rate (C) Interest rate in foreign country (D) Allof the above affects the number of dollars supplied in the foreign exchange market. 17) Suppose the target exchange rate set by the Fed is 150 yen per dollar. If the demand for dollars permanently decrease the fed A) Can permanently meet the target by selling the dollar (B) Can permanently meet the target by buying the dollar (C) must violate both interest parity and purchasing power parity to
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5. Who has given scarcity definition of economics ? (A) Adam Smith (B) Marshall (C) Robbins (D) Robertson Ans : (C)
permanently meet the target. (D) cannot permanently maintain the target rate. 18) The U.S interest rate minus the foreign interest rate is called _____ A) foreign interest rate differential (B) U.S bond rate differential (C) U.S interest rate differential (D) U.S stock yield differential Economics Questions & Answers 1. An Enquiry into the Nature and Causes of Wealth of Nations is the book of economist (A) Adam Smith (B) Marshall (C) Robbins (D) None of above Ans : (A) 2. Economics is the Science of Wealth who gave this definition ? (A) J. K. Mehta (B) Marshall (C) Adam Smith (D) Robbins Ans : (C) 3. Economics is what economists do. It has been supported by (A) Richard Jones (B) Comte (C) Gunnar Myrdal (D) All of the above Ans : (D) 4. Human Welfare is the subject of Economics. This statement is associated with the name of which of the economists ? (A) Marshall (B) Pigou (C) Penson (D) All of the above Ans : (D)
6. Economics is a science the basis of this statement is (A) Relation between cause and effect (B) Use of deductive method and inductive method for the formations of laws (C) Experiments (D) All of the above Ans : (D) 7. Characteristics of economic laws are (A) Mere statements of economic tendencies (B) Less certain (C) Hypothetical (D) All of the above Ans : (D) 8. Which theory is generally included under micro economics ? (A) Price Theory (B) Income Theory (C) Employment Theory (D) None of the above Ans : (A) 9. Whose opinions have revolutionised the scope of macro economics ? (A) Adam Smith (B) J.B. Say (C) J.M. Keynes (D) All of the above Ans : (C) 10. Which of the following is an economic activity ? (A) Teaching of a teacher in the

school (B) To teach son at home (C) To serve her child by mother (D) To play football by a student Ans : (A) 11. Passive factor of production is (A) Only land (B) Only capital (C) Both land and capital (D) Neither land nor capital Ans : (C) 12. Under law of demand (A) Price of commodity is an independent variable (B) Quantity demanded is a dependent variable (C) Reciprocal relationship is found between price and quantity demanded (D) All of the above Ans : (D) 13. For inferior commodities, income effect is (A) Zero (B) Negative (C) Infinite (D) Positive Ans : (B) 14. When total utility becomes maximum, then marginal utility will be (A) Minimum (B) Average (C) Zero (D) Negative Ans : (C) 15. Utility means (A) Power to satisfy a want (B) Usefulness (C) Willingness of a person (D) Harmfulness Ans : (A) 16. Marginal utility is equal to average utility at that time when
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(b) The Fifth Five Year Plan (c) The Sixth Five Year Plan (d) The Eighth Five Year Plan 2. Which of the following are among the non-plan expenditures of the Government of India? [1995] 1. Defence expenditure 2. Subsidies 3. All expenditures linked with the previous plan periods 4. Interest payment Codes: (a) 1 and 2 (b) 1 and 3 (c) 2 and 4 (d) 1, 2, 3 and 4 3. What is the annual rate aimed at in the Eighth Five Year Plan? [1995] (a) 5.6% (b) 6% (c) 6.5% (d) 7% 4. The largest source of financing the public sector outlay of the Eighth Five Year Plan comes from: [1995] (a) balance from current revenue (b) contribution of public enterprises (c) government borrowings (d) deficit financing
average utility is (A) Increasing (B) Maximum (C) Falling (D) Minimum Ans : (B) 17. At point of satiety, marginal utility is (A) Zero (B) Positive (C) Maximum (D) Negative Ans : (A) 18. Which of the following is the second law of Gossen ? (A) Law of equi-marginal utility (B) Law of equi-product (C) Theory of indifference curve (D) Law of diminishing marginal utility Ans : (A) 19. Total utility of a commodity is measured by which price of that commodity ? (A) Value in use (B) Value in exchange (C) Both of above (D) None of above Ans : (A) 20. According to Marshall, the basis of consumer surplus is (A) Law of diminishing marginal utility (B) Law of equi-marginal utility (C) Law of proportions (D) All of the above Ans : (A)
1. Which one of the following vive years plans recognized human development as the cove of all development efforts? [1995] (a) The Third Five Year Plan
5. The New Exim Policy announced in 1992, is for period of: [1995] (a) 3 years (b) 4 years (c) 7 years (d) 5 years

6. Given below are two statements, one labelled as Assertion (A) and the other labelled as Reason (R). Assertion (A): An important policy instrument of economic liberalization is reduction in import duties on capital goods. Reason (R): Reduction in import duties would help the local entrepreneurs to improve technology to face the global markets. In the context of the above two statements, which one of the following is correct? [1996] (a) Both A and R are true and R is the correct explanation (b) Both A and R are true R is not a correct explanation (c) A is true but R is false (d) A is false but R is true 7. The Eighth Five Year Plan is different from the earliest ones. The critical difference lies in the fact that: [1996] (a) it has a considerably larger outlay compared to the earlier plans (b) it has a major thrust on agricultural and rural development (c) considerable emphasis is placed on infrastructure growth (d) industrial licensing has been abolished 8. Consider the following statements; Most international agencies which find Development Programme in India on intergovernmental bilateral
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11. Which of the following come under Non-plan expenditure? [1997] 1. Subsidies
agreements, mainly provide: [1996] 1. Technical assistance 2. Soft loans which are required to be paid back with interest 3. Grants, not required to be paid back 4. Food assistance to be paid back (a) 2 and 4 are correct (b) 1, 2 and 3 are correct
2. Interest payments 3. Defence expenditure 4. Maintenance expenditure for the infrastructure created in the previous plans Choose the correct answer using the codes given below: (a) 1 and 2 (c) 1 and 3
(c) 1, 2 and 4 are correct (b) 2 and 4 (d) 1, 2, 3 and 4 (d) 3 and 4 are correct 9. Consider the following items imported by India: [1996] 1. Capital goods 2. Petroleum 3. Pearls and precious stones 4. Chemicals 5. Iron and Steel The correct sequence of the decreasing order of these items (as per 94-95 figures), in terms of value is: (a) 1,2,3,4,5 (b) 1,2,4,3,5 (c) 2,1,3,4,5 (d) 2,1,4,5,3 10. The Sixth and the Eighth Five Year Plans covered the period 1930-1985 and 1992-1997 respectively. The Seventh Five Year Plan covered the period: [1997] (a) 1987-1992 (b) 19861991 (c) 1985-1990 (d) 1988-1994 12. Which one of the following regions of the world supplies the maximum of our imported commodities (in terms of rupee value)? [1998] (a) Africa (b) America (c) Asia and Oceania (d) Europe 13. The planning process is the industries sector in India has assumed a relatively less important position in the nineties as compared to that in the earlier period. Which one of the following is not true in this regard? [1999] (a) With the advent of liberalisation, industrial investment development have largely been placed within the domain of private and multinational sectors (b) With market assuming a central place, the role of central planning in many sectors has been rendered redundant (c) The focus of planning has shifted to sectors like human resource

(d) The nation's priorities have shifted away from industrial development to rural development 15. Which one of the following is the objective of National Renewal Fund? [1999] (a) To safeguard the interests of workers who may be affected by technological upgradation of industry or closure of sick units (b) To develop the core sector of the economy (c) For the development of infrastructure such as energy, transport communications and irrigation (d) For human resource development such as full literacy, employment population control, housing and drinking water 16. A rise in 'SENSSEX' means: [2000] (a) a rise in prices of shares of all companies registered with Bombay Stock Exchange (b) a rise in prices of shares of all companies registered with National Stock Exchange (c) an overall rise in prices of shares of group up companies registered with Bombay Stock Exchange (d) a rise in prices of shares of all companies belonging to a group of companies registered with Bombay Stock Exchange 17. Assertion (A): The rate of growth of India's exports has shown an appreciable increase after 1991. [2000] Reason (R): The Govt. of India has resorted to devaluation.
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(a) Planned Development [2000] (b) Community Development
(a) Both A and R are true and R is the correct explanation of A (b) Both A and R are true but R is not a correct explanation of A (c) A is true but R is false (d) A is false but R is true 18. Match List I with List II and select the correct answer using the codes given below the lists: [2000] List-I A. Development Programme B. National Council C. Indira Gandhi Institute of D. World Bank List-II 1. UN India Human Development Report 2. India Development Report 3. World Development Report Development Research 4. Human Development Report Codes: (a) A-4; B-1; C-2; D-3 (b) A-4; B-2; C-1; D-3 (c) A-2; B-3; C-4; D-1 (d) A-2; B-1; C-4;D-3 19. "...instil into the vast millions of workers, men and women, who actually do the job, a sense of partnership and of cooperative performance..." The above passage relates to:
(c) Panchayati Raj System (d) Integrated Development Programme 20. Economic liberalisation in India started with: [2000] (a) substantial changes in industrial licensing policy (b) the convertibility of Indian rupee (c) doing away with procedural formalities for foreign direct investment (d) significant reduction in tax rates 21. Consider the following statements: [2000] The Indian rupee is fully convertible: 1. in respect of Current Account of Balance of payment 2. in respect of Capital Account of Balance of payment 3. into gold Which of these statements is/are correct? (a) 1 alone (b) 3 alone (c) 1 and 2 (d) 1, 2 and 3 22. The growth rate of per capita income at current prices is higher than that of per capita income at constant prices, because the latter takes into account the rate of: [2000] (a) growth of population

(b) increase in price level (c) growth of money supply (d) increase in the wage rate
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2. The Third Five-Year Plan introduced the concept of import substitution as a strategy for industrialization. Which of the statements given above is/are correct? (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2 30. Which one of the following brings out the publication called "Energy Statistics" from time to time? [2009] (a) Central Power Research Institute (b) Planning Commission (c) Power Finance Corporation Ltd. (d) Central Statistical Organization 31. Consider the following: [2009] 1. Fringe Benefit Tax 2. Interest Tax 3. Securities Transaction Tax
(a) Union Cabinet (b) President on the advice of Prime Minister (c) Planning Commission
23. Global capital flows to developing countries increased significantly during the nineties. In view of the East Asian financial crisis and Latin American experience, which type of inflow is good for the host country? [2002] (a) Commercial loans (b) Foreign Direct Investment (c) Foreign Portfolio Investment (d) External Commercial borrowings 24. With reference to the Indian Public Finance, consider the following statements: [2002] 1. External liabilities reported in the Union Budget are based on historical exchange rates 2. The continued high borrowing has kept the real interest rates high in the economy 3. The upward trend in the ratio of Fiscal Deficit of GDP a recent years has a adverse effect on private investment 4. Interest payments is the single largest component of the nonplan revenue expenditure of the Union Government Which of these statements are correct? (a) 1, 2 and 3 (b) 1 and 4 (c) 2, 3 and 4 (d) 1,2,3 and 4 25. Five Year Plan in India is finally approved by: [2002]
(d) National Development Council 26. Which one of the following is the correct statement? Service tax is a/an: [2006] (a) direct tax levied by the Central Government. (b) indirect tax levied by the Central Government. (c) Direct tax levied by the State Government. (d) Indirect tax levied by the State Government. 27. Participatory Notes (PNs) are associated with which one of the following? [2007] (a) Consolidated Fund of India (b) Foreign Institutional Investors (c) United Nations Development Programme (d) Kyoto Protocol 28. During which Five Year Plan was the Emergency clamped, new elections took place and the Janata Party was elected? [2009] (a) Third (b) Fourth (c) Fifth (d) Sixth 29. Consider the following statements regarding Indian Planning: [2009] 1. The Second Five-Year Plan emphasized on the establishment of heavy industries.
Which of the above is/are Direct Tax/Taxes? (a) 1 only (b) 1 and 3 only (c) 2 and 3 only (d) 1, 2 and 3 32. In the context of independent India's economy, which one of the following was the earliest event to take place? [2009] (a) Nationalization of Insurance companies (b) Nationalization of State Bank of India

(c) Enactment of Banking Regulation Act (d) Introduction of First FiveYear Plan 33. The SEZ Act, 2005 which came, into effect in February 2006 has certain objectives. In this context, consider the following: [2010] 1. Development of infrastructure facilities. 2. Promotion of investment from foreign Sources. 3. Promotion of exports of services only. Which of the above are the objectives of this Act? (a) 1 and 2 only (b) 3 only (c) 2 and 3 only (d) 1,2 and 3 34. A great deal of Foreign Direct Investment (FDI) to India comes from Mauritius than from many major and mature economies like UK and France. Why? [2010] (a) India has preference for certain countries as regards receiving FDI (b) India has double taxation avoidance agreement with Mauritius (c) Most citizens of Mauritius have ethnic identity with India and so they feel secure to invest in India (d) Impending dangers of global climatic change prompt Mauritius to make huge investments in India
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37. In the context of governance, consider the following: [2010] 1. Encouraging Foreign Direct Investment inflows 2. Privatization of higher educational Institutions 3. Down-sizing o/bureaucracy 4. Selling/offloading the shares of Public Sector Undertakings Which of the above can be used as measures to control the fiscal deficit in India? (a) 1, 2 and 3 (b) 2, 3 and 4 (c) 1, 2 and 4 (d) 3 and 4 only 38. Inclusive growth as enunciated in the Eleventh Five Year Plan does not include one, of the following: [2010] (a) Reduction of poverty (b) Extension of employment opportunities (c) Strengthening of capital market (d) Reduction of gender inequality 39. Who of the following shall cause every recommendation made by the finance Commission to be laid before each House of Parliament? [2010] (a) The President of India (b) The Speaker of Lok Sabha (c) The Prime Minister of India (d) The Union Finance Minister
35. India-based Neutrino Observatory is included by the Planning Commission as a mega science project under the 11th Five-Year Plan. In this context, consider the following statements: [2010] 1. Neutrinos are chargeless elementary particles that travel close to the speed of light. 2. Neutrinos are created, in nuclear reactions of beta decay. 3. Neutrinos have a negligible, but non-zero mass 4. Trillions of Neutrinos pass through human body every second. Which of the statements given above are correct? (a) 1 and 3 only (b) 1, 2 and 3 only (c) 2, 3 and 4 (d) 1,2,3 and 4 36. In the context of Indian economy, consider the following pairs: [2010] Term Most Appropriate description 1. Melt down Fall in stock prices 2. Recession Fall in growth rate 3. Slowdown Fall in GDP Which of the pairs given above is/are correctly matched? (a) 1 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and 3

40. Which one at the following is responsible for the preparation and presentation of Union Budget to the Parliament? [2010] (a) Department of Revenue (b) Department of Economic Affairs (c) Department of Financial Services (d) Department of Expenditure 41. Consider the following actions by the Government: [2010] 1. Cutting the tax rates 2. Increasing the government spending 3. Abolishing the subsidies In the context of economic recession, which of the above actions can be considered a part of the "fiscal stimulus" package? (a) 1 and 2 only (b) 2 only (c) 1 and 3 only (d) 1,2 and 3
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(c) Finance ministry of that State (d) Panchayati Raj Ministry of that State 46. Consider the following statements: In India, taxes on transactions in Stock Exchanges and Futures Markets are [2010] 1. levied by the Union 2. collected by the states Which of the statements given above is/are correct? (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2 Answers: 1. (d) The theme of the eighth five year plan (1992-1997) was "Plan with a human face". 2. (d) Non plan expenditures include non-developmental expenditure (interest payment, subsidies, defence expenditure, civil administration), developmental expenditure and expenditure incurred on projects which remained unfinished in the previous plan. 3. (a) The targeted annual growth rate was 5.6% but the achieved growth rate was 6.7%. 4. (d) Deficit financing, practice in which a government spends more money than it receives as revenue, the difference being made up by borrowing or minting new funds.
1. The assets in the National Investment Fund are managed by the Union Ministry of Finance. 2. The National Investment Fund is to be maintained within the Consolidated Fund of India. 3. Certain Asset Management companies are appointed as the fund managers. 4. A certain proportion of annual, income is used for financing select social sectors. Which of the statements given above is/are correct? (a) 1 and 2 (b) 2 only (c) 3 and 4 (d) 3 only 44. In India, the tax proceeds of which one of the following as a percentage of gross tax revenue has significantly declined in the last five years? [2010] (a) Service tax
42. In the context-of India's Five Year Plans, a shift in the pattern of industrialization, with lower emphasis on heavy industries and more on infrastructure begins in [2010] (a) Fourth Plan (b) Sixth Plan (c) Eighth Plan (d) Tenth Plan 43. With reference to the National Investment Fund to which the disinvestment proceeds are routed, consider the following statements: [2010]
(b) Personal income tax (c) Excise duty (d) Corporation tax 45. Which one of the following authorities makes recommendation to the Governor of a State as to the principles for determining the taxes and duties which may be appropriated by the Panchayats in that particular State? [2010] (a) District Planning Committees (b) State Finance Commission

5. (d) It was for five years (April 1, 1992 - March 31, 1997) 6. (a) Both statements are correct and explains. 7. (a) Eighth Five Year Plan (1992-97) 8. (b) A soft loan is a loan with a below-market rate of interest. This is also known as soft financing. Sometimes soft loans provide other concessions to borrowers, such as long repayment periods or interest holidays. Soft loans are usually provided by governments to projects they think are worthwhile. The World Bank and other development institutions provide soft loans to developing countries. 9. (b) 10. (c) Period between 1990-92 was second plan holiday. The first plan holiday was between 1966-69. 11. (d) Non plan expenditures include non-developmental expenditure (interest payments, subsidies, defence expenditure, civil administration), developmental expenditure and expenditure incurred on projects which remained unfinished in the previous plan. 12. (d) 13. (d) Statement (a), (b) and (c) are True which explain the less important position of industries sector after minutes. 14. (b)
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in nature. Thus, it can not be pulled out of the country. It is also non-debt creating. 24. (c) 25. (d) According to given options, the right answer is NDC. But actually it is finally approved by the Parliament. 26. (b) 95th constitutional amendment act 2003 27. (b) Participatory notes (PNs / P-Notes) are instruments used by investors or hedge funds that are not registered with the SEBI (Securities & Exchange Board of India) to invest in Indian securities. Participatory notes are instruments that derive their value from an underlying financial instrument such as an equity share and, hence, the word, 'derivative instruments'. SEBI permitted FIIs to register and participate in the Indian stock market in 1992. 28. (c) This all happened from 1975-78 during fifth five year plan (1974-78) 29. (a) Second Five- Year Plan (1956-1961); The fourth FiveYear Plan (1969-74) introduced the concept of import substitution as a strategy for industrialization. 30. (d) It is published by Ministry of statistics & Programme implementation, Central Statistical organization. 31. (d) Fringe Benefits Tax (FBT) was the tax applied to most although not all, fringe benefits. A new tax was imposed on employers by India's Finance Act 2005 was introduced for the financial year commencing April 1, 2005. The Fringe Benefit Tax is abolished in the Finance Bill of 2009 by Finance Minister Pranab Mukherjee. Securities
Government of India resolution on 3rd February, 1992. 16. (c) Increase in Sensex reflects the overall mood of the economy of India. A rise in it means that investors & FIIs are positive about the growth of Indian economy & it will be sustained in future. But a rise in Sensex doesn't necessarily mean that the price of your stocks also move up. 17. (a) Devaluation of currency is conscious decision take by Central bank of country to lower the external value of domestic currency. As a result of this Indian goods become cheaper for Foreigners. 18. (a) National council of applied economic research brings out India development report. 19. (b) Community development programme was started in the year 1952. 20. (a) Economic liberalization in India started with industrial delicensing. 21. (a) In respect of capital account of balance of payment, the Indian rupee is partially convertible. 22. (b) National income calculated on the basis of price levels prevailing in current year where as National income at constant prices means NI calculated by using certain past base year prices to arrive at real change in the NI over a period of time. 23. (b) FDI is defined as investment by a foreign multinational or its subsidiary or a foreign company in terms of setting up a project in another country either by way of a 100% subsidiary or by way of a joint venture. Thus, FDI is long term
15. (a) The Concept of the National renewal Fund was announced by the Government as a part of the New Industrial Policy, 1991. The Government formal established the National Renewal Fund (NRF) by a ASSISTANT PROF. SACHIDANANDA SAHOO, IIIT, BBSR

Transaction Tax (STT) is the tax payable on the value of taxable securities transaction. STT was introduced in India by the 2004 budget and is applicable with effect from 1st October 2004. 32. (c) Nationalization of State Bank of India - 1955; Introduction of First Five-Year Plan - 1951; Enactment of Banking Regulation Act - 1949; Nationalization of Insurance companies - 1955-56 33. (a)The objectives of SEZs include making available goods and services free of taxes and duties supported by integrated infrastructure for export, production, expeditious and single window approval mechanism and a package of incentives to attract foreign and domestic investments for promoting export-led growth. 34. (b) India has comprehensive Double Taxation Avoidance Agreements (DTAA) with 23 countries. This means that there are agreed rates of tax and jurisdiction on specified types of income arising in a country to a tax resident of another country. Under the Income Tax Act 1961 of India, there are two provisions, Section 90 and Section 91, which provide specific relief to taxpayers to save them from DTAA. Section 90 is for taxpayers who have paid the tax to a country with which India has signed DTAA, while Section 91 provides relief to tax papers who have paid tax to a country with which India has not signed a DTAA. Thus, India gives relief to both kind of taxpayers. 35. (d)A neutrino is an elementary particle that usually travels close to the speed of light, is electrically neutral, and is able to pass through ordinary matter almost undisturbed. This makes neutrinos extremely difficult to detect. Neutrinos have a very
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tax revenue, which was 31.9 percent in 1992-93,, fell to 17.5 percent in 2006-07, as a result of massive structuring on excise and customs," Assocham said." 45. (b) Article 243 I of the constitution of India 46. (a)
small, but nonzero rest mass. Neutrinos are affected only by a "weak" subatomic force of much shorter range than electromagnetism, and are therefore able to pass through great distances in matter without being affected by it. 36. (a) Recession is slow down in demand. 37. (b) Fiscal deficit = Revenue receipts + Non-debt creating capital receipts - Total expenditure 38. (c) Inclusive growth is 'broadbased growth', 'shared growth', and 'pro-poor growth". 39. (a) As per provisions given under article 281 of the Indian constitution. 40. (b) The DEA is also responsible for preparation and presentation to the Parliament of Central Budget and the Budgets for the Stale Governments under President's Rule and Union Territory Administrations. 41. (a) Abolishing the subsidies will lead to higher prices of basic goods. Thus it is not good for providing stimulus in the economy. 42. (c) It was during eighth plan period (1992-97) 43. (c) On 27 January 2005, the Government had decided to constitute a 'National Investment Fund' (N1F) into which the realization from sale of minority shareholding of the Government in profitable CPSEs would be channelised Salient features of NIF: 44. (c) The excise duty's share in the total tax revenue, which was 41.3 percent in 1992-93. declined to 25.1 percent in 2006-07. The customs duty's share in the total
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4. If a nation has an open economy, it means that the nation: a. Allows private ownership of capital b. Has flexible exchange rates c. Has fixed exchange rates d. Conducts trade with other countries 5. International trade forces domestic firms to become more competitive in terms of: International trade forces domestic firms to become more competitive in terms of: a. The introduction of new products b. Product design and quality c. Product price d. All of the above 6. The movement to free international trade is most likely to generate shortterm unemployment in which industries? a. Industries in which there are neither imports nor exports b. Import-competing industries c. Industries that sell to domestic and foreign buyers d. Industries that sell to only foreign buyers 7. International trade is based on the idea that: a. Exports should exceed imports b. Imports should exceed exports c. Resources are more mobile internationally than are goods d. Resources are less mobile
MULTIPLE-CHOICE QUESTIONS 1. A primary reason why nations conduct international trade is because: a. Some nations prefer to produce one thing while others produce other things b. Resources are not equally distributed among all trading nations c. Trade enhances opportunities to accumulate profits d. Interest rates are not identical in all trading nations 2. A main advantage of specialization results from: a. Economies of largescale production b. The specializing country behaving as a monopoly c. Smaller production runs resulting in lower unit costs d. High wages paid to foreign workers 3. International trade in goods and services is sometimes used as a substitute for all of the following except: a. International movements of capital b. International movements of labor c. Domestic production of the same goods and services d. Domestic production of different goods and services THE INTERNATIONAL ECONOMY

internationally than are goods 8. Arguments for free trade are sometimes disregarded by politicians because: a. Maximizing domestic efficiency is not considered important b. Maximizing consumer welfare may not be a chief priority c. There exist sound economic reasons for keeping ones economy isolated from other economies d. Economists tend to favor highly protected domestic markets 9. How much physical output a worker producers in an hours work depends on: a. The workers motivation and skill b. The technology, plant, and equipment in use c. How easy the product is to manufacture d. All of the above 10. The largest amount of trade with the United States in recent years has been conducted by: a. Canada b. Germany c. Mexico d. United Kingdom
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15. Recent pressures for protectionism in the United States have been motivated by all of the following except: a. U.S. firms shipping component production overseas b. High profit levels for American corporations c. Sluggish rates of productivity growth in the United States d. High unemployment rates among American workers 16. International trade tends to cause welfare losses to at least some groups in a country: a. The less mobile the countrys resources b. The more mobile the countrys resources c. The lower the countrys initial living standard d. The higher the countrys initial living standard 17. For a nation to maximize its productivity in a global economy: a. Only imports are necessary b. Only exports are necessary c. Both imports and exports are necessary d. Neither imports nor exports are necessary
12. __________ is the ability of a firm/industry, under free and fair market conditions, to design, produce, and market goods and services that are better and/or cheaper than those of other firms/industries. a. Competitiveness b. Protectionism c. Comparative advantage d. Absolute advantage 13. A firms __________, relative to that of other firms, is generally regarded as the most important determinant of competitiveness. a. Income level b. Tastes and preferences c. Environmental regulation d. Productivity 14. Free traders maintain that an open economy is advantageous in that it provides all of the following except: a. Increased competition for world producers b. A wider selection of products for consumers c. The utilization of the most efficient production methods d. Relatively high wage levels for all domestic workers
11. Increased foreign competition tends to: a. Intensify inflationary pressures at home b. Induce falling output per worker-hour for domestic workers c. Place constraints on the wages of domestic workers d. Increase profits of domestic importcompeting industries ASSISTANT PROF. SACHIDANANDA SAHOO, IIIT, BBSR

18. A feasible effect of international trade is that: a. A monopoly in the home market becomes an oligopoly in the world market b. An oligopoly in the home market becomes a monopoly in the world market c. A purely competitive firm becomes an oligopolist d. A purely competitive firm becomes a monopolist 19. International trade in goods and services tends to: a. Increase all domestic costs and prices b. Keep all domestic costs and prices at the same level c. Lessen the amount of competition facing home manufacturers d. Increase the amount of competition facing home manufacturers 20. The real income of domestic producers and consumers can be increased by: a. Technological progress, but not international trade b. International trade, but not technological progress c. Technological progress and international trade d. Neither technological progress nor international trade
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25. Empirical research indicates that __________ best enhances productivity gains for firms and industries. a. Local competition b. Regional competition c. Global competition d. No competition 26. By the mid-1990s, __________ banks had become the worlds largest in terms of total assets. a. British b. German c. Japanese d. American 27. A reduced share of the world export market for the United States would be attributed to: a. Decreased productivity in U.S. manufacturing b. High incomes of American households c. Relatively low interest rates in the United States d. High levels of investment by American corporations 28. The dominant trading nation in the world market following World War II was: a. United Kingdom b. Germany c. South Korea d. United States
21. In the United States, automobiles are: a. Imported, but not exported b. Exported, but not imported c. Imported and exported d. Neither exported nor imported 22. Technological improvements are similar to international trade since they both: a. Provide benefits for all producers and consumers b. Increase the nations aggregate income c. Reduce unemployment for all domestic workers d. Ensure that industries can operate at less than full capacity 23. A sudden shift from import tariffs to free trade may induce short-term unemployment in: a. Import-competing industries b. Industries that are only exporters c. Industries that sell domestically as well as export d. Industries that neither import nor export 24. Recent empirical studies indicate that productivity performance in industries is: a. Directly related to globalization of industries b. Inversely related to globalization of industries c. Not related to globalization of industries d. Any of the above

29. A closed economy is one in which: a. Imports exactly equal exports, so that trade is balanced b. Domestic firms invest in industries overseas c. The home economy is isolated from foreign trade d. Saving exactly equals investment at full employment 30. Relative to countries with low ratios of exports to gross domestic product, countries having high export to gross domestic product ratios are __________ vulnerable to changes in the world market. a. Less b. More c. Equally d. Any of the above
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lessen inflationary pressures at home. resources, its stock of machinery and equipment, and the skill of its workers in creating goods that people want to buy. T F 8. If a nation has an open economy, it means that the nation allows private ownership of capital. 9. Increased foreign competition tends to increase profits of domestic importcompeting companies. 10. Restrictive trade policies have resulted in U.S. producers of minerals and metals supplying all of the U.S. consumers needs.
4. The benefits of international trade accrue in the forms of lower domestic prices, development of more efficient methods and new products, and a greater range of consumption choices. 5. In an open trading system, a country will import those commodities that it produces at relatively low cost while exporting commodities that can be produced at relatively high cost. 6. Although free trade provides benefits for consumers, it is often argued that import protection should be provided to domestic producers of strategic goods and materials vital to the nations security. 7. In the long run, competitivenes s depends on an industrys natural
TRUE-FALSE QUESTIONS T F 1. The two most important trading partners of the United States are Canada and Mexico. 2. The United States exports a larger percentage of its gross domestic product than Japan, Germany, and Canada. 3. Opening the economy to international trade tends to T F

ANSWERS 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. b a d d d b d b d a 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. c a d d b a c a d c
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Questions 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. c b a a c c a d c b
Answers to Multiple-Choice
Answers to True-False 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. F F T T F T T F F
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ASSISTANT PROF. SACHIDANANDA SAHOO, IIIT, BBSR

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