Q 1. Study of economic issues of individual unit like an individual consumer, firm, etc. is known as?
a. Microeconomics
b. Macroeconomics
c. Economics
d. Market economies
Q 2. The point where the market demand is equal to market supply is known as?
a. Consumer equilibrium
b. Market equilibrium
c. Excess demand
d. Excess supply
Q 3. The sum of the individual demands for a product from buyers in the market is known as?
a. Individual demand
b. Market demand
c. Utility
d. Total utility
Q 4. When the quantity of a commodity supplied changes from its initial level, it is known as?
a. Law of supply
b. Law of demand
c. Change in quantity supplied.
d. all of the above
Q5. The sales receipt of a firm is known as?
a. revenue
b. selling price
c. total cost
d. profit
Q6. Explain how the production possibility curve is affected when resources are inefficiently employed in an economy?
a. PPC will shift downward
b. PPC will shift upward
c. No change in PPC
d. will move from one point to another on the same PPC
Q7. A consumer buys 17 units of a good at a price Rs.10 per unit. When price falls to Rs. 8 per unit, the consumer buys 23 units. Using the expenditure approach, what will you say about price elasticity of demand of the good?
a. More than unit elastic
b. Less than unit elastic
c. Unit elastic
d. Perfectly elastic
Q8. What is fixed cost and variable cost?
a. fixed cost is the expense of a firm which does not change with the change in the production whereas variable cost are the cost which changes with the level of production
b. fixed costs are the average costs and the variable costs are the marginal costs
c. fixed costs are the total cost of the production whereas variable cost are a part of it.
d. fixed costs are the accounting costs of the firm whereas variable costs are the imputed value of the factors of the production
Q9. What will be the shape of total revenue and marginal revenue curve of a firm which is free to sell any quantity of the good at a given price?
a. TR will be upward sloping and MR will be downward sloping
b. TR will be downward sloping and MR will also be downward sloping
c. TR will be upward sloping and MR will be horizontal
d. TR and MR will be horizontal
Q10. What is the implication of the feature ‘freedom of entry and exit to firms' under perfect competition?
a. Each firm earns super normal profits in the short and long run
b. Each firm earns supernormal profits in the long run only
c. Each firm earns normal profits in the short and long run.
d. Each firm earns just the normal profits in the long run.
Q11. What is the implication of the feature of ‘large number of sellers' under perfect competition?
a. If one firm increases or decreases its supply, the market price remains unaffected
b. If one firm increases its supply, the market price also increases
c. If one firm decreases its supply, the market price also decreases
d. If one firm changes its supply, the market price also changes
Q12. What is the condition of equilibrium under single commodity case?
a. MUx > Px
b. MUx < Px
c. MUx = Px
d. MUx ≥ Px
Q13. How a fall in the prices of the related goods affect the demand for the given good?
a. Increases the demand of the given good
b. Decreases the demand of the given good
c. The demand of the given good remains unaffected
d. None of the above
Q14. What is supply schedule? How does the change in technology of producing a good affect the supply of that good?
a. A supply schedule is a table which shows the quantities of a commodity supplied at various prices during a given time period. The change in technology shifts the supply curve of the good.
b. supply schedule is an increase in the price of a commodity leads to an increase in its quantity supplied. The change in technology increases the supply of the good.
c. Supply schedule means the quantity of a commodity which a firm or an industry is willing to produce at a particular price, during a given time period. The change in technology does not have any affect on the supply of the good.
d. A supply schedule is a table which shows the quantities of a commodity supplied at various prices during a given time period. The change in technology increases the price of the good and hence will increase the supply of the good.
Q15. What is supply curve and what will be the effect of the fall in the price of input on the supply of the good?
a. supply curve shows an inverse relationship between the price of the good and the quantity supplied. A fall in the price of an input reduces the supply of the good using that input.
b. supply curve shows a positive relationship between the price of the good and the quantity supplied. A fall in the price of an input increases the supply of the good using that input, at the same price.
c. supply curve the graphical representation of the price of the good and the quantity supplied. A fall in the price of an input does not change the supply of the good using that input.
d. supply curve shows direct relationship between the price of the good and the quantity supplied. A fall in the price of an input, increases the price of the good and thus increase the supply of the good using that input.
Q16. What is the shape of Total Product under the law of variable proportions?
a. As more and more units of variable factor are employed with fixed factor, total product initially increases at an increasing rate then increases at decreasing rate and ultimately starts decreasing.
b. As more and more units of variable factor are employed with fixed factor, total product initially decreases at a decreasing rate then increases at increasing rate and ultimately starts decreasing.
c. As more and more units of variable factor are employed with fixed factor, total product initially increases and then after attaining its maximum starts falling and becomes negative too.
d. As more and more units of variable factor are employed with fixed factor, total product initially increases then decreases and ultimately becomes negative.
Q17. Explain the condition of consumer's equilibrium
a. MRSxy > Px/Py
b. MRSxy =Px/Py
c. MRSxy ≥ Px/Py
d. MRSxy < Px/Py
Q18. Market for a good is in equilibrium. Supply of the good ‘decreases'. What will be the effect of the same?
a. Equilibrium price of the good decreases and equilibrium quantity of the good increases.
b. Equilibrium price of the good decreases and equilibrium quantity of the good also decreases.
c. Equilibrium price of the good increases and equilibrium quantity of the good decreases.
d. Equilibrium price of the good increases and equilibrium quantity of the good also increases
Q19. Distinguish between cooperative and non cooperative oligopoly.
a. cooperative oligopoly: When firms mutually decide price and output or follow any agreement and doesn't compete with each other, like Cartels; Non-Cooperative oligopoly: When firms don't have any agreement and compete with one another on prices to get more and more share in market.
b. cooperative oligopoly: When firms cooperate with each other to sell an equal amount of output at the same price; Non-Cooperative oligopoly: When firms don't cooperate with each other to sell an equal amount of output at the same price
c. cooperative oligopoly: When firms mutually decide only about output to sell in the market and doesn't compete with each other; Non-Cooperative oligopoly: When firms don't decide about the output to sell in the market but decide the prices mutually and sell their outputs at that fixed price in the market
d. cooperative oligopoly: When firms mutually decide price and doesn't compete with each other; Non-Cooperative oligopoly: When firms compete with one another on prices to get more and more share in market.
Q20. Define capital goods.
a. Goods that are used to satisfy the demand of the ultimate consumers
b. goods that are used to produce other goods rather than being bought by the consumers
c. goods that are consumed by the consumers
d. goods which produces capital
Q21. Define real gross domestic product
a. GDP adjusted for the inflation or deflation.
b. the value of the goods and services produced in the economy in a particular period of time.
c. the total output produced by the firms in an economy
d. GDP + Net income from abroad
Q22. Define legal reserve ratio
a. the rate at which bank discount their first hand bills with RBI
b. the fraction of its deposits which a bank is required to keep with RBI
c. the ratio of deposits and currency
d. the fraction of deposits which a bank is required to keep in the form of gold or government securities.
Q23. What is demand deposit?
a. a deposit in a bank account that cannot be withdrawn before a set date or for which notice of withdrawal is required.
b. Money placed into a banking institution for safekeeping
c. a financial instrument provided by banks which provides investors with a higher rate of interest than a regular savings account, until the given maturity date
d. a deposit of money that can be withdrawn without prior notice, e.g. in a current account.
Q24. What is balance of payment?
a. statement of a country's export and import of services
b. statement of government expenditure and revenue
c. statement of a country export and import of goods
d. statement of a country total payment and receipts
Q25. Which one is not the component of the current account of the balance of payment account?
a. Export and import of goods
b. Export and import of services
c. borrowing and lending of the country
d. unilateral transfers
Q26. Why externalities are a limitation of taking GDP as an index of welfare?
a. It helps GDP to rise
b. GDP fails to value the cost of such factors
c. It results in a decrease in GDP
d. It will have no effect on GDP
Q27. An economy is in equilibrium. Its consumption function is C= 300+0.8Y where C is consumption function and Y is income and investment is Rs.700. Find national income.
a. Rs. 5000
b. Rs.700
c. Rs. 7000
D. Rs. 10000
Q28. What do you mean by direct and indirect tax?
a. direct tax are directly paid to the government, like wealth tax, income tax and indirect tax is the tax which is indirectly paid to the government like service tax, excise duties etc.
b. direct tax is the tax whose burden can be shifted to the other people whereas indirect tax burden cannot be shifted to other people.
c. direct tax is the tax which an individual pay and indirect tax is the tax paid by the producers
d. direct tax are direct and uniform whereas there are various tax rates under indirect tax.
Q29. when price of the foreign currency rises what is the affect on its supply?
a. its supply falls
b. its supply also rises.
c. its supply does not change
d. its supply becomes zero
Q30. When the price of foreign currency falls, its demand:
a. increases
b. decreases
c. constant
d. no effect
Q31. What is economic stability objective of a budget?
a. Economic stability is when a country's payments are equal to its receipts
b. Economic stability is when there is no inflation or deflation in the economy
c. economic stability is when the government expenditure and receipts are equal
d. economic stability is when there is proper allocation of resources in an economy
Q32. What is allocation of resources objective of a budget?
a. managed and proper distribution of resources
b. managed and proper distribution of resources only by the government
c. managed and proper distribution of resources only by the private sector
d. reduction in the inequalities of income
Q33. From the following data about government find revenue deficit, fiscal deficit and primary deficit:
Plan capital expenditure= 120
Revenue expenditure= 100
Non plan capital expenditure= 80
Revenue receipts= 70
Capital receipts net of borrowings= 140
Interest payments= 30
a. revenue deficit = 40, fiscal deficit = 90, primary deficit = 60
b. revenue deficit = 30, fiscal deficit = 90, primary deficit = 60
c. revenue deficit = 40, fiscal deficit = 60, primary deficit = 30
d. revenue deficit = 30, fiscal deficit = 60, primary deficit = 30
Q34. What will be the treatment of payment of income tax by a firm and festival gifts to employees while estimating national income?
a. income tax paid by firm will be included and gifts to employees will not be included in national income
b. income tax paid by firm will not be included and gifts to employees will be included in national income
c. both income tax paid by firm and gifts to employees will be included in national income
d. both income tax paid by firm and gifts to employees will not be included in national income
Q35. How government expenditure and legal reserve help in correcting deficient demand in an economy?
a. By increasing the money supply and credit creation in the economy
b. by reducing money supply and credit creation in an economy
c. by increasing money supply but reducing credit creation in an economy
d. by reducing money supply and increasing credit creation in an economy.
Q36 How open market operations and government expenditure helps in correcting the inflationary gap in an economy?
a. by purchasing government securities through open market operations and increasing the government expenditure
b. by selling the government bonds through open market operations and reducing the government expenditure
c. by Purchasing the government bonds through open market operations and reducing the government expenditure
d. by selling the government bonds through open market operations and increasing the government expenditure
Q37. How do commercial banks create credit?
a. With the help of their initial deposits and legal reserve ratio
b. With the help of initial deposits and SLR
c. With the help of legal reserve only
d. With the help of SLR only
Q38. Calculate national income and personal disposable income from the following:
(in crores)
Personal tax = 150
Net imports= -10
Private final consumption expenditure= 700
Private income= 600
Undistributed profits= 20
Net domestic capital formation= 120
Government final consumption expenditure= 200
Net factor income from abroad= -5
Corporation tax= 100
Net indirect tax= 105
a. NI = 1000, PDI = 500
b. NI = 500, PDI = 200
c. NI = 920, PDI = 330
d. NI = 630, PDI = 230