Indian Economy
1. Which among the following statements is not true when
there is an increase in interest rate in an economy ?
(1) increase in saving
(2) decrease in loan
(3) increase in production cost
(4) increase in capital return
Ans: increase in capital return
2. Multiplier process in economic theory is conventionally taken to mean :
(1) the manner in which prices increase
(2) the manner in which banks create credit
(3) income of an economy grows on account of an initial investment
(4) the manner in which government expenditure increases
Ans: income of an economy grows on account of an initial investment
3. Personal disposable income is :
(1) always equal to personal income.
(2) always more than personal income.
(3) equal to personal income minus direct taxes paid by household.
(4) equal to personal income minus indirect taxes.
Ans: equal to personal income minus direct taxes paid by household.
4. Who said ‘Supply creates its own demand’?
(1) Adam Smith (2) J.B.Saw
(3) Marshall (4) Ricardo
Ans: J. B. Saw
5. Investment is equal to :
(1) gross total of all types of physical capital assets
(2) gross total of all capital assets minus wear and tear
(3) stock of plants, machines and equipments
(4) None of the above
Ans: gross total of all capital assets minus wear and tear
6. Say’s Law of Market holds that
(1) supply is not equal to demand
(2) supply creates its own demand
(3) demand creates its own supply
(4) supply is greater than demand
Ans: supply creates its own demand
7. ‘Marginal efficiency of capital’ is
(1) expected rate of return on new investment
(2) expected rate of return of existing investment
(3) difference between rate of profit and rate of interest
(4) value of output per unit of capital invested
Ans: expected rate of return on new investment
8. The standard of living in a country is represented by its:
(1) poverty ratio
(2) per capita income
3) national income
(4) unemployment rate
Ans: per capita income
9. Capital output ratio of a commodity measures
(1) its per unit cost of production
(2) the amount of capital invested per unit of output
(3) the ratio of capital depreciation to quantity of output
(4) the ratio of working capital employed to quantity of output
Ans: (2) the amount of capital invested per unit of output
10. The method of calculating the national income by the product method is otherwise known as :
(1) Income method
(2) Value added method
(3) Expenditure method
(4) Net output method
Ans: Net output method
11. The best measure to assess a country’s economic growth is
(1) per capita income at constant prices
(2) per capita income at current prices
(3) gross domestic product at current prices
(4) gross national product at current prices
Ans: per capita income at constant prices
12. Which of the following concepts are most closely associated with J.M. Keynes ?
(1) Control of money supply
(2) Marginal utility theory
(3) Indifference curve analysis
(4) Marginal efficiency of captial
Ans: Marginal efficiency of captial
13. According to Keynesian theory of income determination, at full employment, a fall in aggregate demand causes
(1) a fall in prices of output and resources
(2) a fall in real gross National product and employment
(3) a rise in real gross National product and investment
(4) a rise in prices of output and resources
Ans: a fall in prices of output and resources
14. When aggregate supply exceeds aggregate demand
(1) unemployment falls
(2) prices rise
(3) inventories accumulate
(4) unemployment develops
Ans: inventories accumulate
15. Investment is equal to
(1) gross total of all types of physical capital assets
(2) gross total of all capital assets minus wear and tear
(3) stock of plants, machines and equipments
(4) None of these
Ans: gross total of all capital assets minus wear and tear
16. In a business, raw materials, components, work in progress and finished goods are jointly regarded as
(1) capital stock (2)inventory
(3) investment (4)net worth
Ans: Inventory
17. The difference between the GNP and the NNP is equal to the
(1) consumer expenditure on durable goods
(2) direct tax revenue
(3) indirect tax revenue
(4) capital depreciation
Ans: capital depreciation
18. Investment and savings are kept equal through a change in the level of
(1) Consumption
(2) Investment
(3) Government expenditure
(4) Income Consumption
19. Which of the following is not required while computing Gross National Product (GNP) ?
(1) Net foreign investment
(2) Private investment
(3) Per capita income of citizens
(4) Purchase of goods by government
Ans: Per capita income of citizens
20. The sum total of incomes received for the services of labour, land or capital in a country is called :
(1) Gross domestic product
(2) National income
(3) Gross domestic income
(4) Gross national income
Ans: Gross domestic income
21. Which of the following results by dividing national income by size of population ?
(1) Per capita income
(2) Subsistence level
(3) Subsistence expenditure
(4) Per capita production
Ans: Per capita income
22. While determining income the expenditure on which of the following items is not considered as investment ?
(1) Construction of factory
(2) Computer
(3) Increase in the stock of unsold articles
(4) Stock and share in joint stock company
Ans: Increase in the stock of unsold articles
23. Rate of interest is determined by
(1) The rate of return on the capital invested
(2) Central Government
(3) Liquidity preference
(4) Commercial Banks
Ans: Liquidity preference
24. In a Laissez-faire economy
(1) the customers take all the decisions regarding production of all the commodities
(2) the Government does not interfere in the free functioning of demand and supply forces in the market
(3) the private-sector takes all the decisions for price-determination of various commodities produced
(4) the Government controls the allocation of all the factors of production
Ans: the Government does not interfere in the free functioning of demand and supply forces in the market
25. In calculating National Income which of the following is included ?
(1) Services of housewives
(2) Pensions
(3) Income of smugglers
(4) Income of watchmen
Ans: Income of watchmen
26. The term ‘Green GNP’ emphasises
(1) rapid growth of GNP
(2) increase in per capita income
(3) economic development
(4) sustainable development
Ans: sustainable development
27. Who propounded the ‘market law ?
(1) Adam Smith
(2) J.B. Say
(3) T.R. Malthus
(4) David Recardo
Ans: J.B. Say
28. “The national income consists of a collection of goods and services reduced to common basis by being measured in terms of money.”–– Who says this ?
(1) Samuelson (2) Kuznets
(3) Hicks (4) Pigou
Ans: Hicks
29. Capital : Output Ratio of a measures
(1) its per unit cost of production
(2) the amount of capital invested per unit of output
(3) the ratio of capital depreciation to quantity of output
(4) the ratio of working capital employed to quantity of output
Ans: the amount of capital invested per unit of output
30. “Supply creates its own demand” – Who said this ?
(1) J. B. Say (2) J. S. Mill
(3) J. M. Keynes (4) Senior
Ans: J. B. Say
31. Which of the following is a better measurement of Economic Development ?
(1) GDP
(2) Disposable income
(3) NNP
(4) Per capita income
Ans: Per capita income
32. Imputed gross rent of owner occupied buildings is a part of
(1) capital formation
(2) final consumption
(3) intermediate consumption
(4) consumer durable
Ans: final consumption
33. Which of the statements is correct about India’s national income?
(1) Percentage share of agriculture is higher than services
(2) Percentage share of industry is higher than agriculture
(3) Percentage share of services is higher than industry
(4) Percentage share of services is higher than agriculture and industry put together
Ans: Percentage share of services is higher than agriculture and industry put together
34. Who among the following is not a classical economist?
(1) David Ricardo
(2) John Stuart Mill
(3) Thomas Malthus
(4) John Maynard Keynes
Ans: John Maynard Keynes
35. Which of the following is not included in the National Income?
(1) Imputed rent of owner-occupied houses
(2) Government expenditure on making new bridges
(3) Winning a lottery
(4) Commission paid to an agent for sale of house
Ans: Winning a lottery
36. Personal disposable income is
(1) always equal to personal income
(2) always more than personal income
(3) equal to personal income minus indirect taxes
(4) equal to personal income minus direct taxes
Ans: equal to personal income minus direct taxes
37. Who prepared the first estimate of National Income for the country ?
(1) Central Statistical Organisation
(2) National Income Committee
(3) Dadabhai Naoroji
(4) National Sample Survey Organisation
Ans: Dadabhai Naoroji
38. ‘Supply creates its own demand’. This statement is related to
(1) Prof. J.B. Say
(2) John Robinson
(3) Adam Smith
(4) J.S. Mill
Ans: Prof. J.B. Say
39. Which one of the following is not a method of measurement of National Income ?
(1) Value Added Method
(2) Income Method
(3) Investment Method
(4) Expenditure Method
Ans: Investment Method
40. Which one of the following would not constitute an economic activity ?
(1) A teacher teaching students in his class
(2) A teacher teaching students under Sarva Shiksha Abhiyan
(3) A teacher teaching his own daughter at home
(4) A teacher providing consultancy services from his residence
Ans: A teacher teaching his own daughter at home
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