Deck 1: Economic Essentials: Demand, Supply, Taxation, and Monetary Policy

Question 1

Demand for a commodity refers to:

A)Need for the commodity
B)Desire for the commodity
C)Amount of the commodity demanded at a particular price and at a particular time
D)Quantity demanded of that commodity

Answer 1

Amount of the commodity demanded at a particular price and at a particular time

Question 2

If the demand for a good is inelastic, an increase in its price will cause the total expenditure of the consumers of the good to:

A)Increase
B)Decrease
C)Remain the same
D)Become zero

Answer 2

Increase

Question 3

The supply of a good refers to:

A)Stock available for sale
B)Total stock in the warehouse
C)Actual Production of the goo
D)Quantity of the good offered for sale at a particular price per unit of time

Answer 3

Quantity of the good offered for sale at a particular price per unit of time

Question 4

In the short run, when the output of a firm increases, its average fixed cost:

A)Remains constant
B)Decreases
C)Increases
D)First decreases and then rises

Question 5

The cost of one thing in terms of the alternative given up is called:

A)Real cost
B)Production cost
C)Physical cost
D)Opportunity cost

Question 6

In which of the following market structure is the degree of control over the price of its product by a firm very large?

A)Imperfect competition
B)Perfect competition
C)Monopoly
D)In A and B both

Question 7

Demand for factors of production is:

A)Derived demand
B)Joint demand
C)Composite demand
D)None of the above

Question 8

The producer's demand for a factor of production is governed by the ___ of that factor.

A)Price
B)Marginal productivity
C)Availability
D)Profitability

Question 9

Who is the 'lender of the last resort' in the banking structure of India?

A)State Bank of India
B)Reserve Bank of India
C)EXIM Bank of India
D)Union Bank of India

Question 10

____ is the official minimum rate at which the Central Bank of a country is prepared to rediscount approved bills held by the commercial banks.

A)Repo rate
B)Bank rate
C)Prime lending rate
D)Reverse repo rate

Question 11

Which among the following is a function of the Reserve Bank of India?

A)Bank issues the letters of credit to their customers certifying their creditability
B)Collecting and compilation of statistical information relating to banking & other financial sectors
C)Banks under write the securities issued by public or private organizations
D)Accepting deposits from the public

Question 12

The following is the direct tax among:

A)House tax
B)Entertainment tax
C)Service tax
D)Value added tax

Question 13

Which among the following is a cause of inflation?

A)Deficit financing
B)Rise in external loans
C)Unfavorable balance of payment
D)A hike in the CRR by the central bank of the country

Question 14

The capital that is consumed by an economy or a firm in the production process is known as:

A)Capital loss
B)Production cost
C)Dead-weight loss
D)Depreciation

Question 15

Which of the following is also known as International Bank for Reconstruction and Development?

A)Asian Development Bank
B)World Bank
C)Reserve Bank of India
D)International Monetary Fund

Question 16

A change in fiscal policy affects the balance of payments through:

A)The current account only
B)The capital account only
C)Both, the current account and capital account
D)Neither current account nor capital account

Question 17

Fiscal Policy means:

A)Policy relating to money and banking in a country
B)Policy relating to non-banking financial institutions
C)Policy relating to government spending' taxation and borrowing
D)Policy relating to financial matters of international trade

Question 18

Which one of the following is NOT the objective of fiscal policy of government of India?

A)Full employment
B)Price stability
C)Regulation of inter-state trade
D)Economic growth

Question 19

Monetary policy is implemented by in India.

A)The Ministry of Finance
B)Planning Commission
C)The Parliament
D)Reserve Bank of India

Question 20

The most simple and popular method of measuring economic development is to calculate the trend of gross national product (GNP) at __________

A)Current prices
B)Constant prices
C)Both of the above
D)None of the above

Question 21

By __ growth rate of an economy can be speeded up.

A)Investment in share market
B)Investment abroad
C)Investment in human capital formation
D)Investment in primary sector

Question 22

When national income is calculated with reference to a base year, it is called:

A)Nominal national income
B)Net national income
C)Real national income
D)Gross national income

Question 23

Which market structure symbolizes the existence of 'few sellers'?

A)Oligopoly
B)Monopoly
C)Monopolistic competition
D)Perfect competition

Question 24

Which among the following are the factors that determine the national income of a country?

A)Quantity and Quality of factors of production
B)The state of technical knowledge
C)Economic and political stability
D)All of the above