Deck 10: Economic Concepts and Theories

Question 1

Which of the following is an example of economic overhead?

A)Schools
B)Roads and Railwlays
C)Sanitary facilities
D)Hospitals

Answer 1

Roads and Railwlays

Question 2

Three methods of computing the national income are:

A)Savings, investment and income methods
B)Outlay, depreciation and production methods,
C)Production, outlay and income methods,
D)Revenue, consumption and production methods

Answer 2

Production, outlay and income methods,

Question 3

The difference between GNP at Factor Cost and NNP at Factor Cost is:

A)Imports
B)Depreciation
C)Taxes on Agriculture
D)Net income from abroad

Answer 3

Net income from abroad

Question 4

An equilibrium which holds a particular position over-time is:

A)General Equilibrium
B)Unstable equilibrium
C)Stable equilibrium
D)Partial equilibrium

Question 5

National income is a:

A)Cross section analysis
B)Flow concept
C)Stock concept
D)None

Question 6

The services of a house wife are:

A)Not part of Production
B)A part of production
C)A part of consumption
D)Not a part of consumption

Question 7

Inflation can not be caused by:

A)Cost push factor
B)Excessive money supply
C)Excessive production
D)Demand pull factors

Question 8

By representing amounts of proceeds by all entrepreneurs along the Y axis and volumes of employment along the X-axis, we can draw--------curves.

A)Employment
B)Consumption and Savings
C)Revenue and employment
D)Aggregate supply and demand

Question 9

"Effective demand is different from aggregate demand". This statement is:

A)True
B)False
C)Baseless
D)None of these

Question 10

If MPC = 4/5, then value of the multiplier is:

A)20
B)5
C)0.80
D)1.25

Question 11

In the Cambridge equation of M =KPR, the value of "K" is:

A)"V" in the Fisher's Equation
B)1/V
C)M/V
D)None of these

Question 12

Who had a different macro theory than the rest?

A)Adam Smith
B)David Ricardo
C)Malthus
D)J.B.Say

Question 13

"Mr. Keynes and the Classics" is the title of the famous paper by :

A)Hansen
B)Hicks
C)Harrod
D)Haberler

Question 14

The quantity theory of money is primarily a theory of demand for money is stated by:

A)Marshall
B)Fisher
C)Keynes
D)Friedman

Question 15

Which one of the following is not correct:

A)MPC declines as income increases
B)MPC is positive but less than one
C)MPS is always positive
D)MPS declines as income increases

Question 16

Marginal propensity to consume means:

A)Inclination to conspicuous consumption
B)Low income group spending more
C)Rate of income spend on consumption
D)The rate of extra income that will be spent on consumption

Question 17

Human capital formation refers to:

A)The process of increasing the number of people
B)The process of physical growth of capital
C)The process of increasing knowledge, skills and capacities of all people
D)The process of providing more facilities to the people

Question 18

According to Keynesian analysis, consumption is a function of:

A)Permanent income
B)Current income
C)Estimated lifetime income
D)Previous income.

Question 19

If in an economy, out of every additional Rs.100 of national income, Rs.20 is taxed, Rs.20 is saved, and Rs.10 is spent on imports, then the value of multiplier is:

A)2
B)2.5
C)3.3
D)5

Question 20

Which of the following equation is wrong?

A)National Income = Effective demand
B)National Income = GNP
C)National Income = C + I
D)National Income = C + S

Question 21

The essential condition to act as money is:

A)It is homogeneous
B)It is legal tender
C)It is backed by gold
D)It is generally acceptable

Question 22

Which of the following is not a component of Income method to GNP?

A)Wages and salaries
B)Interest
C)Depreciation
D)Net foreign investment