Question 1

In the Classical system, the role of the government is:
A)the highest
B)not at all needed
C)limited
D)important

Accepted Answer

In the Classical system, the role of the government is seen as limited, primarily to protect property rights, enforce contracts, and provide for national defense. Classical economists advocate for minimal government intervention in the economy.

Question 2

Equilibrium in the economy is settled by ---------, according to the Classicals.
A)centralized planning
B)price mechanism
C)both the planning and price mechanism
D)none of these

Accepted Answer

Classical economics posits that equilibrium in the economy is achieved through the price mechanism, where prices adjust to match supply with demand.

Question 3

Self interest, competition, profit motive are the features of:
A)socialism
B)capitalism
C)marxism
D)mixed economy

Accepted Answer

Self-interest, competition, and the profit motive are defining features of capitalism, where private ownership and free market principles drive economic activity.

Question 4

The equilibrium price is determined by the forces of:
A)supply only
B)demand only
C)both demand and supply
D)none of these

Accepted Answer

The equilibrium price in a market is determined by the interaction of both demand and supply forces. When the quantity demanded equals the quantity supplied, the market is in equilibrium, and the price at this point is the equilibrium price.

Question 5

Temporary unemployment is -------------, according to the Classical economists:
A)impossible
B)permanent
C)possible
D)none of these

Accepted Answer

Temporary unemployment is possible according to the Classical economists because they believed that the economy would naturally move towards full employment in the long run.

Question 6

J.B. Say was a ---------------Economist.
A)swedish
B)german
C)french
D)american

Accepted Answer

J.B. Say was a French economist, best known for Say's Law of markets.

Question 7

Pick the odd one out:
A)j.b. say
B)david ricardo
C)adam smith
D)j.m. keynes

Accepted Answer

J.M. Keynes is the odd one out because he is associated with Keynesian economics, which focuses on total spending in the economy and its effects on output and inflation, differing significantly from the classical economics views of J.B. Say, David Ricardo, and Adam Smith.

Question 8

'The General Theory', was published in :
A)1776
B)1890
C)1936
D)1950

Accepted Answer

"The General Theory of Employment, Interest, and Money" was published in 1936 by John Maynard Keynes, marking a significant shift in the understanding of economics.

Question 9

The branch of Economics that deals with economic aggregate is called:
A)micro economics
B)development economics
C)macro economics
D)welfare economics

Accepted Answer

Macro economics is the branch of economics that deals with the performance, structure, behavior, and decision-making of an economy as a whole, rather than individual markets. This includes national, regional, and global economies, focusing on economic aggregates such as total national output and income, unemployment rates, and inflation.

Question 10

The central theme of Keynesian Theory is:
A)laissez-faire
B)free trade
C)effective demand
D)self interest

Accepted Answer

The central theme of Keynesian Theory is effective demand, which posits that total demand in an economy (not just supply) determines the overall level of economic activity, and that inadequate aggregate demand can lead to prolonged periods of high unemployment.

Question 11

Who repudiated Say's law of market?
A)j.b. say
B)david ricardo
C)j.s. mill
D)j.m. keynes

Accepted Answer

J.M. Keynes repudiated Say's Law of Markets, arguing that demand, not supply, is the key driver of economic activity, leading to his theory of demand-side economics.

Question 12

Effective demand is that demand when:
A)aggregate demand is greater than aggregate supply
B)aggregate demand is less than aggregate supply
C)aggregate demand is equal to aggregate supply
D)all of these

Accepted Answer

Effective demand occurs when aggregate demand is equal to aggregate supply, reflecting the equilibrium point in the market where the quantity demanded by consumers is fully met by the quantity supplied by producers.

Question 13

The concept of effective demand is associated with the name of:
A)marshall
B)keynes
C)krugman
D)adam smith

Accepted Answer

The concept of effective demand is primarily associated with John Maynard Keynes, who introduced it as a central aspect of his economic theory in "The General Theory of Employment, Interest, and Money." Keynes argued that the level of employment is determined by the level of aggregate demand, not by the price of labor as classical economics suggested.

Question 14

The proportion between total income and total consumption is called:
A)average propensity to consume
B)average propensity to save
C)marginal propensity to consume
D)marginal propensity to save

Accepted Answer

The average propensity to consume (APC) is defined as the proportion of total income that is used for consumption. It is calculated by dividing total consumption by total income.

Question 15

The proportion between incremental income and incremental consumption is called:
A)apc
B)aps
C)mpc
D)mps

Accepted Answer

The proportion between incremental income and incremental consumption is called the marginal propensity to consume (mpc).

Question 16

The proportion between total income and total saving is called:
A)apc
B)aps
C)mpc
D)mps

Accepted Answer

APS (Average Propensity to Save) is the proportion of total income that is saved. It is calculated by dividing total savings by total income.

Question 17

1- MPC is called:
A)apc
B)aps
C)mpc
D)mps

Accepted Answer

The answer of 1- MPC is called:
A)apc
B)aps
C)mpc
D)mps...

Question 18

APC + APS is equal to:
A)0
B)>0
C)1
D)<0

Accepted Answer

APC (Average Propensity to Consume) + APS (Average Propensity to Save) equals 1 because the total income is either consumed or saved.

Question 19

Multiplier is obtained by:
A)1 - mpc
B)1/1- mps
C)1/1- apc
D)1/1-mpc

Accepted Answer

The multiplier is obtained by the formula 1/(1 - MPC), where MPC stands for the marginal propensity to consume. This formula reflects how an initial change in spending will lead to a larger overall increase in income and spending in the economy.

Question 20

Exports minus imports is termed as:
A)net income
B)net imports
C)net exports
D)national income

Accepted Answer

Net exports are defined as the value of a country's total exports minus the value of its total imports. It is a measure used to calculate a country's aggregate expenditures or gross domestic product in an open economy.

Quiz 6: Economic Theory and Concepts

In the Classical system, the role of the government is:

Equilibrium in the economy is settled by ---------, according to the Classicals.

Self interest, competition, profit motive are the features of:

The equilibrium price is determined by the forces of:

Temporary unemployment is -------------, according to the Classical economists:

J.B. Say was a ---------------Economist.

Pick the odd one out:

'The General Theory', was published in :

The branch of Economics that deals with economic aggregate is called:

The central theme of Keynesian Theory is:

Who repudiated Say's law of market?

Effective demand is that demand when:

The concept of effective demand is associated with the name of:

The proportion between total income and total consumption is called:

The proportion between incremental income and incremental consumption is called:

The proportion between total income and total saving is called:

1- MPC is called:

APC + APS is equal to:

Multiplier is obtained by:

Exports minus imports is termed as: