MCQs on Macro Economics Part-1

Q.1:- ………is the total value of a country’s final output of all new goods and services produced during the year:

• Gross national product
• National Income
• Gross national Income
• Gross domestic product

Q.2:- Which of the following statement is true?

• Personal income refers to the income of individuals of a country.
• The income at their disposal after paying direct taxes is called disposable income
• Both (a) and (b)
• None of the above

Q.3:- Which sector has the maximum share in National Income in India?

• Local Sector
• Public Sector
• Private Sector
• None of the above

Q.4:- Which of the following is not required while calculating Gross National Product (GNP)?

• Per Capital Income of Citizens
• Private Investments
• Net Foreign Investments
• Purchase of Goods and Services

Q.5:- Which of the following is associated with the term deflation in economy?

• Decrease in the supply of coins and currency notes
• Decrease in the money relating to the supply of goods and services
• Decrease in the supply of goods and services
• Decrease in the import of goods and services

Q.6:- The national output is measured at:

• Market Prices
• Wholesale Prices
• Cost Prices
• Production Prices

Q.7:- Most important source of capital formation in India has been:

• Public sector savings
• Household savings
• Government revenue surpluses
• Corporate savings

Q.8:- Which of the following actions taken by a RBI is expansionary?

• Decrease its policy rate
• Increasing its policy rate
• Increasing the reserve requirement
• The purchase of government bonds

Q.9:- The difference between total expenditure and total receipts except loans and other liabilities is called……

• Revenue deficit
• Primary deficit
• Fiscal deficit
• Budget deficit

Q.10:- Who is responsible for presenting the Union Budget before the Parliament?

• Prime Minister
• RBI Governor
• Finance Minister
• None of the above

Q.11:- During depression and unemployment which type of budget is recommended?

• Balanced Budget
• Surplus Budget
• Deficit Budget
• Unbalanced budget

Q.12:- Inflation relates to which of the following?

• price level falls - money value falls
• price level rises - money value rises
• Price level rises - money value falls
• price level falls - money value rises

Q.13:- When deficit financing increases, what actions will RBI take on CRR and SLR?

• Decrease It
• No Change
• Increase It
• None of these

Q.14:- The market in which loans of money can be obtained is called:

• Exchange market
• Institutional market
• Reserve market
• Money market

Q.15:- Which of the following statements correctly define the meaning of reverse repo rate?

• The rate at which the apex bank RBI borrows money from commercial banks
• The rate at which apex bank RBI allows finance to commercial banks
• The rate at which apex bank RBI lends money to commercial banks
• The amount of funds that the commercial banks have to keep with the RBI

Q.16:- Which of the following best describes the goal of Monetary Policy?

• Stopping inflation
• Controlling the money supply
• Controlling taxes
• Controlling the national debt

Q.17:- Open market operations:

• Is an activity by the bank to purchase its own equity?
• is an activity by corporates to raise equity.
• Is an activity by a Central bank to give (ortake) liquidity in its currency to (or from) a bank or group of banks
• Is an activity by central government to raise tax?

Q.18:- The trough of a business cycle occurs when ________hits its lowest point:

• The money supply
• Inflation
• Aggregate economic activity
• The unemployment rate

Q.19:- The period of the business cycle in which real GDP is Increasing is called the:

• Recession
• Expansion
• Stagflation
• Peak

Q.20:- During business cycles the opposite of a trough is:

• A Peak
• A hyperinflation
• A trend
• An inflation

Q.21:- What is the business cycle?

• Is the artificial fall and rise of the economic growth that occurs over time
• Is the business rise and fall of the economic growth that occurs over time
• Is the natural rise and fall of the economic growth that occurs over time
• Is the natural fall and rise of the economic growth that occurs over time

Q.22:- Which of the following describes the phase of a business cycle that occurs after a trough and before a peak:

• Lag
• Expansion
• Consolidation
• Contraction

Q.23:- A short-term variation in relation to calendar or time of a day:

• Random variation
• Cyclical
• Seasonal
• Trend

Q.24:- Which among the following is a qualitative tool of monetary policy?

• Credit Rationing
• Cash Reserve Ratio
• Credit Ceiling
• Bank Rate

Q.25:- In a free economy, inequalities of income is due to:

• Private property and inheritance
• Free Competition
• Differences in the marginal productivity of labour.
• Private Property Only

Q.26:- What action should Government take on its overall expenditure to check inflationary forces?

• No change in Expenditure
• Reduce Expenditure
• Increase Expenditure
• None of these

Q.27:- A country’s gross domestic product can be calculated using the following formula:

• GDP = C + G + I - NX.
• GDP=C+G-I+NX.
• GDP=C+G+I+NX.
• GDP=C-G+I+NX.

Q.28:- Indian Economy is an example of:

• Closed Economy
• Mixed Economy
• Capitalist economy
• None of the above

Q.29:- Most pertinent problem while computing National Income is:

• Non-monetized Consumption
• Inflation
• Low Savings
• Under Employment

Q.30:- if an, economy is in equilibrium at the point where plans to save and to invest are equal, then Government expenditure must be

• Equal than Government Income
• Zero
• Negative
• Larger than Government Income

Q.31:- If we compare GDP and GNP, then:

• GNP = NNP - net income from abroad
• GNP = GDP - net income from abroad
• GNP = NNP + net income from a broad
• GNP = GDP + net income from abroad

Q.32:- The basis of the fiscal policy is to maintain a balance between:

• Private spending and tax rate
• Private spending and tax rate
• Public Spending and Tax Rates
• Public spending and private spending

Q.33:- The difference between fiscal deficit and interest payment during the year is called:

• Revenue deficit
• Primary deficit
• Fiscal deficit
• Budget deficit

Q.34:- Difference between revenue deficit and grants for creation of capital assets is called:

• Effective revenue deficit
• Budget deficit
• Primary deficit
• Fiscal deficit

Q.35:- As the level of interest rates in the economy falls, the demand for money, ceteris paribus:

• Will remain unchanged
• increase
• Could move in either direction depending on other factors
• Will fall more or less in line with the change in interest rates

Q.36:- The low point in the business cycle is referred to as the:

• Peak
• Trough
• Boom
• Expansion

Q.37:- Which of the following is a reason for inflation?

• Deficit financing
• Growth in per capita income
• Structural deficiencies
• All of the above

Q.38:- Along with Ministry of Finance, which other institution play an important role in monetarypolicy of India?

• AMFI
• SEBI
• CBI
• RBI

Q.39:- Revenue equals expenditure in a:

• Balanced budget
• Deficit budget
• Surplus budget
• None of the above

Q.40:- The immediate effect of credit-creation by banks is:

• Increase in money supply
• Reduction of poverty
• Rise in prices
• Increase in real national income

Q.41:- What is the impact ori bank’s profitability when RBI increases CRR and SLR rates?

• Profitability of banks
• No impact on profits of banks
• Reduces profitability of banks
• None of these

Q.42:- If RBI adopts an expansionist open market policy, this means it will:

• Openly announces intention to expand credit
• Offer banks more credit in open market
• Buys securities from non-government holders
• Sell securities in the open market

Q.43:- Which of the following is the objective of Fiscal Policy?

• To maintain and achieve full employment.
• To stabilize the price level.
• To stabilize the growth rate of the economy.
• All of the above

Q.44:- If the economy is in an inflationary period, what action would Fiscal Policy most likely take?

• Increase taxes
• Increase spending
• Decrease the discount rate
• Decrease taxes

Q.45:- Measurement of domestic savings:

• Corporate sector
• Household sector
• Private sector
• All the above

Q.46:- To avoid double counting when GDP is estimated, economists:

• Use retail prices
• Use price of only intermediate goods
• Calculate value added at each stage of production
• Use GDP deflator.

Q.47:- Coincident indicators tend to reach their peaks and troughs at about the same time as:

• Leading indicators
• Real GDP
• Lagging indicators
• The budget deficit

Q.48:- Which of the following is the basis of determining the National Income?

• Production of Goods and Services
• Total Revenue of the State
• Both (a) and (b)
• Net Profit earned and expenditure incurred by the state

Q.49:- State which is not included while computing National Income of India:

• Wages of labour
• Production of raw cotton
• Unemployment allowance
• Income of Yoga Instructor

Q.50:- State the largest contribution in Gross Domestic Savings:

• Government Sector
• Household Sector
• D. Industrial Sector
• Both (a) and (b)