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MCQs on Macro Economics Part - 3

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Q.1:- The most appropriate measure of a country’s economic growth is:

  • Per capita real income
  • NDP
  • NNP
  • GDP
Check Answer

Correct Option: A

Q.2:- National Income is based on:

  • Total Revenue of the State
  • Sum of all Factor Income
  • Production of Goods and Services
  • Net Profit Earned by the State
Check Answer

Correct Option: B

Q.3:- If income is below equilibrium:

  • Prices will tend to fall
  • Stocks of unsold goods will tend to increase
  • Income will tend to rise
  • Investments will tend to fall
Check Answer

Correct Option: C

Q.4:- When an economy enjoys full employment

  • Frictional and structural unemployment may be positive
  • The economy has a rate of employment equal to the natural rate of employment
  • the unemployment rate equals zero
  • cyclical unemployment is positive
Check Answer

Correct Option: A

Q.5:- If GDP is raising and the unemployment rate is decreasing, what actions would Monetary policy and Fiscal Policy take to try to fix this economic situation?

  • Lower the Federal Funds rate Raise Taxes
  • Raise the Federal Funds rate decrease spending
  • Lower the Discount rate decrease spending
  • Raise the Discount rate Lower Taxes
Check Answer

Correct Option: B

Q.6:- If a nation currently has a budget deficit, their income is not covering the cost of running their country. If this budget is not revised, what could be a possible result of this situation?

  • A balanced budget
  • A Mounting debt
  • Discretionary fiscal policy
  • A Budget surplus
Check Answer

Correct Option: B

Q.7:- Tool of the fiscal policy includes:

  • Government spending
  • Printing of money
  • Taxation
  • All of the above
Check Answer

Correct Option: D

Q.8:- In monetary terminology, what is called the ‘monetary base’ or ‘high powered money:

  • The total liability of RBI
  • The total foreign exchange of RBI
  • The total assets of RBI
  • The total debt of the government
Check Answer

Correct Option: A

Q.9:- Which one of the following rates represents the change, if any, in your purchasing power as a result of owning abond?

  • nominal rate
  • real rate
  • Current rate
  • risk-free rate
Check Answer

Correct Option: B

Q.10:- the equation that shows the relationship between expected inflation, real interest rates, and nominal interest rates is called the

  • GDP deflator.
  • Net inflation index.
  • Fisher equation.
  • Interest rate parity equation
Check Answer

Correct Option: C

Q.11:- During a recession, the unemployment rate tends to

  • Properly estimate the actual amount of unemployment
  • overstate the actual amount of unemployment
  • understate the actual amount of unemployment
  • any of the above
Check Answer

Correct Option: C

Q.12:- What is the aim of Fiscal Policy regarding rate of capital formation?

  • Maximize rate of Capital formation
  • stagnate rate of Capital formation
  • Minimize rate of Capital formation
  • None of these
Check Answer

Correct Option: C

Q.13:- Base Index for GDP is:

  • 2012-13
  • 2011-12
  • 2013-14
  • 2014-15
Check Answer

Correct Option: B

Q.14:- GDP includes:

  • Final, but not intermediate, goods.
  • Both intermediate and final goods.
  • Neither intermediate nor final goods.
  • Intermediate, but not final, goods.
Check Answer

Correct Option: A

Q.15:- Macro-economics is a study of economics that deals with which 4 major factors:

  • Households, firms, government, and demand-supply
  • Firms, government, free-market, and regulations
  • Households, firms, government and external sector
  • None of the above
Check Answer

Correct Option: C

Q.16:- The type of bank that is exclusively owned by its members is a:

  • mutual bank
  • savings and loan bank
  • share broker Account
  • commercial bank
Check Answer

Correct Option: D

Q.17:- An economy is enlarging its stock of capital goods:

  • When gross investment exceeds replacement investment
  • When replacement investment exceeds gross investment.
  • When net investment exceeds gross investment.
  • Whenever gross investment is positive.
Check Answer

Correct Option: A

Q.18:- Transfer payments are included in:

  • NI.
  • NDP.
  • PI.
  • GDP.
Check Answer

Correct Option: C

Q.19:- Which of the following is not a method of estimating national income?

  • Export import method
  • Value added method
  • Income method
  • Expenditure method-
Check Answer

Correct Option: A

Q.20:- These are forces in the company’s immediate environment that affect the performance of the company:

  • Macro environment
  • Technological environment
  • Micro environment
  • Natural environment
Check Answer

Correct Option: A

Q.21:- The total sum of incomes received for services of land, labour or capital in a country is called:

  • Gross National Income
  • National Income
  • Gross Domestic Income
  • Gross National Product
Check Answer

Correct Option: B

Q.22:- Which of the following is the most likely reason why total income tends to fluctuate?

  • Consumption habits often undergo dramatic changes
  • Consumption is not always a constant fraction of income
  • Many savings and investment decisions are taken by different people
  • People adjust to changing incomes by changing saving habits
Check Answer

Correct Option: C

Q.23:- Which of the following statement is true?

  • National Expenditure =National income + National Taxes
  • National Expenditure = National income — Taxes
  • National Expenditure = National income
  • National Expenditure = National income + National production
Check Answer

Correct Option: C

Q.24:- If the real interest rate increases, we may conclude that

  • The inflation rate has increased.
  • The nominal interest rate and the inflation rate remained constant.
  • The nominal interest rate increased and the inflation rate remained constant.
  • The nominal interest rate decreased and the inflation rate remained constant
Check Answer

Correct Option: C

Q.25:- The degree of unemployment in the Indian economy is underestimated because

  • those who are out of work and have stopped looking are not counted in the labor force
  • the underemployed workers are counted as fully employed
  • the discouraged worker is not considered as being part of the labor force
  • all of the above
Check Answer

Correct Option: D

Q.26:- The amount a bank needs to maintain in form of cash, gold and other securities before giving credit is:

  • OMO
  • CRR
  • Bank rate
  • SLR
Check Answer

Correct Option: D

Q.27:- Which policy is concerned with raising revenue through taxation and deciding on the level and Pattern of expenditure?

  • Fiscal Policy
  • Monetary policy
  • Cash policy
  • None of these
Check Answer

Correct Option: A

Q.28:- Fiscal policy is called as…….. policy:

  • Industrial
  • Budgetary
  • Economic
  • Monetary
Check Answer

Correct Option: B

Q.29:- Credit creation increases:

  • Real national income
  • Real Wealth of the community
  • Purchasing Power of the currency
  • Supply of money
Check Answer

Correct Option: C

Q.30:- Which of the following is Monetary policy measure?

  • Management of money supply
  • Change in Taxes
  • Interest rates
  • A and c both
Check Answer

Correct Option: D

Q.31:- Export of goods is called trade in:

  • Basic goods
  • Non-real goods
  • Invisible goods
  • Visible goods
Check Answer

Correct Option: C

Q.32:- During the Great Depression

  • industrial output fell by 40 percent
  • the United States experienced a long and deep recession
  • unemployment rates reached 25 percent
  • all of the above
Check Answer

Correct Option: D

Q.33:- How many types of business cycle mostly?

  • Five
  • Four
  • Three
  • Two
Check Answer

Correct Option: A

Q.34:- The phase after contraction and before expansionis:

  • Peak
  • Trough
  • Contraction
  • Expansion
Check Answer

Correct Option: B

Q.35:- The phase after peak and before Trough is:

  • Peak
  • Contraction
  • Trough
  • Expansion
Check Answer

Correct Option: B

Q.36:- What completes a business cycle?

  • A cycle of single boom and contraction in a sequence.
  • The prolonged period of contraction,
  • The period between boom and contraction.
  • The prolonged period of boom.
Check Answer

Correct Option: A

Q.37:- The four phases of the business cycle are

  • peak, depression, bust, and boom
  • peak, depression, trough, and boom
  • peak, recession, trough, and recovery
  • peak, recession, trough, and boom
Check Answer

Correct Option: C

Q.38:- Real rates are defined as nominal rates that have been adjusted for which ofthe following?

  • default risk
  • Interest rate risk
  • inflation
  • accrued interest
Check Answer

Correct Option: C

Q.39:- Difference, between Fiscal deficit and Interest payments is:

  • Total deficit
  • Revenue deficit
  • Primary deficit
  • Budget deficit
Check Answer

Correct Option: C

Q.40:- Broadly the fiscal policy can be:

  • Expansionary
  • Contractionary
  • Neither a nor b
  • Both (a) and (b)
Check Answer

Correct Option: D

Q.41:- Monetary Policy affect

  • Inflation Only
  • Both inflation and output
  • Neither inflation and output
  • Output only
Check Answer

Correct Option: B

Q.42:- Which is not an instrument of monetary policy?

  • Money supply
  • Taxation
  • Credit policy
  • Interest rate policy
Check Answer

Correct Option: B

Q.43:- Twin deficit in an economy means:

  • High budget deficit and high fiscal deficit.
  • High capital account deficit and high fiscal deficit
  • High current account deficit and high capital account deficit
  • High current account deficit and high fiscal deficit
Check Answer

Correct Option: A

Q.44:- In developed economy, full employment and economic stability is function of which policy?

  • Agriculture Policy
  • Industrial Policy
  • Education Policy
  • Fiscal Policy
Check Answer

Correct Option: D

Q.45:- Which policy is concerned with raising revenue through taxation and deciding on the level andPattern of expenditure?

  • Monetary policy
  • Cash policy
  • Fiscal Policy
  • None of these
Check Answer

Correct Option: C

Q.46:- GDP Deflation calculation:

  • Real GDP/Nominal GDP
  • Real GDP/Nominal GDP*100
  • Nominal GDP/Real GDP*100
  • Nominal GDP/Real GDP
Check Answer

Correct Option: C

Q.47:- Private ownership of property and resources is a characteristic of……….economy:

  • Command
  • Market
  • Traditional
  • Socialist
Check Answer

Correct Option: B

Q.48:- Because of tax indexing, a household is pushed into a higher tax bracket only if its

  • nominal income falls faster than the rate of inflation
  • nominal income rises faster than the rate of inflation
  • nominal income rises equal to the rate of inflation
  • nominal income rises slower than the rate of inflation
Check Answer

Correct Option: B

Q.49:- Suppose the total market value of all final goods and services produced in a particular country in 2004 is $500 billion and the total market value of final goods and services sold is $450 billion. We can conclude that:

  • GDP in 2004 is $500 billion.
  • NDP in 2004 is $450 billion.
  • Inventories in 2004 fell by $50 billion.
  • GDP in 2004 is $450 billion.
Check Answer

Correct Option: A

Q.50:- It is not a method to measure national income:

  • Adding all incomes
  • Adding all expenditure
  • Adding all taxes
  • Adding value of goods and services
Check Answer

Correct Option: C