MCQs on Macro Economics Part - 3

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

• Per capita real income
• NDP
• NNP
• GDP

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

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

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

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

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

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

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

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

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

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

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

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

Q.13:- Base Index for GDP is:

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

Q.14:- GDP includes:

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

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

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

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.

Q.18:- Transfer payments are included in:

• NI.
• NDP.
• PI.
• GDP.

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

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

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

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

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

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

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

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

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

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

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

• Industrial
• Budgetary
• Economic
• Monetary

Q.29:- Credit creation increases:

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

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

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

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

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

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

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

• Five
• Four
• Three
• Two

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

• Peak
• Trough
• Contraction
• Expansion

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

• Peak
• Contraction
• Trough
• Expansion

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.

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

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

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

• Total deficit
• Revenue deficit
• Primary deficit
• Budget deficit

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

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

Q.41:- Monetary Policy affect

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

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

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

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

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

• Agriculture Policy
• Industrial Policy
• Education Policy
• Fiscal Policy

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

Q.46:- GDP Deflation calculation:

• Real GDP/Nominal GDP
• Real GDP/Nominal GDP*100
• Nominal GDP/Real GDP*100
• Nominal GDP/Real GDP

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

• Command
• Market
• Traditional
• Socialist

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

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.

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