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MCQs on Macro Economics Part - 4

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Q.1:- Point out which of the following is not an instrument of fiscal policy:

  • A cut in the marginal rates of IRPF
  • An increase in tobacco taxes
  • An increase in the interest rate
  • A cut in unemployment compensation
Check Answer

Correct Option: C

Q.2:- The purpose of financial markets is to:

  • Control inflation
  • Allocate savings efficiently
  • Lower the yield on bonds.
  • Increase the price of common stocks.
Check Answer

Correct Option: B

Q.3:- How are funds allocated efficiently in a market economy?

  • The economic unit that is willing to pay the highest expected returnreceives the funds.
  • Receipt of the funds is rotated so that each economic unit can receivethem in turn.
  • The economic unit that considers itself most in need of fundsreceives them.
  • The most powerful economic unit receives the funds
Check Answer

Correct Option: A

Q.4:- Business cycles are measured from

  • boom to bust
  • depression to depression
  • peak to peak
  • recession to recession
Check Answer

Correct Option: C

Q.5:- Which of the following marks the beginning of a contraction in the business cycle:

  • Peak
  • Expansion
  • Recession
  • Trough
Check Answer

Correct Option: A

Q.6:- Economic indicator of contraction and expansionary phase by measuring real GDP is:

  • Business cycle
  • Technical indicator
  • Leading indicator
  • Lagging indicator
Check Answer

Correct Option: A

Q.7:- Money market mutual funds

  • Are involved in acquiring and placing mortgages.
  • Are available only to high net-worth individuals.
  • Are also known as finance companies.
  • Enable individuals and small businesses to invest indirectly in money-market instruments.
Check Answer

Correct Option: D

Q.8:- Recurrent expansions and contractions of economic activity that take place over several years refers to

  • The business cycle
  • The business cycle
  • Depression
  • Disinflation
Check Answer

Correct Option: B

Q.9:- Which of the following is not an instrument of Fiscal Policy?

  • Social Welfare
  • Public Debt
  • Public Expenditure
  • Taxation
Check Answer

Correct Option: A

Q.10:- In an overheated economy

  • Frictional unemployment rate plus structural unemployment rate is less than zero.
  • Cyclical unemployment equals zero.
  • Actual unemployment rate is less than the natural rate.
  • Actual unemployment rate is less than full employment.
Check Answer

Correct Option: C

Q.11:- National income accountants can avoid multiple counting by:

  • Counting both intermediate and final goods.
  • Only counting final goods.
  • Only counting intermediate goods.
  • Including transfers in their calculations.
Check Answer

Correct Option: B

Q.12:- The sum of the marginal propensity to consume and the marginal propensity to save must be equal to:

  • The multiplier
  • One
  • Zero
  • Disposable income
Check Answer

Correct Option: B

Q.13:- The main objectives of macroeconomic policy is:

  • A stable and satisfactory rate of economic growth
  • A high and stable level of employment
  • A low and stable rate of inflation
  • All of the above
Check Answer

Correct Option: D

Q.14:- Gross investment refers to:

  • Net investment after it has been "inflated" for changes in the price level.
  • Private investment minus public investment.
  • Net investment plus net exports.
  • Net investment plus replacement investment.
Check Answer

Correct Option: D

Q.15:- Which of the following is the smallest dollar amount in the United States?

  • Personal income
  • Gross domestic product
  • Disposable income
  • National income
Check Answer

Correct Option: C

Q.16:- A large underground economy results in an:

  • Overstated GDP.
  • Understated GDP.
  • Understated GDP price index.
  • Overstated GDP price index.
Check Answer

Correct Option: B

Q.17:- To the extent that inflation is unanticipated, it creates winners and losers. Unanticipated inflation helps

  • savers at the expense of investors
  • taxpayers at the expense of government
  • workers at the expense of employers
  • borrowers at the expense of lenders
Check Answer

Correct Option: D

Q.18:- Fiscal policy refers to the policy of government regarding taxation, public expenditure and:

  • Policies
  • Public Debts
  • Budgets
  • Deposit
Check Answer

Correct Option: C

Q.19:- The pure time value of money is known as the:

  • Term structure of interest rates.
  • Fisher effect.
  • Liquidity effect.
  • Inflation factor.
Check Answer

Correct Option: A

Q.20:- If a company agreements today for several future date of real currency exchange, they will be building use of a

  • futures rate
  • Stock rate
  • Forward rate
  • stock rate
Check Answer

Correct Option: C

Q.21:- All of the following are indicators of a recession except

  • tax cuts
  • stock prices
  • average work week for production workers
  • interest rates
Check Answer

Correct Option: A

Q.22:- Which of the following is an effect of inflation?

  • Erosion in purchasing power
  • Affects relative price of goods
  • Increase in inequalities of income
  • All the above
Check Answer

Correct Option: D

Q.23:- The phase after expansion and before contraction is:

  • Trough
  • Expansion
  • Contraction
  • Peak
Check Answer

Correct Option: D

Q.24:- When aggregate economic activity is increasing, the economy is said to be:

  • An expansion
  • A turning point
  • A contraction
  • A peak
Check Answer

Correct Option: A

Q.25:- A reserve ratio of 0.10 means that a bank loans out ________percent of its_______

  • 90, excess reserves
  • 90, deposit liabilities
  • 10, deposit liabilities
  • 10, excess reserves
Check Answer

Correct Option: B

Q.26:- Which of the following is correct?

  • Fiscal deficit = Primary Deficit Plus interest
  • Primary deficit = Fiscal Deficit Plus interest
  • Fiscal deficit = Primary Deficit minus interest
  • Primary deficit = Fiscal Deficit minus interest
Check Answer

Correct Option: D

Q.27:- Setup Corporation buys $100,000 of sand, rock, and cement to produce redi-mix concrete. It sells 10,000 cubic yards of concrete at $30 a cubic yard. The value added by Setup Corporation is:

  • $200,000
  • Zero dollars
  • $100,000
  • $300,000
Check Answer

Correct Option: A

Q.28:- The GDP is the:

  • Monetary value of all goods and services, final and intermediate, produced in a specific year.
  • Monetary value of all economic resources used in producing a year's output.
  • Monetary value of all final goods and services produced within a nation in a particular year.
  • National income minus all non-income charges against output.
Check Answer

Correct Option: C

Q.29:- The amount of after-tax income received by households is measured by:

  • Personal income.
  • Disposable income
  • Discretionary income.
  • National income
Check Answer

Correct Option: B

Q.30:- Which of the following best defines national income?

  • all incomes earned by U.S. resource suppliers for their current contributions to production
  • the before-tax income received by households
  • the market value of the annual output net of consumption of fixed capital
  • income received by households less personal taxes
Check Answer

Correct Option: A

Q.31:- Final goods and services refer to:

  • Goods and services purchased by ultimate users, rather than for resale or further processing.
  • Goods and services whose value has been adjusted for changes in the price level.
  • The excess of U.S. exports over U.S. imports.
  • Goods and services thatare unsold and therefore added to inventories.
Check Answer

Correct Option: A

Q.32:- During inflation and full employment which type of budget is recommended?

  • Deficit Budget
  • Unbalanced budget
  • Surplus Budget
  • Balanced Budget
Check Answer

Correct Option: C

Q.33:- A corporation in which you are a shareholder has just gone bankrupt. Its liabilities are far in excess of its assets. You will be called on to pay:

  • A proportional share of all creditor claims based on the number of common shares that you own.
  • Nothing.
  • An amount that could, at most, equal what you originally paid for the shares of common stock in the corporation.
  • A proportionate share of bondholder claims based on the number of common shares that you own.
Check Answer

Correct Option: B

Q.34:- Balance of payments of a country includes:

  • Capital receipts and payments
  • Balance of trade
  • Both (a) and (b)
  • Saving and investment account
Check Answer

Correct Option: C

Q.35:- Which of the following is a part of business cycle stage?

  • Trough
  • Depression
  • Inflation
  • Deflation
Check Answer

Correct Option: A

Q.36:- ......................... elements of a time series sit above or below the trend line and may recur for a year or longer.

  • Seasonal
  • Irregular
  • Cyclical
  • Trend
Check Answer

Correct Option: C

Q.37:- Delphi method of forecasting technique is a

  • Casual Method of forecasting technique
  • Time Series Method of forecasting technique
  • Qualitative Method of forecasting technique
  • Quantitative Method of forecasting technique
Check Answer

Correct Option: C

Q.38:- The following is not a forecasting tool?

  • Organisation charts
  • Cash flow statement
  • Production charts
  • None of the above.
Check Answer

Correct Option: D

Q.39:- Business cycles share all of these characteristics except

  • the interest rates rise
  • wage growth slows down
  • consumer expenditures decline abruptly
  • business inventories of steel, automobiles and other durable goods rise unexpectedly
Check Answer

Correct Option: A

Q.40:- Which one of the following premiums is compensation for expected future inflation?

  • liquidity
  • inflation
  • interest rate risk
  • taxability
Check Answer

Correct Option: B

Q.41:- The Fisher Effect primarily emphasizes the effects of on an investor's rate of return.

  • market
  • inflation
  • maturity
  • default
Check Answer

Correct Option: B

Q.42:- Suppose that the Indian Express Newspaper reads: “Indian Economy Remains in Recession.” The type of unemployment that would likely occur in this circumstance is

  • Frictional Unemployment
  • cyclical unemployment
  • sustained unemployment
  • structural unemployment
Check Answer

Correct Option: A

Q.43:- When buyers’ spending to purchase goods and services outruns sellers’ capacities to supply them, thus forcing up prices on what is available, _____occurs

  • cost-pull inflation
  • demand-pull inflation
  • monetary inflation
  • supply-side inflation
Check Answer

Correct Option: B

Q.44:- Gross domestic product (GDP) measures and reports output:

  • In percentage terms.
  • In quantities of physical units (for example, pounds, gallons, and bushels).
  • As an index number.
  • In dollar amounts
Check Answer

Correct Option: D

Q.45:- Which of the following activities is excluded from GDP, causing GDP to understate a nation's well-being?

  • the child-care services provided by stay-at-homeparents
  • the construction of new houses
  • government expenditures on military equipment
  • the services of used-car dealers
Check Answer

Correct Option: A

Q.46:- The largest component of national income is:

  • Rents.
  • Corporate profits.
  • Compensation of employees.
  • Interest.
Check Answer

Correct Option: C

Q.47:- Which of the following is an intermediate good?

  • The purchase of jogging shoes by a professor
  • The purchase of baseball uniforms by a professional base ball team.
  • The purchase of gasoline for a ski trip to Colorado
  • The purchase of a pizza by a college student.
Check Answer

Correct Option: B

Q.48:- The official unemployment rate tends to underestimate unemployment because

  • It fails to count the employment of all home makers
  • It ignores all full-time students who are not actively seeking employment.
  • It does not count workers under the age of 14.
  • It counts all those who are employed part-time as fully employed.
Check Answer

Correct Option: D

Q.49:- Which of the following statements is true with regards to fiscal policy?

  • It relates to government spending levels and revenue, specially taxes.
  • It can be changed frequently.
  • It relates to the management of money supply in the economy.
  • It is formulated by the Central Bank.
Check Answer

Correct Option: A

Q.50:- Who formulates the monetary policy?

  • The local governing bodies
  • The Central government
  • Both a. and b.
  • The Central Bank
Check Answer

Correct Option: D