1. Imputed value of good is added to the GDP because:
Correct : B. There is no market price for that
2. GDP Deflator is also called as:
Correct : D. Implicit Price Deflator
3. Personal Income includes:
Correct : A. Dividend distributed
4. Disposable Income does not include:
Correct : B. Income tax
5. Investment is reckoned by which method for computing GDP:
Correct : C. Expenditure Method
6. Adam Smith, the father of modern economic theory, defined economics as a subject,
which is mainly concerned with the study of nature and causes of generation of ______
Correct : A. Wealth
7. _________ introduced the concept of welfare in the study of economics:
Correct : B. Alfred Marshall
8. Who defined economics as: a science which studies human behavior as a relationship
between ends and scarce means which have alternative uses:
Correct : D. Robbins
9. The problem of scarcity and choice making can be depicted using the tool of ___ curve.
Correct : D. Production possibility
10. Macroeconomics is primarily concerned with aggregates. Which of the following is not
a macroeconomic aggregate?
Correct : A. Decision making by a household
11. Scientific attempts to describe economic relationships are :
Correct : C. Known as positive economics
12. The ________ method consists in deriving conclusions from general truths, takes few
general principles and applies them draw conclusions.
Correct : B. Deductive
13. ________is a term referring to an intellectual controversy over epistemology, research
methodology between Carl Menger, and Gustav von Schmoller.
Correct : A. Methodenstreit
14. Inductive method which also called empirical method was adopted by the:
Correct : D. Historical School of Economists
15. Decisions made in households, firms, and government are the focus of:
Correct : C. Normative economics
16. Knowledge used to combine resources productively is called:
Correct : D. Technology
17. Economic efficiency for the entire economy requires that :
Correct : D. All of the above
18. Theories are:
Correct : D. Developed when we collect data, try to explain how things work, and then
19. Division of Labour is limited by the extent of:
Correct : D. Market
20. Milton Friedman restated the :
Correct : C. Quantity Theory of Money
21. If the value of a variable varies as a consequence of the variation in the value of some
other variable, it is called:
Correct : A. Exogenous variable
22. Saving is a function of:
Correct : D. Income
23. In the classical theory the equlity between saving and investment is brought about by:
Correct : B. Rate Interest
24. Economic Laws are:
Correct : A. Statement of tendencies
25. Which of the following concepts are most closely associated with J.M. Keynes?
Correct : D. Marginal efficiency of capital
26. Which of the following is an example of economic overhead?
Correct : B. Roads and Railwlays
27. Three methods of computing the national income are:
Correct : C. Production, outlay and income methods,
28. The difference between GNP at Factor Cost and NNP at Factor Cost is:
Correct : D. Net income from abroad
29. An equilibrium which holds a particular position over-time is:
Correct : C. Stable equilibrium
30. National income is a:
Correct : B. Flow concept
31. The services of a house wife are:
Correct : A. Not part of Production
32. Inflation can not be caused by:
Correct : C. Excessive production
33. By representing amounts of proceeds by all entrepreneurs along the Y axis and volumes
of employment along the X-axis, we can draw--------curves.
Correct : A. Employment
34. “Effective demand is different from aggregate demand”. This statement is:
Correct : A. True
35. If MPC = 4/5, then value of the multiplier is:
Correct : B. 5
36. In the Cambridge equation of M =KPR, the value of “K” is:
Correct : B. 1/V
37. Who had a different macro theory than the rest?
Correct : C. Malthus
38. ”Mr. Keynes and the Classics” is the title of the famous paper by :
Correct : B. Hicks
39. Which of the following is not a flow variable:
Correct : B. Wealth
40. The quantity theory of money is primarily a theory of demand for money is stated by:
Correct : D. Friedman
41. When MPC is 0.5, the value of multiplier is:
Correct : C. 2
42. In Classical theory, the equality between saving and investment is brought about by:
Correct : B. Rate of interest
43. Which one of the following is not correct:
Correct : C. MPS is always positive
44. Marginal propensity to consume means:
Correct : D. The rate of extra income that will be spent on consumption
45. Human capital formation refers to:
Correct : C. The process of increasing knowledge, skills and capacities of all people
46. According to Keynesian analysis, consumption is a function of:
Correct : B. Current income
47. If in an economy, out of every additional Rs.100 of national income, Rs.20 is taxed,
Rs.20 is saved, and Rs.10 is spent on imports, then the value of multiplier is:
Correct : A. 2
48. Which of the following equation is wrong?
Correct : A. National Income = Effective demand
49. The essential condition to act as money is:
Correct : D. It is generally acceptable
50. Which of the following is not a component of Income method to GNP?
Correct : C. Depreciation
51. The marginal propensity to save is defined as:
Correct : A. 1-∆C/∆Y
52. -------------is associated with the theory of multiplier:
Correct : D. Keynes
53. The MPC has a value:
Correct : B. Less than one but greater than zero
54. Which of the following is not a stock variable:
Correct : D. Saving
55. An official reduction in the value of home currency in terms of foreign currency is
known as:
Correct : B. Devaluation
56. The value of investment multiplier depends on:
Correct : C. MPC
57. Wage cut as a solution of unemployment in classical theory is suggested by:
Correct : B. Say B. A.C. Pigou
58. The word macro was first used in Economics by:
Correct : B. Ragner Frisch
59. Personal Disposable income is:
Correct : C. Equal to personal income minus direct taxes
60. When the method of Statics is called upon to study a changing process, it is referred to
as the method of:
Correct : B. Dynamics
61. In Classical theory of employment, there is the possibility of:
Correct : B. Voluntary unemployment
62. Leakages are the factors which:
Correct : C. Reduce the power of multiplier
63. The phenomenon of increase in money wages that leads to increases in unemployment
is shown by:
Correct : B. Phillip’s curve
64. Which of the following is Keynesian saving function?
Correct : C. S = f (Y)
65. Usually an IS curve is a -------line.
Correct : B. Downward Slopping
66. When consumption and income are equal, saving is ------------
Correct : C. Zero
67. When of the following is correct:
Correct : A. 1/MPS = value of the multiplier
68. “Treatise on money’ is a book written by:
Correct : D. Keynes
69. Value of money:
Correct : A. Is inversely related to the price level
70. The major primary function of money in modern Economics is to serve as:
Correct : B. A medium of exchange
71. 1- C/Y is defined as:
Correct : C. Average propensity to save
72. The “General Theory” of Keynes was published in the year:
Correct : A. 1936
73. Say’s Law of market says:
Correct : B. Supply creates demand
74. The curve showing the possibilities of production of desired good is known as:
Correct : B. Production possibility curve
75. Which one of the following definition of Economics is associated with the name of
Lionel Robbins?
Correct : B. Scarcity definition
76. In a free enterprise economy, the problems of what, how and for whom to produce are
solved by :
Correct : B. The Price mechanism
77. Who considered Political Economy as “an enquiry into the nature and causes of the
wealth of nations”?
Correct : A. Adam Smith
78. Which of the following definitions of Economics include the economic concept of
‘scales of Preferences’?
Correct : C. Scarcity definition
79. Which of the following embodies a more widely accepted definition of economics?
Correct : D. Science of making choice.
80. The fundamental problem faced by an economy is one of :
Correct : D. Scarcity of resources and multiplicity of wants.
81. Production possibilities curve does not show:
Correct : D. Productive potential under conditions of underemployment
82. State whether Economics is :
Correct : D. A science or an art depending on who uses Economics and for what
83. Who of the following emphasized the normative aspect of Economics as a science?
Correct : C. The German historical school
84. Of the following economists who is considered as master of partial analysis?
Correct : A. Alfred Marshall
85. Which of the following statements has been drawn by inductive method?
Correct : B. All businessmen wish to buy at low price and sell at high price
86. What is true for deductive method?
Correct : A. Abstract
87. What is true for inductive method?
Correct : B. Empirical
88. Find out the correct statement:
Correct : B. Models transform verbal expressions in to more scientific expressions
89. Micro economic theory studies how a free enterprise economy determines:
Correct : A. The Price of goods
90. Which aspect of taxation involves normative economics?
Correct : B. The fairness of the tax
91. Microeconomics deals primarily with:
Correct : D. Comparative statics, partial equilibrium and positive economics.
92. The word micro was first used in Economics by:
Correct : B. Ragnar Frisch
93. A function refers to :
Correct : D. The relationship between one dependent variable and one or more
94. The validity of an economic theory is judged by its power to:
Correct : A. Explain an economic phenomenon
95. The subject matter of economics is the study of:
Correct : D. Scarcity and Choice
96. To whom do you attribute the ‘growth’ definition of economics?
Correct : A. Paul Samuelson
97. The first economist who coined the terms micro economics and macroeconomics