1. Which of the following statements is NOT TRUE of indifference curves?
Correct : B. they are convex to origin
2. A consumer with a given income will maximise their utility when:
Correct : D. the marginal utilities derived from each commodity consumed are proportional
3. The typical indifference curve ……..
Correct : B. shows all combinations of goods that give a consumer in same level of utility
4. The rate at which a consumer is able to substitute one good for another is determined by the …….
Correct : C. ratio of the prices of the goods
5. A utility function shows the relation between …..
Correct : A. the amount of goods consumed and a consumer utility.
6. Which of the following is the measure to control inflation.
Correct : B. raising bank rate
7. Which of the following is a measure to reduce inequality of income
Correct : B. social securities
8. The most outstanding feature of capitalist economic system is …
Correct : C. inequality of income
9. Employment of people who take jobs below their capacity is known as
Correct : A. underemployment
10. Which of the following is a social consequences of unemployment in india
Correct : B. loss of income and respect
11. Unemployment caused by a decline in demand for production in a particular industry is
Correct : C. structural unemployment
12. Which of the following is not a development issue in india
Correct : D. decreasing trend of foreign capital
13. Indian economy growth is primarily driven by
Correct : C. service
14. Law of equi-marginal utility was suggested by
Correct : B. robins
15. The concept of consumer surplus was developed by
Correct : A. marshal
16. Indifference curve analysis is based on the principles of
Correct : C. diminishing marginal rate of substitution
17. The author of the wealth of nation is
Correct : C. adam smith
18. Macro economic theory is also known as
Correct : A. price theory
19. The study of entire economic system is called
Correct : A. macro economics
20. The author of “the wealth of nations” is
Correct : D. adam smith
21. The study of international trade and national income is part of
Correct : B. macro economics
22. If the income elasticity of demand is that one, the good is a
Correct : B. luxury
23. The income elasticity of demand is negative for a
Correct : D. inferior good
24. If the price of DVRs fell and as a result the demand for VHS recorders fell we could conclude that VHS recorders
DVRs are
Correct : B. substitutes
25. What effect is working when the price of a good falls and consumers tend to buy it instead of other goods
Correct : B. substitution effect
26. The quantity demanded of a product increases when
Correct : C. the price of the product falls
27. Two goods that are used jointly to provide satisfaction are called
Correct : C. complementary goods
28. Demand curve slopes downwards because of
Correct : D. all of the above
29. If the income and substitution effect of a price increase works in the same direction the good whose price has
changed is a
Correct : C. normal goods
30. Which of the following is not a survey method of demand forecasting
Correct : C. barometric method
31. Which of the following is not a method of demand forecasting
Correct : A. trend projection method
32. Which one is not a property of isoquant
Correct : D. positive slope
33. In which production function, the degree of homogeneity is always one
Correct : C. linear homogeneous production function
34. Which of the following is a short run law
Correct : A. law of diminishing returns
35. Which of the following is not a variable input
Correct : C. equipment
36. Which cost is more useful for decision making
Correct : A. opportunity cost
37. Which cost are recorded in books of accounts
Correct : D. explicit cost
38. Fixed cost per unit increases when
Correct : A. volume of production decreases
39. Variable cost per unit
Correct : B. varies with the volume of production
40. Firms in a oligopoly
Correct : B. can each influence the market price
41. Duopoly is
Correct : C. two firm oligopoly
42. Product differentiation is an important feature of
Correct : B. monopolistic competiton
43. Globalisation has created new opportunities of
Correct : D. none of these
44. Removing barriers or restrictions set by the government is called
Correct : A. liberalization
45. WTO aims at
Correct : C. liberalizing international trade
46. What are “hawala transaction”
Correct : B. transfer of money without actually moving it
47. Which of the following is a measure to control inflation.
Correct : B. raising bank rate
48. Which of the following is a measure to reduce inequality of income
Correct : B. social securities
49. The most outstanding feature of the capitalist economic system is
Correct : C. nequality of income
50. Which of the following is a social consequence of unemployment in india
Correct : B. loss of income and respect
51. The unemployment caused by a decline in demand for production in a particular industry is
Correct : C. structural unemployment
52. Which of the following is not a development issue in india.
Correct : D. decreasing trend of foreign capital
53. India’s economy growth is primarily driven by
Correct : C. service
54. In which exchange rate system, exchange rate is fixed by the monetary authority
Correct : B. fixed exchange rate system
55. Direct foreign investment is part of
Correct : D. financial account
56. MNC
Correct : D. may produce primary or manufactured goods
57. One major initiative to attract foreign companies to invest in india is
Correct : C. to build up special economic zones
58. The portfolio investment by foreign institutional investor is
Correct : A. fdi
59. Under the new trade policy, import licensing was abolished except in case of
Correct : D. hazardous and environmentally sensitive industry
60. Where do MNCs choose to set up production?
Correct : B. cheap labour resources
61. Cargil foods, an MNC has bought over which indigenous Indian company?
Correct : C. parakh foods
62. For motors entered the Indian automobile business in collaboration with which Indian manufacturer?
Correct : A. mahindra and mahindra
63. Trade between countries
Correct : A. determines prices of products in different countries
64. Globalization by connecting countries leads to
Correct : B. greater competition among producers
65. If tax is imposed on Chinese toys, what will happen?
Correct : B. indian toy makers will proposer
66. Which of the following is an example of a trade barrier?
Correct : C. tax on imports
67. Which out of the following industries has a large number of well off buyers in urban areas?
Correct : B. automobile
68. Automatic fiscal stabilizers
Correct : C. Help to reduce the severity of recessions and inflationary boom periods
69. The higher the marginal income tax rate, the
Correct : D. lower the autonomous expenditure multiplier
70. Suppose that the MPC out of disposable income was 0.8 and the marginal tax rate was 0.25 for a given economy. In this case, the value of the tax multiplier in the simple Keynesian model would be
Correct : B. -2.
71. Suppose that the MPC out of disposable income was 0.8 and the tax function for a given economy was T= -30+0.25Y. an increase in the intercept of the tax function of 10 units(from -30 to -20 would cause equilibrium income in the simple Keynesian model to fall by
Correct : C. 20 units
72. If the tax function is given by T= -20+0.1 Y the average tax rate would
Correct : B. Fall as income falls
73. The role of the progressive tax system as an autonomous fiscal stabilizer requires that the budget
Correct : B. Should go into a surplus at appropriate points in the business cycle.
74. If the tax function is T= t0+t1y where t1 equals 1/3,and if the marginal propensity to consume out of disposable income is 3/4 , then the change in GDP oer unit change into t0 (∆Y/∆ t0) will be
Correct : C. -1.5
75. In the simple Keynesian model, if the tax function is given by T=0.15Y and the consumption function is C= 50 + 0.7 YD then a 10-unit ncrease in government spending would increase equilibrium income by
Correct : B. 11.2 units
76. Advocates of the public-choice view argue that voting behaviour is influenced by the
Correct : B. Level of economic activity.
77. According to the partisan theory,
Correct : A. Politicians are viewed as working only for their own welfare.
78. Which of the following statements is(are) correct?
Correct : C. The myopic, or short-sighted behaviour of voters is inconsistent with rational expectations
79. When automatic fiscal stabilizers are in place, a shock that causes a fall in the kevel of economic activity automatically
Correct : B. Results in a rise in the federal deficit that lessens the fall in income
80. According to the Keynesian model, the optimal fiscal policy is to
Correct : A. Increase cyclical but not structural deficits during a recession
81. Which of the following are the most frequently utilized tools of fiscal policy in the United States?
Correct : D. Personal income taxes
82. Assume that the actual deficit is $150 billion with the economy well below potential output and that the level of economic activity rose to its potential level while tax revenues increased by $50 billion and transfer payments fell by $20 billion. Then, what is the structural deficit?
Correct : D. $80 billion
83. The structural deficit is
Correct : D. Both b and c
84. According to the Keynesians,
Correct : B. An easy-fiscal tight-monetary policy mix affects the composition of output by encouraging imports of foreign goods and discouraging U.S. exports, as was experienced during the 1980s
85. During the recession of 2001,
Correct : B. A series of tax cuts were passed, though the only occurred in late 2001
86. Advocates of the public-choice view argue that elected officials
Correct : D. None of the above
87. Which of the following statements are(is) correct?
Correct : D. The answer depends upon the school of thought used to evaluate the effects of deficit policies
88. Assuming a simultaneous deduction in income taxes and transfer payments of $50 billion, then aggregate disposable income will
Correct : C. remain constant
89. From the net tax function: T=t0+t1Y,where t0<0 and t1>0, it follows that, as income rises
Correct : C. average taxes falls and the deficit declines
90. The structural deficit is the deficit that
Correct : C. Exists when output is at its natural rate of output
91. In the IS-LM model, an easy monetary in conjunction with a tight fiscal policy
Correct : D. Both b and c
92. The cyclical deficit is that portion of the deficit
Correct : D. Both a & c
93. Automatic stabilizers drive changes in
Correct : B. The cyclical deficit
94. According to the concept of rational expectations
Correct : A. Budget deficits are irrelevant to output in the short-run