1) Consumption spending does not include ? a. Household’s purchases of food b. Households’ purchase of a car c. Household’s payment of rent for an apartment d. Household’s purchase of stock in any XYZ corporation
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2) Net investment is___________________? a. Gross investment minus household investment b. Gross investment minus govt. Investment c. Gross investment minus capital consumption allowance d. None of the above
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3) GNP is_______________? a. Total sales in the economy b. Total monetary transactions in an economy c. The market value of all goods and services produced in an economy d. Total spending in an economy
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4) We measure national income by this method ? a. Expenditure method b. Income method c. Product method d. All of the above
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5) What is the meaning of the term stagflation ? a. Fall in prices due to less circulation of currency b. Fall in employment due to declining production c. High inflation rate combined with high unemployment and unchanged consume demand d. None of these
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6) What does price elasticity of demand measure ? a. Changes in price caused by changes in demand b. The rate of change of sales c. The responsiveness of demand to price changes d. The value of sales at a given price
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7) What would reduce the role of central planning in a economy ? a. Increasing government spending b. Increasing public ownership of firms c. Increasing the role of markets d. Removing the profit motive
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8) Transfer payments means ? a. Bank loans b. The payment without work c. Tax payments d. Payments made to all factors of production
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9) The standard of living in a country is represented by its ? a. National income b. Per capita income c. Poverty ratio d. None of these
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10) A tax which is paid by the person on whom the tax is incident is called a ? a. Local tax b. Indirect tax c. Direct tax d. Rate
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11) Who is a “Lame Duck” in a stock market ? a. A new investor b. A old investor c. A member of the stock exchange who cannot meet his obligations d. None of the above
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12) Which company holds the world record for having the maximum number of shareholders ? a. Reliance Industries Ltd. b. British Gas c. General Motors d. State Bank
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13) Devaluation of currency helps to promote ? a. National income b. Saving c. Imports at lower cost d. Exports
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14) If saving exceeds investment the national income will ? a. Fall b. Rise c. Fluctuate d. Remain constant
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15) Which function is performed by both commercial banks and central banks ? a. Acting as bankers to the government b. Advising the government on monetary policy c. Dealing in foreign exchange d. Fixing the main interest rate
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16) What is Black Money ? a. Income on which payment of tax is usually evaded b. Illegally earned money c. Money earned through underhand deals d. None of these
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17) The most industrialized country in Asia is ? a. Japan b. South Korea c. Taiwan d. Malaysia
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18) What can a central bank increase in order to reduce consumer borrowing ? a. commercial bank deposits b. government bank deposits c. government spending d. interest rates e. None of these
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19) Which of the following is an example of government policy that could reduce inflation ? a. increasing bank lending b. increasing import duties c. reducing government expenditure d. None of these
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20) Which of the following groups suffer the most from inflation ? a. Debtors b. Creditors c. Business class d. None of these
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21) With whom would you associate the following quote” The business of business is business” ? a. Milton Friedman b. Adam smith c. Alfred Marshal d. Karl Marx
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22) Devaluation means ? a. Converting rupee into gold b. Lowering of the value of one currency in comparison of some foreign currency c. Making rupee dearer in comparison to some foreign currency d. None of these
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23) The period of high inflation and low economic growth is termed as ? a. Stagnation b. Take-off stage in economy c. Stagflation d. None of these
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24) Which of the following can be used for check inflation temporarily ? a. increase in wages b. Decrease in money supply c. Decrease in tax d. None of these
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25) Which of the following must always balance ? a. The balance of visible trade b. The balance of invisible trade c. The balance on the current account d. The balance of payments
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26) Which type of income is earned only the actor of production enterprise ? a. interest b. Profit c. rent d. wages
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27) Which of the following is regarded as a factor of production ? a. Capital b. Interest c. Profit d. None of these
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28) The situation with increasing unemployment and inflation is terms as ? a. Hyperinflation b. Reflection c. Stagflation d. Galloping
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29) When the stock market is down falling it is called ? a. Bullish b. Bearish c. Falling d. Crashing
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30) Large payment to senior employee who is forced into retirement is called ? a. Golden bonus b. Golden shake hand c. Friendly handshake d. Golden handshake
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