Basic of Economics Mcqs - Set 2

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
Answer  Explanation 

ANSWER: Household’s purchase of stock in any XYZ corporation

Explanation:
No explanation is available for this question!


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
Answer  Explanation 

ANSWER: Gross investment minus capital consumption allowance

Explanation:
No explanation is available for this question!


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
Answer  Explanation 

ANSWER: The market value of all goods and services produced in an economy

Explanation:
No explanation is available for this question!


4)   We measure national income by this method ?

a. Expenditure method
b. Income method
c. Product method
d. All of the above
Answer  Explanation 

ANSWER: All of the above

Explanation:
No explanation is available for this question!


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
Answer  Explanation 

ANSWER: High inflation rate combined with high unemployment and unchanged consume demand

Explanation:
No explanation is available for this question!


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
Answer  Explanation 

ANSWER: The responsiveness of demand to price changes

Explanation:
No explanation is available for this question!


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
Answer  Explanation 

ANSWER: Increasing the role of markets

Explanation:
No explanation is available for this question!


8)   Transfer payments means ?

a. Bank loans
b. The payment without work
c. Tax payments
d. Payments made to all factors of production
Answer  Explanation 

ANSWER: The payment without work

Explanation:
No explanation is available for this question!


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
Answer  Explanation 

ANSWER: Per capita income

Explanation:
No explanation is available for this question!


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
Answer  Explanation 

ANSWER: Direct tax

Explanation:
No explanation is available for this question!


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
Answer  Explanation 

ANSWER: A member of the stock exchange who cannot meet his obligations

Explanation:
No explanation is available for this question!


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
Answer  Explanation 

ANSWER: Reliance Industries Ltd.

Explanation:
No explanation is available for this question!


13)   Devaluation of currency helps to promote ?

a. National income
b. Saving
c. Imports at lower cost
d. Exports
Answer  Explanation 

ANSWER: Exports

Explanation:
No explanation is available for this question!


14)   If saving exceeds investment the national income will ?

a. Fall
b. Rise
c. Fluctuate
d. Remain constant
Answer  Explanation 

ANSWER: Remain constant

Explanation:
No explanation is available for this question!


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
Answer  Explanation 

ANSWER: Dealing in foreign exchange

Explanation:
No explanation is available for this question!


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
Answer  Explanation 

ANSWER: Income on which payment of tax is usually evaded

Explanation:
No explanation is available for this question!


17)   The most industrialized country in Asia is ?

a. Japan
b. South Korea
c. Taiwan
d. Malaysia
Answer  Explanation 

ANSWER: Japan

Explanation:
No explanation is available for this question!


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
Answer  Explanation 

ANSWER: interest rates

Explanation:
No explanation is available for this question!


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
Answer  Explanation 

ANSWER: reducing government expenditure

Explanation:
No explanation is available for this question!


20)   Which of the following groups suffer the most from inflation ?

a. Debtors
b. Creditors
c. Business class
d. None of these
Answer  Explanation 

ANSWER: Creditors

Explanation:
No explanation is available for this question!


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
Answer  Explanation 

ANSWER: Milton Friedman

Explanation:
No explanation is available for this question!


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
Answer  Explanation 

ANSWER: Lowering of the value of one currency in comparison of some foreign currency

Explanation:
No explanation is available for this question!


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
Answer  Explanation 

ANSWER: Stagflation

Explanation:
No explanation is available for this question!


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
Answer  Explanation 

ANSWER: Decrease in tax

Explanation:
No explanation is available for this question!


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
Answer  Explanation 

ANSWER: The balance of payments

Explanation:
No explanation is available for this question!


26)   Which type of income is earned only the actor of production enterprise ?

a. interest
b. Profit
c. rent
d. wages
Answer  Explanation 

ANSWER: Profit

Explanation:
No explanation is available for this question!


27)   Which of the following is regarded as a factor of production ?

a. Capital
b. Interest
c. Profit
d. None of these
Answer  Explanation 

ANSWER: Capital

Explanation:
No explanation is available for this question!


28)   The situation with increasing unemployment and inflation is terms as ?

a. Hyperinflation
b. Reflection
c. Stagflation
d. Galloping
Answer  Explanation 

ANSWER: Stagflation

Explanation:
No explanation is available for this question!


29)   When the stock market is down falling it is called ?

a. Bullish
b. Bearish
c. Falling
d. Crashing
Answer  Explanation 

ANSWER: Bearish

Explanation:
No explanation is available for this question!


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
Answer  Explanation 

ANSWER: Golden handshake

Explanation:
No explanation is available for this question!