QUESTION AND ANSWER : Mcq, Oneliner. &Text Etc...

इस ब्लॉग्स का सृजन भारत वर्ष में आयोजित होने वाली समस्त प्रकार की प्रतियोगी एवं भर्ती परीक्षाओं में सभी प्रकार के प्रतिभागियों को संतुष्ठ करते हुए वांछित पाठ्य विषय वस्तु का संपादन और संगर्हण किया गया हैं , सभी विषय वस्तुए सर्वाधिकार सुरक्षित हैं ,न लाभ न हानि पर संचालित कि जा रही , इन सभी विषय वस्तुए को भारत वर्षमें हिंदी , गुजराती, मराठी , कन्नड़ , तमिल, तेलगु, बांग्ला , उर्दू, आदि में अनूदित कर के देखा जा सकता हैं , सभी को भविष्य कि हार्दिक शुभकामना सहित सुझाव सादर आमंत्रित हैं,

Thursday, October 10, 2013

MCQ IN ECONOMICS- 2

General Awareness Economics For bank PO
ECONOMICS GENERAL AWARENESS BANK CLERKS /PO
Current Affair on Business and Economy for Bank Clerical/ PO Exams

1. A situation where we have people whose level of income is not sufficient to meet the minimum consumption expenditure is considered as—
(A) Absolute Poverty
(B) Relative Poverty
(C) Urban Poverty
(D) Rural Poverty
Ans. (A)

2. Full convertibility of a rupee means—
(A) Purchase of foreign exchange for rupees freely
(B) Payment for imports in terms of rupees
(C) Repayment of loans in terms of rupees
(D) Determination of rate of exchange between rupee and foreign currencies freely by the market forces of demand and supply
Ans. (D)

3. India is called a mixed economy because of the existence of—
1. Public Sector
2. Private Sector
3. Joint Sector
4. Cooperative Sector
(A) 1, 4
(C) 3, 4
(B) 1, 2
(D) 2, 4
Ans. (B)

4. Revealed Preference Theory was propounded by—
(A) Adam Smith
(B) Marshall
(C) P.A. Samuelson
(D) J.S. Mill
Ans. (C)

5. Gross Domestic Product is defined as the value of all—
(A) Goods produced in an economy in a year
(B) Goods and services produced in an economy in a year
(C) Final goods produced in an economy in a year
(D) Final goods and services produced in an economy in a year
Ans. (D)

6. An exceptional demand curve is one that moves—
(A) Upward to the right
(B) Downward to the right
(C) Horizontally
(D) Vertically
Ans. (A)

7. Production function explains the relationship between—
(A) Initial inputs and ultimate output
(B) Inputs and ultimate consumption
(C) Output and consumption
(D) Output and exports
Ans. (A)

8. In Economics the terms ‘Utility’ and ‘usefulness’ have—
(A) Same meaning
(B) Different meaning
(C) Opposite meaning
(D) None f the above
Ans. (B)

9. The present Indian monetary system is based on—
(A) Gold Reserve System
(B) Proportional Reserve System
(C) Convertible Currency System
(D) Minimum Reserve System
Ans. (D)

10. One of the essential conditions of monopolistic competition is—
(A) Many buyers but one seller
(B) Price discrimination
(C) Product differentiation
(D) Homogeneous product
Ans. (C)

11. Gresham’s law is related to—
(A) Consumption and demand
(B) Supply and demand
(C) Circulation of money
(D) Deficit financing
Ans. (C)

12. In a laissez-faire economy—
(A) The customers take all the decisions regarding production of all the cornmodities
(B) The Government does not interfere in the free functioning of demand and supply forces in the market
(C) The private sector takes all the decisions for price-determination of various commodities produced
(D) The Government controls the allocation of all the factors of production
Ans. (B)

13. In calculating National Income which of the following is included?
(A) Services of housewives
(B) Pensions
(C) Income of smugglers
(D) Income of watchmen
Ans. (D)

14. Who among the following has suggested tax on expenditure?
(A) Dalton
(B) Kaldor
(C) Musgrave
(D) Gautam Mathur
Ans. (B)

15. Bank-rate is the rate at which—
(A) A Commercial Bank borrows loans from some other Commercial Bank
(B) The Central Bank borrows loans from the Government
(C) The Commercial Bank gives loans to the public
(D) The Central Bank are-discounts the Commercial bills brought to it by the Commercial Banks
Ans. (D)

16. The annual record for all the monetary transactions of a country with other countries of the world is known as—
(A) Balance of trade
(B) Balance of monetary receipts
(C) Balance of payments
(D) Balance-Sheet
Ans. (C)

17. Which institution is known as ‘soft loan window’ of the World Bank?
(A) International Finance Corporation
(B) International Development Agency
(C) International Monetary Fund
(D) Indian Development Forum
Ans. (B)

18. ECOMARC is a symbol related to—
(A) Exported goods
(B) Imported goods
(C) Goods safe for environment
(D) Best quality
Ans. (C)

19. Consider the following reasons of continuous decline in average land-holding size in
India—
1. Law of inheritance
2. Consolidation
3. Farm mechanization
4. Desire of land ownership
Pick out the correct answer from the options given below—
(A) 1, 2, 3 and 4
(B) 1, 3 and 4
(C) l and 4
(D) 1 and 2
Ans. (C)

20. Which of the following sets belongs to Central tax?
(A) Excise duty, Sales tax and Customs duty
(B) Excise duty, Customs duty and Income- tax
(C) Income-tax, Customs duty and House tax
(D) Customs duty, Entertainment tax and Income tax
Ans. (B)

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Solved paper UPSC 2008 Prelims Economics
Prelims Old Papers Economics
UPSC Solved papers

The shift in the SS curve to S’S’ is due to an imposition of a tax.

Which of the following areas in the diagram shows excess burden of the tax?

(a) ODIY

(b) SDA

(d) CAD

Ans. (c)

2. Consider the following statements:

A. The number of firms is large both under perfect competition and monopolistic competition.

B. There is freedom of entry and exit in both perfect competition and monopolistic competition.

C. In both perfect competition and monopolistic competition, every firm is a price taker and quantity adjuster.

Which of the statements given above are correct?

(a) A, B and C

(b) B and C

(d) A and B

Ans. (d)

3. Match List I (Market Type) with List-II (Implication) and select the correct answer using the codes given below the lists:

List-I List-II

(Market Type) (Implication)

A. Perfect competition 1. Collusion of firms

B. Monopoly 2. Excess capacity

C. Monopolistic competition 3. Uniform price

D. Oligopoly 4. Blocked entry

Code:

A B C D

(a) 2 4 3 1

(b) 3 1 2 4

(d) 3 4 2 1

Ans. (d)

4. In the Kinked Demand Curve Model, suppose MC curve shifts upward in the discontinuous range of MR curve.

Which one of the following is correct? At equilibrium,

(a) price rises but quantity remains the same

(b) price and quantity both remain the same

(d) price and quantity both rise

Ans. (b)

5. Consider the following statements:

Short run profit is maximum under perfect competition when

A. second order condition is satisfied.

B. MC curve cuts MR curve from below.

C. MC curve cuts MR curve from above.

Which of the statements given above is/are correct?

(a) A and C

(b) A and B

(d) B only

Ans. (b)

6. Which of the following is not a necessary condition of perfect competition?

(a) Large number of firms in the industry producing homogeneous products

(b) Free entry and free exit of firms

(d) Absence of artificial restrictions by the government

Ans. (c)

7. Consider the following statements:

A. The shape of a unitary elastic demand curve is a rectangular hyperbola.

B. The shape of a perfectly elastic demand curve is a rectangular hyperbola.

C. Perfectly inelastic demand curve is parallel to the price axis.

D. Perfectly elastic demand curve is parallel to the quantity axis.

Which of the statements given above are correct?

(a) A and B

(b) A, C and D

(d) B and D

Ans (b)

8. Which one of the following statements is correct?

A straight line demand curve (cutting both the axis) is elastic

(a) throughout the length of the demand curve

(b) at the mid-point

(d) above the mid-point towards the price axis

Ans. (d)

9. Under perfect competition, supply curve is identified as which one of the following?

(a) Rising portion of marginal cost curve

(b) Rising portion of average total cost curve

(d) Portion of marginal cost above the average variable cost curve

Ans. (d)

10. Which one of the following is the correct sequence of magnitude of minima in ascending order in marginal cost (MC) curve, average cost (AC) curve and average variable cost (AVC) curve?

(a) MC, AVC, AC

(b) AVC, AC, MC

(d) AC, MC, AVC

Ans. (a)

11. Consider the following statements:

A. The vertical distance from average cost (AC) curve to average variable cost (%&VC) curve is average fixed cost (AEC).

B. AVC curve, AC curve and marginal cost (MC) curve are ‘U shaped.

C. AFC curve is horizontal to ‘X’ axis.

Which of the statements given above are correct?

(a) 1 and 2

(b) 2 and 3

(d) 1, 2 and 3

Ans. (a)

12. Short-run marginal cost of a firm does not contain any element of which of the following?

(a) Costs of raw materials

(b) Salaries of the managerial staff

(d) Cost of fuel for operating machines engaged in production.

Ans. (c)

13. Suppose a fisherman has a fishing net and a boat. He alone hunts fish in sea for which he has to pay no license fee etc. Fish, caught by him, will have which one of the following?

(a) Zero economic cost of production as he makes no out-of-pocket payment to anybody and is working of his own

(b) Negative economic cost of production because he enjoys fishing and has to make no payment

(c) Positive cost of production due to his sacrificing the opportunity of working elsewhere and renting out fishing net and boat etc

(d) Infinite cost of production

Ans. (a)

14. Income consumption line of the ‘Consumer Theory’ is analogous in ‘Production Theory’ to which one of the following?

(a) Expansion path

(b) Isoquant line

(d) Isocost line

Ans. (a)

15. Which of the following is not correct in respect of Cobb-Douglas production function?

(a) It was originally based on the empirical study of US manufacturing industry.

(b) It is a linearly homogeneous production function, taking into account two factors, labour and capital, for the entire output of the manufacturing industry.

(c) It tells us that output depends upon labour and capital, and that part of output which cannot be explained by labour and capital, is attributed to the residual.

(d) It is based on the assumption of operation of law of diminishing returns.

Ans. (d)

16. Which one of the following statements is correct? If the elasticity of substitution between two factors X and Y be zero, then it implies that for a given change in outputs,

(a) X and Y will always change by the same proportion

(b)Y changes but X remains the same

(d) X and Y both change necessarily by different proportion

Ans. (a)

17. Consider the following statements:

According to the law of variable proportions; total product is maximum when

A. marginal product becomes zero.

B. marginal product curve cuts average product curve from above.

C. slope of marginal product curve is zero.

D. tangent of the total product curve is parallel to the horizontal axis.

Which of the statements given above are correct?

(a) A and D

(b) C and D

(d) B and C

Ans. (c)

18. Assertion (A): The monopolist never operates on the portion of the demand curve which is inelastic. Reason (R) When elasticity of demand is less than unity MR is negative.

Ans (a)

19. Assertion (A): The Revealed Preference Hypothesis excludes the study of Giffin Paradox

Reason (R) Revealed Preference Hypothesis considers only negative income elasticity of demand whereas Giffin Paradox relates to positive elasticity of demand.

Ans. (c)

20. Assertion (A): Indifference curve for perfect substitute goods is a downward sloping straight line. Reason (R): For perfect substitute goods, MRS is falling.

Ans. (a)

21. Assertion (A): There is no excess capacity under monopolistic competition in the long run. Reason (R): The demand curve under monopolistic competition is downward sloping.

Ans. (d)

22. Assertion (A): M curve lies below the VMP curve under imperfect competition.

Reason (R): Under imperfect competition MR < P.

Ans. (a)

23. Which of the following statements about Pareto Optimum are correct?

A. It changes with changes in the distribution of income.

B. At the Pareto Optimum, MRS in consumption = MRT in production.

C. It is not unique.

D. It is obtained under imperfect competition.

Select the correct answer using the codes given below:

(a) A and B

(b) A, B and C

(d) B and C

Ans. (b)

24. Match List- I (Economist) with List -II (Concept) and select the correct answer using the codes given below the lists:

List- I List -II

(Economist) (Concept)

A. Pareto 1. Compensation Principle

B. Hicks-Kaldor 2. Social Welfare Function

C. Bergson 3. Social Optimum

D. Scitovsky 4. Double Criterion Compensation

Code:

A B C D

(a) 3 1 2 4

(b) 2 4 3 1

(d) 2 1 3 4

Ans. (a)

25. Which one of the following statements is correct?

In a production process with two factors, land and labour, if the marginal productivity of land is negative, then it is in

(a) the stage I for land and stage II for labour

(b) the stage II for land and labour

(d) the stage I for labour and stage III for land

Ans. (b)

26. Which one of the following statements is correct?

The Engel Curve for Giffen goods is

(a) positively sloped

(b) negatively sloped

(d) horizontal

Ans. (b)

27. Which one of the following statements is correct? According to the classical economists, the existence of unemployment at any time is only of temporary nature and can be considered as

(a) structural unemployment

(b) cyclical unemployment

(d) disguised unemployment

Ans. (c)

28. Which one of the following statements is correct?

Creeping inflation is a situation in which the rate at

which price level rises is:

(a) very high

(b) high

(d) slow

Ans. (d)

29. Which of the following groups are adversely affected by inflation?

A. Wage earners in the informal sector.

B. Profit earners.

C. Salary earners with salaries indexed to inflation

D. Pensioners with fixed pensions.

Select the correct answer using the codes given below:

(a) A and B

(b) C and D

(d) B and C

Ans. (a)

30. Which one of the following is a qualitative credit control method?

(a) Open market operations

(b) Bank-rate

(d) Moral suasion

Ans. (d)

31. What kind of change is to be made in (i) Cash reserve ratio, and (ii) Bank rate, to control inflation?

(a) (i) should increase but (ii) should decrease

(b) (ii) should increase but (ii) should decrease

(d) Both should decrease

Ans. (c)

32. Which one of the following pairs is called an open market operation?

(a) Selling and buying of securities or bills by the central bank

(b) Selling and buying of foreign exchange

(d) Selling and buying of gold in the open market by commercial banks

Ans. (a)

33. The money multiplier in an economy increases with which one of the following?

(a) Increase in the cash reserve ratio

(b) Increase in the statutory liquidity ratio

(d) Increase in the population of the country

Ans. (c)

34.

In the context of the figure above which of the following statements is/are correct?

A. Investment is autonomous.

B. Saving is autonomous.

C. Investment is dependent on income.

D Saving is dependent on income.

Select the correct answer using the codes given below:

(a) B and C

(b) A and D

(d) A only

Ans. (b)

35. consider the following consumption saving functions:

A. C = 200+0.8Y

B. S = 200+0.2Y

C. C = 150+0.8Y

D. S = -150+0.2Y

Which of the above are consistent pairs of functions?

(a) A and B

(b) A and D

(d) C and D

Ans. (d)

36. There are 2 assets A and B in which one can invest his savings of Rs. 1,000/. Assume that there is no risk and interest rate is 10%.

Asset A gives a return of Rs. 100/- in perpetuity

Asset B gives Rs. 200/. at the end of year 1 and Rs. 900/- at-the end of the year 2.

Which one of the following statements is correct?

(a) Present value of A and B are the same.

(b) Present value of B is higher than that of A.

(d) Information is inadequate to determine the present value of A and B

Ans. (c)

37. Which one of the following statements is correct?

Value of output and value-added can be distinguished if we know

(a) the value of intermediate inputs

(b) the value of net indirect taxes

(d) the value of consumption of fixed capital

Ans. (a)

38. Given:

% Change in nominal GNP = 1.8

% change in population = 0.5

% change in price level = 1.3

What is the approximate percentage change in real per -capita GNP?

(a) Zero

(b) 0.5

(d) 1.3

Ans. (a)

39. Match List- I (Concept) with List -II (Economist) and select the correct answer using the codes given below the lists:

List I List II

(Concept) (Economist)

A. Liquidity trap 1. M. Friedman

B. Demonstration effect 2. A.C. Pigou

C. Permanent income hypothesis 3. J. Duesenberry

D. Wealth effect 4. J.M. Keynes

Code:

A B C D

(a) 4 3 1 2

(b) 1 2 4 3

(d) 1 3 4 2

Ans. (a)

40. Which one of the following statements is correct?

To derive disposable income from national income, one has to

(a) deduct income taxes and add transfer payments.

(b) deduct income taxes and deduct transfer payments

(d) add income taxes and deduct transfer payments

Ans. (a)

41. Approach paper to 11^th five plan, issued by the Planning Commission refers to the merger of which one of the following pairs of government programmes?

(a) Sarva Shiksha Abhiyan with Mid-day Meal Programme

(b) Jawahar Rojgar Yojana with Mid-day Meal Programme

(d) Shram Shakti Yojana with Jawahar Rojgar Yojana

Ans. (a)

42. Which one of the following statements is correct? J.M. Keynes assumed that supply of money as a function of rate of interest is

(a) perfect elastic

(b) highly elastic

(d) perfectly inelastic

Ans. (a)

43. Who developed the Time Preference Theory of interest?

(a) Irving Fisher

(b) N. Senior

(d) J.M. Keynes

Ans. (a)

44.

In the graph given above, what does the point B indicate?

(a) Excess supply in the goods market and excess demand in the money market

(b) Excess demand in the goods market and excess supply in the money market

(d) Excess demand in both goods and money market

Ans. (b)

45. Which one of the following is the most important determinant of speculative demand for money?

(a) Income

(b) Interest rate

(d) Prices

Ans. (b)

46. Which one of the following equations was used by Fischer to exp the Quantity Theory of Money ?

(Symbols have their usual meanings)

(a) MV= PT

(b) MP = VT

(d) PV = MT

Ans. (a)

47. If Y is the total money income of the community M is the money supply and P is the price level, than how is Vy (The income velocity of money) defined as?

(a) Vy = M/Y

(b) Vy = Y/M

(d) Vy = PY/M

Ans. (d)

48. When shall an increase in money supply have a small effect on nominal Gross Domestic Product?

(a) If the velocity is decreasing

(b) If the velocity is unchanged

(d) If the Government spending is also increasing

Ans. (d)

49. There are a number of banks in a market. The initial total primary deposit is Rs. 1,000. Every bank is required to maintain a 10% reserve legally The transactions are completely made through cheque and no transaction is made in cash. W1{at will be the total credit creation in the market?

(a) Rs. 1,000

(b) Rs 5,000

(d) None of these

Ans. (c)

50. Which one of the following is a source of non-tax revenue for governments?

(a) Import duty on cars

(b) Octroi at cheek points on roads.

(d) Excise duty or beverages

Ans. (c)

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UPSC Economics Solved Questions For prelims
Economics For UPSC IAS Prelims Exam
Economics Objective Solved papers
MCQ Online Economics Test

1. Prebisch-Singer thesis enunciates which of the following?

1. International trade has been operating as a mechanism of international inequalities and has, therefore, retarded the development of less developed countries.

2. The strategy of import substitution as a means to achieve self-sufficiency in industrial production, has led to ma! allocation of resources and a very bad effect on industrial productivity.

Select the correct answer by using the code given below

(a) l only

(b) 2 only

(d) Neither 1 nor 2

Ans. (a)

2. If the supply of a commodity is very inelastic in the exporting country and demand for the same is fairly elastic in the importing country, the imposition of tariff will have which one of the following?

(a) A very large protective effect

(b) No protective effect at all

(d) A very small protective effect

Ans. (a)

3. If an Indian exporter exports to Bangladesh Rs. 50,000 worth of goods payable in three months, the balance of payment for India will show which one of the following?

(a) Current account credit goes up and capital account debit also goes up by Rs. 50,000 each

(b) Current account credit goes down and capital account debit goes up by Rs. 50,000 each

(d) Current account credit goes up and capital account debit goes down by Rs. 50,000 each

Ans. (d)

4. Devaluation makes Balance of Payments worse in the short-run and then improves it in the long-run. What is this phenomenon known as?

(a) Marshall -Lerner condition

(b) J-curve effect

(d) Backwash effect

Ans. (b)

5. Which one of the following is considered as non-debt creating foreign investment inflow?

(a) External assistance

(b) Foreign direct investment

(d) Commercial borrowings

Ans. (b)

6. Exchange rates are kept same in all the parts of market by using which one of the following?

(a) SDRs

(b) Arbitrage

(d) Speculation

Ans. (b)

7. An over-valued currency in the foreign exchange market

will have which one of the following impacts in India?

(a) Make imports costlier and exports cheaper

(b) Will ha4e no effect on cost of imports

(d) Make imports cheaper and exports costlier

Ans. (d)

8. The inflationary impact of the inflow of foreign capital in

India is neutralized by the Reserve Bank of India by which

one of the following methods?

(a) Permitting outflow of foreign exchange

(b) Sale of securities in the open market

(d) Permitting depreciation of Indian rupee in the foreign exchange market

Ans. (b)

9. Which one of the following is the correct sequence in the process of economic integration between different countries?

(a) Common market—Free trade area—Custom union— Economic union

(b) Free trade area—Custom union—Common market— Economic union

(d) Common market—Free trade area—Economic union— Custom union

Ans. (b)

10. Under Gold Standard, how can a surplus in a country’s balance of payments be eliminated?

(a) By inflow of gold and a rise in general price level

(b) By outflow of gold and a rise in general price level

(d) By outflow of gold and a fall in general price level

Ans. {d)

11. Which one of the following governs the theory which brings parity with respect to convertibility of currency into gold content?

(a) Mint parity of exchange

(b) Special Drawing Rights

(d) Multiple exchange rate

Ans. (a)

12. In order to reduce the balance of payment deficits of the member countries, which one of the following schemes was introduced by the World Bank in 1980?

(a) Buffer stock loans

(b) Supplementary loans

(d) Gold loans

Ans. (c)

13. Special Drawing Rights (SDRs) introduced by the IMP are in which form?

(a) Gold

(b) Both silver and gold

(d) Book-keeping entry only

Ans. (d)

14. Which one of the following does not constitute a part of the jurisdiction of WTO?

(a) Trade related tariff and non-tariff barriers

(b) Trade related intellectual property rights

(d) Regional trade agreements

Ans. (d)

15. Assertion (A) A balance of payments deficit is always and every where a monetary phenomenon.

Reason (R): A balance of payments deficit cannot be corrected through changes in money supply

Codes:

(a) Both A and R are individually true and R is the correct explanation of A

(b) Both A and R are individually true but R is not the correct explanation of A

(d) A is false but R is true

Ans. (c)

16. Which one of the following is not a component of foreign aid of a country?

(a) Bilateral grant

(b) Multilateral grant

(d) Commercial borrowing

Ans. (d)

17. What is the assumption that economic growth will percolate down to all sectors, known as?

(a) Dispersal theory

(b) Trickle down theory

(d) Decentralized growth theory

Ans. (b)

18. In plan models, which type of model is generally used to check consistency among various sectors?

(a) Harrod -Domar model

(b) Input-output model

(d) Solow model

Ans (b)

19. Consider the following A dual economy implies

1. the existence of domestic and export markets.

2. modern industry and commercial agriculture co-existing with subsistence farming and traditional handicrafts.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(d) Neither 1 nor 2

Ans. (b)

20. Theory of linkages is most appropriate for which kind of development models?

(a) Balanced growth models

(b) Unbalanced growth models

(d) One sector growth models

Ans. (b)

21. With which one of the following is backward bending supply curve usually associated.

(a) Land

(b) Labour

(d) Organisation

Ans. (b)

22. Which one of the following is the correct expression for the actual rate of growth (g)?

(a) g = s/c

(b) g = s x c

(d) g =

Where s = the ratio of saving to income

c = actual incremental capital- output ratio

Ans. (a)

23. Inverted-U hypothesis of Kuznets is associated with movement of which one of the following?

(a) Consumption inequality

(b) Wealth inequality

(d) Tax inequality

Ans. (c)

24. Match List-I with List-II and select the correct answer by using the code given below the lists:

List-I List -II

(Model) (Proposition)

A. Marxist model of economic development 1.Give importance to

non-economic variables

B. Harrod-Domar growth model 2. Flexible capital-output ratio is assumed

C. Solow’s growth model 3. Productive capacity is equal to

aggregate demand

D. Kaldor’s growth model 4. Structural Mal –adjustment in a

growing economy

Code:

A B C D

(a) 4 2 3 1

(b) 1 3 2 4

(d) 1 2 3 4

Ans. (c)

25. Which one of the following is a component of disequilibrium mentioned often in the context of trade and development?

(a) Revenue gap

(b) Savings-investment gap

(d) Expenditure gap

Ans. (b)

26. The Feldman – Mahalanobis growth model, which one of the following strategies is followed?

(a) Emphasize the consumer goods first and then the investment goods

(b) Emphasize the investment goods first and consumer goods later

(d) Put emphasis on foreign trade only

Ans. (c)

27. Consider the following sectors:

1. Electrical Equipments

2. Service Sector

3. Food Processing Industries

4. Metallurgical Industries

Which one of the following is the correct sequence in ascending order in terms of their share in attracting FDI inflows in India?

(a) 4-3-2-1

(b) 1-2-3-4

(d) 1-2-4-3

Ans. (a)

28. What is the major underlying assumption of efficiency wage models?

(a) Labour productivity depends on level of nutrition

(b) Labour productivity is independent of number of labourers -

(d) Capital and labour productivities are equal

Ans. (b)

29. How is ‘Path dependency defined as?

(a) A condition of the past affecting the past situation

(b) A comparatively fast path of progress of economy

(d) A slow path of progress of the economy

Ans. (c)

30. What are the sufficient conditions for operation of stage theories of growth?

1. Well-integrated commodity and money markets.

2. Highly developed transport facilities

3. Well-trained workforce and an efficient bureaucracy

4. Existence of a federal structure.

Select the correct answer by using the codes given below

(a) 1, 2, and 4

(b) 2, 3, and 4

Ans. (d)

31. What is the correct sequence of the Marxian stage theory of growth?

1. Slavery

2. Primitive Communism

3. Socialism

4. Communism

5. Feudalism

6. Capitalism

Select the correct answer by using the codes given below

(a) 1—2—3—4—5—6

(b) 2—1—5—6—3—4

(d) 2—1—5–6—4—3

Ans. (b)

32. Capital fundamentalism refers to which one of the following?

(a) Capital structure of a country

(b) Accelerated capital accumulation for development

(d) Growth of capital expenditure

Ans. (b)

33. To make meaningful international comparisons of income and living standards, which one of the following is most appropriate?

(a) A measure of purchasing power parity

(b) A measure of per capita income

(d) An index of infrastructure development

Ans. (a)

34. If the Paasche’s index is 196 and Fishers’ index is 210, what is the value of the Laspeyre’ index?

(a) 220

(b) 215

(d) 230

Ans. (c)

35. consider the following statements

The coefficient of correlation.

1. is not affected by a change of origin and scale.

2. lies between —a and + ct

3. is a relative measure of linear association between two or more variables.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 and 3

(d)1, 2 and 3

Ans. (c)

36. In a certain distribution, the following results were obtained

X = 45, Median = 48, Coefficient of skew ness = — 0.3.

What is the value of standard deviation?

(a) 20

(b) 25

(d) 30

Ans. (d)

37. The first quartile derived from set of observations is 27 and its quartile deviation is 17. What is its third quartile?

(a) 59

(b) 61

(d) 57

Ans (b)

38. What is a cumulative percentage curve called?

(a) Frequency density curve

(b) Ogive curve

(d) Frequency polygon

Ans. (b)

39. Assertion (A) : Fisher’s index number is an ideal one.

Reason (R) : In the Fisher’s index number, the upward bias of Laspeyre’s index and downward bias of Paasche’s index are balanced to a great extent.

Codes:

(a) Both A and Rare individually true and R is the correct explanation of A

(b) Both A and R are individually true but R is not the correct explanation of A

(d) A is false but R is true -

Ans. (c)

40. Match List-I with List-II and select the correct answer using the code given below the lists:

List –I List-II

(Type of Unemployment) (Associated Fact)

A. Frictional Unemployment 1.Non-availability of job

B. Structural Unemployment 2. Marginal productivity is zero

C. Seasonal Unemployment 3. Use of obsolete technology for production

D. Disguised Unemployment 4. Population pressure on land

Code:

A B C D

(a) 4 2 1 3

(b) 1 3 4 2

(d) 1 2 4 3

Ans. (b)

41. According to the 60th Round of NSSO Survey on Employment and Unemployment, unemployment rate on current daily status basis (number of person days per 1000 person days) was highest for which one of the following categories?

(a) Rural male

(b) Rural female

(d) Urban female

Ans. (a)

42. Which one of the following committees was set up to review the concept of poverty line?

(a) S. Chakravarty Committee

(b) D.T, Lakdawala Committee

(d) R.C. Dust Committee

Ans. (b)

43. Which one of the following countries has the highest life expectancy at birth?

(a) Pakistan

(b) India

(d) Sri Lanka

Ans. (d)

44. According to Census-2001 data, what is the urban population as percentage of total population of India?

(a) 23.3%

(b) 25.7%

(d) 28.9%

Ans. (c)

45. Which category of the target groups is not included in the SHG bank linkage programme for micro-finance to agriculture?

(a) Unemployed non-agricultural labourers

(b) Agricultural and non-agricultural labourers

(d) Artisans and craftsmen

Ans. (a)

46. Consider the following components of money supply in India

1. Currency in circulation.

2. Banker’s deposits with the RBI

3. Other deposits with the RBI

4. Demand deposits of banks

Which of the above are the components of Reserve Money?

(a) l and 3

(b) l, 2 and 3.

(d) 2, 3 and 4

Ans. (B)

47. Consider the following statements for Indian Millennium Deposits (IMDs) scheme.

1. The scheme was launched by the Reserve Bank of India.

2. It was intended for NRIs and resident Indians both.

3. The tenure of IMDs was 5 years.

Which of the statements given above is/are correct?

(a) 3 only

(b) 2 only

(d) 2 and 3

Ans. (a)

48. Consider the following statements in respect of the Tenth Plan

1. This plan has specific monitorable targets in respect of poverty.

2. Decline in incremental capital-output ratio is to be achieved through creating new capacities.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(d) Neither 1 nor 2

Ans. (a)

49. In which of the following y was the highest growth of general index of industrial production in India registered?

(a) 2001-02

(b) 2002-03

(d) 2004-05

Ans. (d)

50. Growth rate in NNP at factor cost (at constant prices) has been highest during which Five-Year Plan?

(a) Ninth Plan

(b) Eighth Plan

(d) Fifth Plan

Ans. (b)

............................................-------------------------------------------------.............................................

: Micro Economics
Economics Solved Model Paper
Solved Question Papers of Micro Economics
Multiple Choice Questions for Economics
Free online Economics MCQ Quiz

1. Assertion (A): An oligopolist faces demand curve which has a kink at the level of the prevailing price.

Reason (R): The segment of the demand curve above the prevailing price level or kink is highly inelastic and the segment of the demand curve below the prevailing price level is elastic.

Codes:

(a) Both A and R are individually true and. R is the correct explanation of A

(b) Both A and It are individually true but R is not the correct explanation of A

(d) A is false but R is true

Ans. (c)

2. Consider the following statements relating to marginal rate of technical substitution (MRTS).

1. The MRTS in case of an isoquant measures the rate at which one input is substituted for the other.

2. The M of input X for input Y at a point on an isoquant is equal to the positive slope of the isoquant at that point.

3. The MRTS equals to the ratio of the marginal product of input V to the marginal product of input X.

Which of the statements given above are correct?

(a) 1 and 2

(b) 2 and 3

(d) 1, 2 and 3

Ans. (c)

3. When is an isoquant L – shaped?

(a) When the two factors are complementary

(b) When the two factors are perfect substitutes

(d) When the two factors are imperfect substitutes

Ans. (c)

4. A firm’s average total cost is Its 60, its average variable cost is Rs. 55 and its output is 50 units. What is its total fixed cost?

(a) Less than Rs. 200

(b) Between Rs. 200 and Rs. 300

(d) Firm has no fixed cost

Ans. (c)

5. Under constant returns to scale, which one of the following is the nature of the long -run average cost curve?

(a) Parallel to output axis

(b) Upward rising

(d) Identical to short-run average cost curve

Ans. (a)

6. In the figure shown below, MN and QR are two straight line demand curves parallel to each other.

Consider the following statements

1. The slope and elasticity of demand is same on the demand curves MN and QR, at the price P0

2. The slopes are same but elasticity of demand is more on demand curve MN than demand curve QR, at price

3. Elasticities of demand are same but slope of demand curve MN is less than that of QR at the price P

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(d) 2 and 3

Ans. (b)

7. When the negative income effect is greater than substitution effect, it is the case of which one of the following?

(a) Giffen goods

(b) Inferior goods

(d) Normal goods

Ans. (d)

8. Which one of the following statements is correct?

Consumption possibility frontier is same as

(a) the indifference curve

(b) the budget line

(d) the demand curve

Ans. (b)

9. Which one of the following statements is not correct?

(a) Normal goods have a positive income elasticity of demand

(b) Inferior goods have a negative income elasticity of demand

(d) Luxury goods have an income elasticity of demand that is equal to one

Ans. (d)

10. A firm has certain initial equilibrium price, when demand function QD = 50 — 3P and supply function is 20 + 3P. If the firm’s demand function is shifted to C = 68 — 3P, what is the initial equilibrium price and the new equilibrium price, respectively?

(a) 5 and 6

(b) 5 and 8

(d) 8 and 5

Ans. (b)

11.Cournot model assumes which of the following?

1. There are two firms operating in the market.

2. The firms face a kinked demand curve.

3. Each firm acts on the assumption that their competitors

will not react to her decision to change output.

Select the correct answer by using the code given below

(a)

(b) 2 and 3

(d)1, 2 and 3

Ans. (c)

12. Which one of the following statements is correct?

The Sweezy mode of oligopoly assumes that price elasticity of demand

(a) is higher for a price increase than for a price decrease

(b) is lower for a price increase than for a price decrease

(d) cannot change for a price decrease

Ans. (a)

13. Which one of the following statements is correct?

(a) Demand for factors of production is an independent demand

(b) Demand for factors of production is a derived demand

(d) Demand for factors of production is same as the demand for commodities

Ans. (b)

14. What is the principle which is applied to redress the imbalance between distribution and welfare, known as?

(a) Principle of taxation

(b) Compensation principle

(d) Principle of supply

Ans. (b)

15. The inconsistency of which one of the following criteria is labelled as Scitovsky Paradox?

(a) Little Criterion

(b) Pareto Criterion

(d) Kaldor Flicks Criterion

Ans. (d)

16. consider the following statements

The distribution of two commodities between two individuals is Pareto optimal if

1. one individual cannot be made better off without making the other worse off.

2. the individuals are on their consumption contract curve.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(d) Neither 1 nor 2

Ans. (c)

17. What is maximizing the level of satisfaction with the given level of inputs and technology, called?

(a) Technical efficiency

(b) Allocative efficiency

(d) X- efficiency

Ans. (d)

18. Which one of the following statements is correct? An increase in money supply in Keynesian framework results in

(a) a higher level of income and a higher rate of interest

(b) a lower level of income and a lower rate of interest

(d) a lower level of income and a higher rate of interest

Ans. (c)

19. Which one of the following statements is correct?

A fall in the money supply results in the

(a) rightward shift in the IS curve

(b) rightward shift in the LM curve

(d) leftward shift in the LM curve only

Ans. (d)

20. Which one of the following statements is correct?

The IS function indicates the

(a) locus of the money market equilibrium

(b) locus of the commodity market equilibrium

(d) locus of both money and labour market equilibrium

Ans. (b)

21. Which one of the following statements is correct? According to Keynes, fresh investment would be possible only if

(a) the marginal efficiency of capital exceeds the rate of interest

(b) the marginal efficiency of capital is less than the rate of interest

(d) the marginal efficiency of capital is negative

Ans. (a)

22. Which one of the following statements is correct?

Autonomous investment is

(a) functionally related to interest rate

(b) functionally related to both income and interest rate

(d) independent of income and interest rate

Ans. (d)

23. Consider the following statements

1. The MPC is higher in a poor country and lower in a rich country.

2. Higher the MPC, higher will be the value of multiplier.

3. Lower the M lower will be the value of multiplier.

Which of the statements given above are correct?

(a) 1 and 2

(b) 1 and 3

(d) 1 2 and 3

Ans. (a)

24. Match List-I with List-II and select the correct answer by using the code given below the lists

List – I List -II

(Economist) (Concept)

A. A. C. Pigou 1. Liquidity Preference

B. J.M. Key 2. Real Balance Effect

C. J.R. Hicks-A.H. Hansen 3. Ratchet Effect

D. J.S. Duesenberry 4. IS-LM Analysis

Code:

A B C D

(a) 2 1 4 3

(b) 4 3 2 1

(d) 4 1 2 3

Ans. (a)

25.

In the diagram given above, which one of the following is indicated by the point A lying below the IS curve?

(a) Excess demand in the commodity market

(b) Excess supply in the money market

(d) Equilibrium income and interest

Ans (a)

26. In the. permanent income hypothesis of consumption, components ‘of which one pair has a proportional relationship?

(a) Permanent income and transitory income

(b) Permanent income and transitory consumption

(d) Transitory income and transitory consumption

Ans (c)

27. Which one of the following statements is correct? Crowding our in an economy can be avoided if

(a) government finances its expenditure by new money supply

(b) government finances its expenditure by taxes

(d) government finances its expenditure by raising cash reserve ratio

Ans. (c)

28. Which one of the following statement is correct?

According to Say’s law of market.

(a) demand creates its own supply

(b) supply creates its own demand

(d) demand and supply are never equal

Ans. (b)

29. Which one of the following statements in respect of the National Income Accounting is correct?

(a) Budget deficit is equal to savings-invest gap

(b) Budget deficit is more than savings-investment gap

(d) Budget deficit is always zero

Ans. (d)

30. Which of the following is/are included in National Income Accounting?

1. Purchase of shares and bonds.

2. Value of residential investment.

3. Value of production for self consumption.

4. Value of intermediate goods.

Select the correct answer by using the codes given below:

(a) l and 2

(b) 2 only

(d) 3 and 4

Ans. (c)

31. Consider the following statements

1. The equilibrium between the aggregate demand and aggregate supply may take place at a point of less-than-full employment in an economy.

2. The .size of deficient demand is inversely proportional to the deflationary gap.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2only

(d) Neither 1 nor 2

Ans. (a)

32. Assertion (A) : Gross National Product will always be more than the Gross Domestic Product.

Reason (R): To get Gross National Product, not factor income from abroad is added to Gross Domestic product

Codes:

(a) Both A and R are individually true and R is the correct explanation of A

(b) Both A and R are individually true but R is not the correct explanation of A

(d) A is false but R is true

Ans. (d)

33. what is the empirically fitted relationship between the rate of change of money wages and rate of unemployment, known as?

(a) Baumal’s Hypothesis

(b) Keynesian Model

(d) Phillip’s Curve

Ans. (d)

34. In the simplified version of Friedman’s quantity theory of money, velocity of circulation of money depends on which of the following?

(a) Rate of interest and rate of price change

(b) Rate of interest and rate of change of income

(d) Rate of change of price and rate of: change of investment

Ans. (b)

35. Consider the following assets

1. Cash held by public

2. Equity shares of banks

3. Deposits of banks

4. RBI bonds

Which of the above assets are considered as part of money supply?

(a) 1 and 2

(b) 1 and 3

(d) 1, 3 and 4

Ans. (b)

36. which one of the following is stated by the quantity theory of money?

(a) An increase in the nominal money supply causes a proportional increase in the price level

(b) An increase in the real money supply causes a proportional increase in the price level

(d) An increase in the real money supply causes a proportional increase in real GNP

Ans. (a)

37. Consider the following statements

1. Bond price and interest rate are positively related.

2. Bond price and interest rate are negatively related.

3. Credit creation varies directly with Cash Reserve Ratio (CER).

4. Credit creation varies inversely with Cash Reserve Ratio (CRR).

Which of the statements given above are correct?

(a) 1 and 2

(b) 1 and 4

(d) 2 and 4

Ans. (d)

38. Suppose, due to an open market purchase of government securities, reserves in the commercial banks increase by Rs. 1,000. If the reserve ratio is 20 percent, what will be the increase in money supply?

(a) Its. 5,000

(b) Rs. 4,000

(d) Rs. 1,000

Ans. (c)

39. Which one of the following is not a component of demand-pull inflation?

(a) An increase in government expenditure with no change in tax rate

(b) A downward shift h savings function

(d) An upward shift of investment function

Ans. (c)

40. Assertion (A) Indirect taxes promote inequality in the distribution of income.

Reason (R): Poor bear more burden of indirect taxes.

Codes:

(a) Both A and Rare individually true and R is the correct explanation of A

(b) Both A and R are individually true but R is not the correct explanation of A

(d) A is false but R is true

Ans. (a)

41. which one of the following statements is correct?

According to Peacock and Wiseman, public expenditure grows

(a) steadily over a period of time

(b) at a. constant rate in relation to GNP

(d) at a lower rate in relation to GNP

Ans. (c)

42. As compared to traditional budgeting, in case of Performance and Programme Budgeting System (PPBS), which one of the following statements is correct?

(a) It stresses on outcome only

(b) It stresses on expenditure allocation only

(d) It stresses less on outcome and more on expenditure allocation

Ans. (c)

43. Which one of the following statements is coned?

Zero-base budgeting implies that

(a) it emphasizes physical targets rather than financial targets

(b) spending on all programmes is re-examined and justified each year rather than following add-on every year

(d) it focuses on centralization of expenditure

Ans. (b)

44. Which one of the following statements is correct?

The revenue from the imposition of an advolarem tax and that of a unit tax in a perfectly competitive market which results in the same price rise, are

(a) more for advolarem tax

(b) more for unit tax

(d) zero for both the taxes

Ans. (c)

45. in which one of the following groups of taxes, do impact and incidence of tax coincide?

(a) Income tax and corporation tax

(b) Income tax and excise duties

(d) Excise duties and sales tax

Ans. (a)

46. The concept of optional taxation, based on whatever criteria, has to. cover decision-making at which of the following levels?

1. The aggregate amount of taxations and its division between direct and indirect taxations.

2. The composition and rate schedules of direct and indirect taxes.

3. The composition and revenue schedules of indirect taxes.

4. The composition and revenue schedules of direct taxes.

Select the correct answer by using the code given below:

(a) 1 and 4

(b) 1 and 3

(d) 2, 3 and 4

Ans. (c)

47. According to Cohn Clark, what is taxable capacity?

(a) 20 percent of National income

(b) 25 percent of National Income

(d) 35 percent of National Income

Ans. (b)

48. Which one of the following is not the Canon of taxation as stated by Adam Smith?

(a) Canon of equality

(b) Canon of certainty

(d) Canon of productivity

Ans. (d)

49. Which curve shows that how much of its import commodity is required by a nation in exchange for various quantities of its export commodity?

(a) Offer curve

(b) indifference curve

(d) Production possibility curve

Ans. (a)

50. Which of the following is/are correct in respect of opportunity cost theory?

1. A straight line production possibility curve indicates constant opportunity cost.

2; The production possibility curve under increasing cost would be concave to the origin.

Select the correct answer by using the code given below:

(a) l only

(b) 2 only

(d) Neither 1 nor 2

Ans. (c)

.............................................................-----------------------------------------------.....................................

Objective Commerce Test BCom Level containing Assertion Reason Type Questions
commerce quiz with answers
Test your knowledge about commerce

1. Consider the following events:
1. Demand for poll
2. Chairman’s declaration of result of voting by show of hands
3. Appointment of scrutinizers at poll
4. Declaration of the result of the poll
The correct sequence of these events is:
(a) 1, 3, 4, 2
(b) 1, 4, 3, 2
(c) 2, 3, 1, 4
(d) 2, l, 3, 4
Ans. (d)

2. Which one of the following sections of the Company’s Act 1956 makes it obligatory that with effect from 1994, every company with a paid up share capital of Rs. 50 lakhs or more should have a qualified whole time company secretary?
(a) Sec. 385 A
(b) Sec. 386 A
(c) Sec. 383 A
(d) Sec. 411 B
Ans. (c)

3. Which one of the following statements regarding the rights, duties and liabilities of a company secretary is correct?
(a) A C. S. does not have access to the books of accounts of the company
(b) Remuneration of a company secretary is taken into account for the purpose of calculating the overall managerial remuneration under section 198 of the Companies Act
(c) A company secretary is liable for any misstatement made in the prospectus
(d) A company secretary is responsible for signing various returns and statements and filing the same with the Registrar of Companies
Ans. (d)

4. Consider the following steps in the process of allotment of shares
1. Issue of prospectus
2. Appointment of Manager to the issue
3. Receipt of Application Money
4. Listing in a Stock Exchange
5. Minimum subscription
The correct chronological sequence of these steps is:
(a) 1, 2,5,4,3
(b) 2, 1,3,5,4
(c) 2, 1,5,3,4
(d) 1, 2,4,5,3
Ans. (d)

5. Which one of the following statements is not connected with the conversion of shares into stock and reconversion into shares?
(a) Only shares that are fully paid up can be converted into stock
(b) Articles of Association shall permit such conversion through a special resolution
(c) Conversion can take place by passing an ordinary resolution as provided in the Article.
(d) Memorandum of Association shall permit such conversion.
Ans. (d)

6.Under the Indian Companies Act, 1956, a person can be a Director in:
(a) 7 companies
(b) 10 companies
(c) 20 companies
(d) 25 companies
Ans. (c)

7. When a person transacts with a company on a matter which is beyond the power of the company, the person will be governed by the doctrine of:
(a) indoor management
(b) self-assessment
(c) constructive notice
(d) management by exception
Ans.(c)

8. Which one of the following statements illustrates the doctrine of indoor management?
(a) Person dealing with the company is bound to enquire into the regularity of the internal proceedings.
(b) Persons dealing with the company are bound to enquire as to whether the general meeting of the shareholders was convened on proper notice.
(c) Persons dealing with the company are entitled to assume that what has been done has been regularly.
done by the company and therefore they can hold the company liable even if the internal formalities
are found not to have been completed.
(d) Persons dealing with the company can easily assume that all acts done are intra-vires the company.
Ans. (d)

The following items consist of two statements, One labeled the ‘Assertion A’ and the other labeled the Reason R. You are to examine these two statements carefully and decide whether the Assertion A and the Reason R are individually true and if so, whether the reason is a correct explanation of the Assertion. Select your answers to these items using the codes given below and mark your answer sheet accordingly:
Codes:
(a) Both A and Rare true and R is the correct explanation of A.
(b) Roth A and R are true but R is NOT a correct explanation of A
(c) A is true but R is false
(d) A is false but R is true
9. Assertion (A): The chairman’s speech is NOT required under the Companies Act. It is a matter of custom or tradition.
Reason (R): The Chairman’s speech is a complementary material and has to be read in
conjunction with the Annual Report where lie provides additional information on the status of the company’s activities and the overall developments taking place in that industry.
Ans. (a)

10. Assertion (A): Intrusion of an outsider as member is undesirable unless he is found to be a persona grata to the existing members.
Reason (R): The Articles of a private limited company must for this reason contain restrictions as to transfer of shares, limitation of members to 50 and prohibition of invitation to public to subscribe to any share in the company.
Ans. (b)

11. Assertion (A): The prospectus of a company must state the management p of the risk factors.
Reason (R): The investor can make the decision to invest or not to invest at his own risk.
Ans. (a)

12. Assertion (A): Everything that goes to increase the importance of the subordinate’s role is decentralization.
Reason (R): When the degree of delegation of authority is more than the degree of reservation of authority, it is a case of decentralization.
Ans. (d)

13. Assertion (A): MBO is effective way of planning and organization the work.
Reason (R): Employees participate in setting the objectives.
Ans. (c)

14. Assertion (A): O & M is a conscious attempt to improve the quality of management and to maintain efficient administrative machinery.
Reason (R): O & M involves a detailed study of the subject to be investigated, say procedures currently being followed.
Ans. (b)

15. Assertion (A): A company secretary with the requisite qualification and experience may still not be appointed by the Board if he is judged by the Board to be not trust worthy.
Reason (R): The company secretary deals with several confidential matters of the company
Ans. (a)

16. Assertion (A): Agenda is the genesis of the meeting be held and of the minutes to be recorded subsequently.
Reason (R): The agenda, if prepared in brief, would enable the secretary and the chairman to prepare and finalize the minutes correctly and without difficulty.
Ans. (c)

17. Assertion (A): Owners claims (equities) are often referred to as Residual.
Reason (R): Owners do not have any claim on the assets until all the claims of the creditors have been satisfied in full.
Ans. (a)

18. Assertion (A): Interest on working capital should be treated as an item of Revenue Expenditure.
Reason (R): Interest is the cost of capital employed in the business.
Ans. (d)

19. Assertion (A): Wages paid for the installation of a new machine are treated as capital expenditure.
Reason (R): It is connected with the task of putting a new asset in working condition.
Ans. (a)

20. Assertion (A): Legacy is treated as capital Receipt and shown in the liability side of the Balance sheet of a non-profit organization.
Reason (R): Property received under legency creates liability for the organization.
Ans. (a)

21. Assertion (A): Depreciation amount is added back to net profit for calculating ‘funds from operations’ in preparing a fund flow statement.
Reason (R): Depreciation is an item of cost but not funds.
Ans. (a)

22. Assertion (A): Quick realization of receivables will improve the debtor’s turnover of an enterprise.
Reason (R): Realization of receivables increases the quantum of working capital.
Ans. (c)

23. Assertion (A): In a large company, internal control is the responsibility of the management.
Reason (R): The external auditor has to certify that the company has internal control commensurate with the size of its operations.
Ans. (b)

24. Assertion (A): The Return On Investments (RO is regarded as a primary ratio because it is one single measure where there final outcome of all business activities is recorded.
Reason (R): The ‘Capital’ and ‘Return’ are subject to varying interpretations by firms. Therefore ROI is in practice.
Ans. (a)

25. Assertion (A) : The amounts realized on sale of shares at a premium is credited to share premium account but not to Profit and loss Account.
Reason (R) The amount of share premium is excluded from the distribution to shareholders as it is not current year’s profits.
Ans. (b)

26. Assertion (A): Inventory is valued at cost or market price whichever is lower.
Reason (R) : Inventory is shown on Balance sheet at cost or market price whichever is lower.
Ans. (b)

27. Assertion (A) Lower inventory turnover ratio denotes better inventory control.
Reason (R): Inventory Turnover Ratio measures the relationship between average stock of material held and average consumption of materials.
Ans. (d)

28. Assertion (A) : Owing to a constant rise in the market price of finished products a manufacturer valued the inventory of raw materials at average cost. This has consequently reduced his gross margin on sales.
Reason (R) : The principle of valuation of inventories on the lower cost market price is the most suitable method in all circumstances.
Ans. (c)

29.Assertion (A) : Payment made to trade creditors improves the current ratio
Reason (R) : Current assets increase when payment is made.
Ans. (c)

30. Assertion (A) : 15% Acid Test-Ratio may be considered sufficient for paying short term debts (liabilities).
Reason (R) : True picture of short-term debt paying capacity cannot even be obtained from the current ratio of 300%.
Ans.(b)

31. Assertion (A) : An auditor is a watch dog but not a bloodhound.
Reason (R) : It is quite possible that accounts may contain error inspite of trial balance agreeing.
Ans. (b)

32. Assertion (A) : Balance sheet audit is carried out throughout the year.
Reason (R): Balance sheet audit means a final audit.
Ans.(d)

33. Assertion (A): Internal Audit is, in essence, auditing for the management.
Reason (R) : Due to large size of the concerns it is impossible to depend extensively upon external auditing services.
Ans. (d)

34. Assertion (A): The partnership deed may provide for audit of the books of accounts of a Partnership firm.
Reason (R) : The Indian Partnership Act, 1932, does not require audit of the books of accounts of a partnership firm.
Ans. (b)

35. Assertion (A): EXIM bank offers 100% refinance to commercial banks which enables banks to extend deferred credit to Indian exporters.
Reason (R): Commercial banks who are authorized dealers in foreign exchange in India can provide clearance for deferred credit proposals up to Rs. 5 crores at bid submission and contract stage for contracts which are eligible for refinance from Exim Bank.
Ans. (b)

36. Assertion (A) : Span of control helps dividing the burden of work and sharing responsibilities with subordinates.
Reason (R) : The manager can give proper attention only to a certain number of persons at a time.
Ans. (b)

37. Assertion (A) : Office management is a method of planning and organizing activities relating to processing, storage and supply of information.
Reason (R): An office manager should not be the in charge of organizing resources.
Ans. (b)

38. Assertion (A): Filing department is a service unit.
Reason (R) : There are two popular varieties of flat the (i) numerical and (ii) alpha numerical.
Ans. (c)

....................................................-------------------------------------------..................................................

Model test paper and Multiple choice Questions Quiz on indian Economy and theory of economics

1. Under which one of the following conditions, does product

exhaustion theorem hold?

(a) Increasing return to scale

(b) Decreasing return to scale

(d) Constant return to factors of production

2. Public goods are characterized by:

1. collective consumption.

2. divisibility.

3. non-exclusion.

4. rival-consumption.

Select the correct answer using the code given below

(a) 1 and 2

(b) 1 and 3

(d) 2 and 4

3.Capital Deepening refers to which one of the following:

(a) Going for more fixed capital

(b) Emphasis on social overhead capital

(d) An increasing capital-output ratio

4. Disguised underemployment refers to the situation when:

(a) people seems occupied on a full time basis even though the services they render require less than full time?

(b) workers are underpaid despite doing full time job

(d) the economy experiences underemployment equilibrium

5. Which one of the following is explained-by Fei-Rariis model?

(a) The inter-relationship between the agricultural and the industrial sectors

(b) Planning methods when labour is in short supply

(d) A neo-classical framework of growth analysis

6. Consider the following statement:

1. The Solow model explains a capita/labour ratio which does not grow under equilibrium condition.

2. Substituting capital for labour is possible in the Solow model.

Which of the statements-given above is/are correct?

(a) 1 only

(b) 2 only

(c)Both 1 and 2

(d) Neither 1 nor 2

7. Consider the following statements:

1. Dualism refers to the existence and persistence of increasing divergences between rich and poor nations and rich and poor people at various Levels.

2. Dualism is the political division of the society into two broad groups of the rightists and the leftists in modem democracy.

Which of the statements given above is correct?

(a)1 only

(b) 2 only

(d) Neither 1 nor 2

8. Directions: The following item consists of two statements, one labelled as the ‘Assertion (A) ‘and the other as’ Reason (R)’ — You are to examine these two statements carefully and select the answer using the code given below.

Assertion (A) : The doctrine of unbalanced growth is based on creation of imbalances in the economy in a conscious manner.

Reason (R) : Unequal development of various sectors often generates conditions for rapid development.

Code:

(a) Both A and R are individually true and R is the correct explanation o &

(b)Both A and R are individually true, but R is not correct explanation bf A

(d) A is false, but R is true

9. Suppose the market demand function of a perfect competitive industiy is given by Q(d) = 4,750—50P

and market supply function is given by

Q(s) = 1,750+ 50P.

Price is expressed in rupees. Which one of the following is equal to the market

equilibrium price?

(a) Rs. 30.

(b) Rs. 20

(d) Rs. 26

10. Market failure occurs because of:

I. Externality

2. Asymmetric information

3. Perfect competition

Select the correct answer using the code given below

(a) 1,2and3

(b) I only

(d)2 and 3

11. If personal income is Rs. 57,000 ;

personal income tax Rs. 9,000;

consumption Rs. 43,000;

interest payment Rs 10,000;

personal saving Rs. 40,000;

then the disposable personal income would be equal to:

(a)Rs. 50,000

(b) Rs. 47,000

(c)Rs. 48,000

(d) Rs. 40,000

12. A discriminating monopolist charges a

(a) higher price in the, sub-market where price elasticity of demand is high

(b) higher price in the sub-market where price elasticity of demand is low

(d) higher price in the sub-market where demand is low

13. In the long run, the cost and output relationship depends on

which one of the following?

(a) Return to scale

(b) Fixed proportion of the variables

(d) Return to the fixed factor

14. Consider to following statements with respect to a duopoly market with firms AandB:

I. If both firms act as followers, then they will have reaction functions

2. If Firm A acts as leader and firm B acts as follower, then firm A will not have any reaction function.

3. If both firms act as leaders, then the outcome is economic

warfare.

Which of the statements given above are correct?

(a) 1 and 2

(b) 1 ,2 and 3

(d) 2 and 3

15. Consider the following:

According to Ricardian theory of distribution

I. rent is price determined.

2. land is supposed to have various alternative used.

3. marginal land earns no rent,

4. rent is a surplus in the sense that it is an excess over transfer earnings.

Which of the statements given above are correct?

(a) 1,2and 4

(b) 1,3 and 4

(d) 1 and 4

16 If two commodities perfectly/substitutable (competitive), the direction of change of the cross elasticity of demand between then be?

(a) zero

(b) positive

(d) infinity

17. From which of the following axioms does the property that ‘indifference curves for a consumer cannot intersect each other’ follow?

I. Axiom of non-satiation

2. Axiom of transitivity

3. Axiom of reflexivity

4. Axiom of convexity

select the correct answer using the code given below

(a) 1 and 3

(b) 1and 4

(d) 1 and 2

18. Consider the following statements

Under flexible exchange fate system, balance of payments

disequilibria are corrected by:

1. changes in the exchange rates.

2. international flow of money and reserves.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(d) Neither 1 nor 2

19. Which one of the following is implied by interest parity?

(a) Interest rates are at par in all the countries

(b) Movements in spot rates and forward fates in the foreign exchange market are same

(d) A condition that the expected returns on deposits of any two countries are equal when measured in the same currency

20. Which one of the following best describes the nineteenth century

gold standard system?

(a) Regulated system with floating exchange rates

(b) Automatic system with fixed exchange rates

(e) Regulated system with fixed exchange rates

(d) Automatic system with floating exchange rates

21 Consider the following statements regarding the features of the

World Bank:

1. The Board of Governors is the supreme body.

2. The voting power of the Governor of a member country is related to the financial contribution of the country concerned.

3. It gives short-term loan to its members to correct their temporary balance of payments disequilibrium.

Which of the statements given above is/are correct?

(a)1 only

(b) 1and 2

(d) l,2 and 3

22. Which of the following is/are the reasons for the collapse of Bretton-Woods system?

I. The refusal by the U.S. Treasury to convert short-term liability into gold.

2. The U.S. move to make dollar inconvertible.

3. The devaluation of U.S. dollar in 1973.

Select the correct answer using the code given below

(a) 1 only

(b) 1 and 2

(d) l,2 and 3

23. Tariffication refers to:

(a) replacement of quotas by tariffs only

(b) replacement of all existing non-tariff restrictions by tariff

(d) obtaining sanction to increase tariff rates

24. Which of the following are the components of foreign capital?

1. Grants and loans.

2. External commercial borrowings.

3. Foreign direct investment.

4. Deposits from non-residents.

Select the correct an using the code given below

(a) 1,2,3 and 4

(b) 1,2 and 4

(d)3 and 4

25. Under loanable funds theory of interest, which of the following

are included in the supply of loanable funds?

1. Current savings.

2. Funds released from embodiment in working capital.

3. Bank loans.

Select the correct answer using the code given below

(a) 1 and2

(b) 2and3

(d)1,2and3

26. Which one of the following is represented by the intersection of

the IS curve and the LM curve?

(a) Only a flow equilibrium

(b) Only a stock equilibrium

(d) Moving away from equilibrium

27. Which one of the following situations occurs during the period

when borrowers and lenders expect inflation?

(a) The nominal rate of interest exceeds real rate of interest

(b) The real rate of interest exceeds the nominal rate of interest

(d) Nominal and real rates of interest become zero

28. With whom, among the following, is the theory that the rate of interest is also a factor for transaction demand for money, associated?

(a) Baumol and Tobin

(b) Pigou

(d) Samuelson

29. According to Friedman, on which of the following does the

velocity of circulation of money depend?

I. Market interest rate on bonds.

2. Rate of change in general price level.

3. Ratio of physical non-human wealth to human wealth.

4. Ratio of savings to investment.

Select the correct answer using the code given below

(a) 1 and 3

(b) l, 2 and 4

(d) 4 only

30. Consider the following statements:

I. Lower the currency-deposit ratio, higher the money

multiplier.

2. Lower the reserve-deposit ratio, higher the money multiplier.

3. Larger the monetary base, higher is the money supply.

4. Larger the monetary base, lower is the money supply.

Which of the statements given above are correct?

(a) l and 3

(b) 1,2and4

(d) 2 and 4

31. In the standard Keynesian IS-LM model, a decrease in minimum

cash reserve ratio will:

(a) create demand-pull inflation in full-employment

(b) create cost-push inflation in full-employment

(d) create demand-pull inflation if there is unemployment

32. When one of the following is not correct in the context of IS and LM framework of the theory of interest?

(a) It integrated money interest and income into a general equilibrium model of product and money market

(b) Investment and interest are the two important variable in the model

(d) IS represents the money market equilibrium and LM represents the product market equilibrium

33. The accelerator model predicts that the changes in investment is determined by the changes in:

(a) inventory

(b) capital

(d) output

34. Given, MPC = 0.8 and the threshold consumption = 100,

which one of the following is the corresponding saving function?

(a)100+0.2Y

(b)-100+0.8Y

(d) 400+ 0.2Y

35. According to the classical theory of employment, deviations from the state of full employment are of:

(a) permanent nature

(b) purely temporary nature

(d) normal situations

36. Effective demand is that level of demand at which:

(a) aggregate demand is fore than aggregate supply

(b) aggregate demand is less than aggregate supply

(d) output is maximum

37. In national income accounting, which one of the following is the

difference between gross aggregates and net aggregates?

(a) The value of net indirect taxes

(b) The value of consumption of fixed capital

(d) The value of final consumption expenditure

38. Consider the following statements relating to gross investment in

the national income accounts:

1.It includes the items relating to residential arid non-residential construction.

2.It takes care of spending on producers durable goods.

3.It includes changes in business inventories.

Which of the statements given above are correct?

(a)l and 2

(b)2 and 3

(c)l and 3

(d) l, 2 and 3

39. Consider the following statements:

I. Pigou held the view that employment depends upon money wages and could be substantially increased by curtailing wages.

2. Keynes held the view that employment depends upon the level of effective demand which can be increased by leaving money intact. - -

Which of the statements given above is correct?

(a)1 only

(b) 2 only

(c)Both 1 and 2

(d) Neither 1 and 2

40. Which one of the following is related to the theory that supply created its own demand and therefore full employment I s a natural situation?

(a) Say’s law

(b) Pigou’s law of employment

(d) Keynesian theory of employment

41. The life cycle hypothesis of consumption implies that

consumption is related to

(a) price expectation over one’s life time

(b) permanent income

(d) expected life income

42. According to Keynes, which one of the following is meant by

liquidity preference?

(a) Refraining from saving

(b) Desire to hold cash

(d) Increasing savings in terms of precious metals

43. The currency notes in circulation as well as the proportion of total money supply held in the form of currency are influenced by which of the following?

I. The physical volume of trade and transactions.

2. The level of prices in the economy.

3. The development of bank and banking habits of the people.

Select the correct answer using the code given below

(a) 1 only

(b) 2 only

(d) 1 and 3

44. Imposition of a tariff will change the income distribution of the tariff-imposing country in favour of the scarce factor and against the abundant factor. This is known as:

(a) Leontief paradox

(b) Lerner paradox

(d) Metzler-paradox

Directions : The following two (2) items consist of two statements, one labeled as the ‘Assertion (A) ‘and the other as ‘Reason (R)’. You are to examine these two statements carefully and select the answers to these items using the code given below.

Code:

(a) Both A and R tare individually true and R is the correct explanation of A

(b) Both A and R are individually true, but R is not the correct explanation of A

(d) A is false, but R is true

45. Assertion (A) The money creation multiplier is equal to the reciprocal of the minimum reserve ratio:

Reason (R): The banking system as a whole can grant new credit up to an amount of excess reserves.

46. Assertion (A): Inflationary gap is caused by excess demand.

Reason (R) : Excess demand is due to scarcity of supply of money.

47. Consider the following statements:

I. Bond price and interest rate vary indirectly.

2. A tax on personal income reduces disposable income.

3. According to Say’s Law, demand creates its own supply.

Which of the statements given above are correct?

(a)1 and 2

(b)2 and 3

(d) 1,2 and 3

48. Which of the following are included in broad money (M 3) in

India?

I. Currency with the public.

2. Demand deposits with banks.

3. Time deposits with banks.

4. ‘Other’ deposits with RBI.

Select be correct answer using the code given below

(a)l,2 and 3

(b) 1 and2

(d)l,2,3and4

49. Consider the following statements:

In competitive markets, incidence of tax

1. is shared by buyers and sellers.

2. on buyers increases if elasticity of supply increases.

3. is fully borne by buyers if elasticity of demand is zero.

4. is independent of elasticities.

Which of the statements given above are correct?

(a) l and 2

(b) l,2 and 3

(d)2 and 4

50. Which one of the following is not a tax sacrifice principle?

(a) Equal absolute sacrifice

(b) Equal proportional sacrifice

(d) Equal average sacrifice

Answers:

1	c
2	b
3	a
4	a
5	a
6	c
7	d
8	a
9	a
10	b
11	c
12	b
13	a
14	b
15	b
16	a
17	d
18	c
19	a
20	b
21	b
22	a
23	b
24	a
25	c
26	c
27	c
28	a
29	c
30	c
31	a
32	d
33	d
34	c
35	b
36	c
37	b
38	d
39	c
40	a
41	d
42	b
43	c
44	b
45	a
46	a
47	a
48	d
49	b
50	d

QUESTION AND ANSWER : Mcq, Oneliner. &Text Etc...

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