Q1. Which five year plan is also known as “Gadgil Yojana” ?
A Second Five Year Plan
B Third Five Year Plan
C Fourth Five Year Plan
D Fifth Five Year Plan
ANS B
Q2. The first bank managed by Indians was ?
A Oudh Bank
B Punab National Bank
C Oriental Bank of Commerce
D State Bank of India.
ANS A
Q3. Export-Import bank of India was established in ?
A 1981
B 1982
C 1983
D 1984
ANS B
Q4. The Executive head of a state Government is ?
A Chief Justice of High Court
B The Governor
C Chief Minister
D Prime Minister
ANS B
Q5. Balance sheet shows
A Assets
B Liabilities
C Both assets and liabilities
D Neither of them
ANS C
Q6. What is the mainstay of the Indian economy?
A Manufacturing
B Business
C Public sector
D Agriculture
ANS D
Q7. Which state is the biggest tea producer in the country ?
A Andhra Pradesh
B Sikkim
C Assam
D West Bengal
ANS C
Q8. Gross domestic capital formation is defined as
A flow of expenditure devoted to increased or maintaining of the capital stock
B expenditure incurred on physical assets only
C production exceeding demand
D net addition to stock after depreciation
ANS D
Q9. States earn maximum revenue through
A Tax Fines
B Customs
C License sales
D Commercial taxes
ANS D
Q10. Green Revolution started in
A 1964-65
B 1965-66
C 1966-67
D 1967-68
ANS C
Q11. Operating Surplus arises in the
A Government Sector
B Production for self-consumption/
C Subsistence farming
D Enterprise Sector
ANS D
Sol. The operating surplus of an enterprise measures the difference between revenue and expenditure – i.e. the surplus or deficit – accruing from production.
Q12. Cost of production of the producer is given by
A Sum of wages paid to labourers
B Sum of wages and interest paid on capital
C Sum of wages, interest rent and supernormal profit
D Sum of wages, interest, rent and normal profit
ANS D
Sol. The concept of cost of production is very significant in economics because it influences the production, supply, sales and the determination of price in the market.
Q13. The major aim of a country to devalue its currency is:
A encourage imports
B discourage both exports and imports
C encourage both exports and imports
D encourage exports
ANS D
Sol. Devaluation is the deliberate downward adjustment of the value of a country’s money relative to another currency, group of currencies, or currency standard. Devaluation reduces the cost of a country’s exports, rendering them more competitive in the global market.
Q14. The internal prices during Devaluation usually
A FALL
B RISE
C REMAIN UNCHANGED
D NONE
ANS C
Sol. Devaluation is the deliberate downward adjustment of the value of a country’s money relative to another currency, group of currencies, or currency standard. It has effects on a country’s international trade by alluring traders. But internal prices remain unaffected.
Q15. Dear money refers to money with
A low rate of interest
B high rate of interest
C depression
D inflation
ANS B
Sol. Dear money refers to money that is hard to obtain because of abnormally high interest rates.
Q16. Narrow money is a category of money supply that includes
A The sum of currency in circulation and the demand deposits in banks
B The sum of MI money and the time deposits
C The market value of the stocks held by all the holders excluding the promoters
D None of these
ANS A
Sol. Narrow money is a category of money supply that includes all physical money such as coins and currency, demand deposits and other liquid assets held by the central bank.
Q17. A specified minimum fraction of the total deposits of customers, which commercial banks have to hold as reserves either in cash or as deposits with the central bank is called the
A Variable Reserve Ratio
B Cash Reserve Ratio
C Statutory Liquidity Ratio
D Minimum Reserve Ratio
ANS B
Sol. Cash Reserve Ratio (CRR) is a specified minimum fraction of the total deposits of customers, which commercial banks have to hold as reserves either in cash or as deposits with the central bank. CRR is set according to the guidelines of the central bank of a country.
Q18. “Legal Tender Money” refers to :
A Cheques
B Currency notes
C Drafts
D None of these
ANS B
Sol. Legal tender is any official medium of payment recognized by law that can be used to extinguish a public or private debt, or meet a financial obligation. The national currency is legal tender in practically every country.
Q19. The terms ‘bear’ and ‘bull’ are used to describe general actions and attitudes related to which of the following commercial activity ?
A Banking
B E-commerce
C International trade
D Stock market
ANS D
Sol. The terms bear and bull are used to describe general actions and attitudes, or sentiment, either of an individual or the market. A bear market refers to a decline in prices, usually for a few months, in a single security or asset, group of securities or the securities market as a whole. A bull market is when prices are rising.
Q20. Gresham’s law is related to
A Consumption and demand
B Supply and demand
C Circulation of money
D None of these
ANS C
Sol. Gresham’s law is a monetary principle stating that “bad money drives out good.”
Q21. Who are the creditors of a Corporation ?
A Bond holders
B Stock holders
C Both Bond and Stock holders
D None of these
ANS C
Sol. A creditor is an entity (person or institution) that extends credit by giving another entity permission to borrow money intended to be repaid in the future. Shareholders are those who own stock in a company, whereas bondholders are those who own bonds issued by a company.
Q22. What is USP in marketing field?
A Uninterrupted power supply
B Universal standards of production
C US Programme based
D Unique Selling Proposition
ANS D
Sol. Unique Selling Proposition or USP is the one feature or the perceived benefit of a good which makes it unique from the rest of the competing brands in the market. It is that very reason which motivates a buyer to purchase that product even though it might be costlier than other products.
Q23. The tax placed on legal documents, usually in the transfer of assets or property is known as?
A Excise Tax
B Stamp duty
C VAT
D Octroi
ANS B
Sol. A stamp duty is the tax placed on legal documents, usually in the transfer of assets or property.
Q24. “The General Equilibrium Analysis” was developed by
A Leon Walras
B Ricardo
C Marshall
D Adam Smith
ANS A
Sol. General equilibrium theory, or Walrasian general equilibrium, attempts to explain the functioning of the macroeconomy as a whole, rather than as collections of individual market phenomena. The theory was first developed by the French economist Leon Walras in the late 19th century.
Q25. The first computer made available for commercial use was
A MANIAC
B ENIAC
C UNIVAC
D None of these
ANS C
Sol. The first computer made available for commercial use was UNIVAC. This was designed principally by J. Presper Eckert and John Mauchly, who were inventors of the ENIAC.
Q26. ‘Take-off stage’ in an economy means
A Steady growth begins
B Economy is stagnant
C All controls are removed
D None of these
ANS A
Sol. The third significant stage of growth is the stage of take-off. The period of this stage is 20 to 30 years during which the economy development process is automatic and the economy becomes self-reliant. Self-reliance, means that the economy can develop without external assistance.
Q27. Malthusian theory of population shows the relationship between-
A food supply and demand
B food supply and population growth
C population growth and development
D Employment and resources
ANS B
Sol. Thomas Robert Malthus, an English cleric, and scholar published this theory in his 1798 writings, An Essay on the Principle of Population. He believed that through preventative checks and positive checks, the population would be controlled to balance the food supply with the population level.
Q28. The average income earned per person in a given area in a specified year is known as?
A Per capita monetary income
B National income
C Per capita rural income
D None of these
ANS A
Sol. Per capita income (PCI) or average income measures the average income earned per person in a given area (city, region, country, etc.) in a specified year. It is calculated by dividing the area’s total income by its total population.
Q29. Gross National Product – Depreciation Allowance = ?
A Per Capita Income
B Gross Domestic Product
C Personal Income
D Net National Product
ANS D
Sol. Net national product (NNP) is the monetary value of finished goods and services produced by a country’s citizens, overseas and domestically, in a given period (i.e., the gross national product (GNP) minus the amount of GNP required to purchase new goods to maintain existing stock (i.e., depreciation).
Q30 Liberalism stands for
A religious orthodoxy
B freedom in social, political and economic aspects
C self-emancipation
D None of these
ANS B
Q30. The Great Depression occurred during
A 1914
B 1929
C 1939
D 1922
ANS B
Sol. The Great Depression was the worst economic downturn in the history of the industrialized world, lasting from the stock market crash of 1929 to 1939.
Q31. Pakistani economist Mahbub ul Haq created HDI in
A 1991
B 1947
C 1990
D None of these
ANS C
Sol. Pakistani economist Mahbub ul Haq created HDI in 1990 which was further used to measure the country’s development by the United Nations Development Program (UNDP).
Q32. The Indian economy can be most appropriately described as a-
A Capitalist economy
B Socialist economy
C Mixed economy
D Both (a) and (b)
ANS C
Sol. The economy of India is a developing mixed economy.
Q33. Arthashastra by “Kautilya” is related with-
A Military Phase
B Political Reign
C Social Phase
D None of these
ANS B
Sol. The Arthashastra summarizes the political thoughts of Kautilya.
Q34. The term ‘Mixed Economy’ denotes
A Existence of both rural and urban sectors
B Existence of both private and public sectors
C Existence of both heavy and small industries
D None of these
ANS B
Sol. A mixed economic system is a system that combines aspects of both capitalism and socialism. A mixed economic system protects private property and allows a level of economic freedom in the use of capital, but also allows for governments to interfere in economic activities in order to achieve social aims.
Q35. The demand for Luxury goods __________ as income increases.
A Rises
B Falls
C Remians constant
D None of these
ANS A
Sol. Luxury items have income elasticity of demand, which means as people become wealthier, they will buy more of such goods. In the same way, if there is a decline in income, demand for luxury items will decline.
Q36. Who coined the phrase “Tragedy of the commons”?
A Garett Hardin
B Seligman
C Adolph Wagner
D A.P Lernier
ANS A
Sol. The tragedy of the commons is a term coined by scientist Garrett Hardin in 1968 describing what can happen in groups when individuals act in their own best self interests and ignore what’s best for the whole group.
Q37. Price mechanism is a feature of-
A Capitalist economy
B Socialist economy
C Mixed economy
D None of these
ANS A
Sol. Price mechanism refers to the system where the forces of demand and supply determine the prices of commodities and the changes therein. It is the buyers and sellers who actually determine the price of a commodity.
Q38. Which of the following are consumer semi-durable goods?
A Cars and television
B Milk and Milk products
C Food grains and other food products
D Both A and B
ANS C
Sol. Semi-durable goods are goods that are neither perishable nor lasting, such as clothing or furniture.
Q39. Production of a commodity mostly through the natural process is an activity of-
A Primary sector
B Secondary sector
C Tertiary sector
D None of these
ANS A
Q40. The terms “Micro Economics” and Macro Economics” were coined by
A Ranger Frisch
B Ranger Nurkse
C Alfred Marshall
D J.M. Keynes
ANS A
Sol. The terms micro and macro are used by Ragnar Frisch. Economics is studied by dividing into two types, they are Micro Economics and Macro Economics.
Q41. According to the classical system, Saving is a function of
A Income
B The interest rate
C The real wage
D The price level
ANS A
Sol. Saving function (or propensity to save) relates the level of saving to the level of income. It is the desire or tendency of the households to save at a given level of income. Thus, saving (S) is a function (f) of income (Y).
Q42. Average Revenue means
A the profit realised from the marginal unit sold
B the profit realised by sale of all commodities
C the revenue per unit of commodity sold
D the revenue generated per month
ANS C
Sol. Average revenue is the revenue generated per unit of output sold. It plays a role in the determination of a firm’s profit. Per unit profit is average revenue minus average (total) cost.
Q43. Which of the following is one of the essential conditions of perfect competition market
A product differentiation
B multiplicity of prices for identical products at any one time.
C many sellers and a few buyers.
D Only one price for identical goods at any one time.
ANS
Q44. If cash reserve ratio decreases, credit creation will _______.
A increase
B decrease
C does not change
D first decreases than increases
ANS A
Sol. When the Federal Reserve lowers the reserve ratio, it lowers the amount of cash banks are required to hold in reserves and allows them to make more loans to consumers and businesses. This increases the money supply and expands the economy.
Q45. Stagflation is defined as
A low inflation, low growth, low unemployment
B high inflation, low growth, high unemployment
C high inflation, high growth, high unemployment
D low inflation, high growth, low unemployment
ANS B
Sol. A condition of slow economic growth and relatively high unemployment accompanied by rising prices, or inflation and a decline in Gross Domestic Product (GDP).
Q46.In a centrally planned economy, the ____________ plans all the important activities in the economy.
A Industrialists
B Citizens
C Government
D Judiciary
ANS C
Sol. A centrally planned economy is an economic system in which the state or government makes economic decisions rather than the these being made by the interaction between consumers and businesses.
Q47. ‘Law of demand’ implies that when there is excess demand for a commodity, then
A Price of the commodity falls
B Price of the commodity remains same
C Price of the commodity rises
D Quantity demanded of the commodity falls
ANS C
Sol. The law of demand states that quantity purchased varies inversely with price.
Q48.A horizontal demand curve is
A Relatively elastic
B Perfectly elastic
C Perfectly inelastic
D Relatively inelastic
ANS B
Sol. In the case of a product with a horizontal demand curve, elasticity is said to be perfectly elastic. When the price of a perfectly elastic good or service increases above the market price, the quantity demanded falls to zero.
Q49. The Removal of prohibitions and hindrance by government is called
A Globalisation
B Privatisation
C Liberalisation
D None of these
ANS C
Sol. The economic liberalisation in India refers to the changes and reforms, initiated in 1991, of the country’s economic policies, with the goal of making the economy more market- and service-oriented, and expanding the role of private and foreign investment.
Q50. Which of the following is not the infrastructure Sector?
A Food Production
B Construction of roads
C Power generation
D Expansion of air ports
ANS A
Sol. Infrastructure sector is a key driver for the Indian economy. The sector is highly responsible for propelling India’s overall development and enjoys intense focus from Government for initiating policies that would ensure time-bound creation of world class infrastructure in the country. Infrastructure sector includes power, bridges, dams, roads and urban infrastructure development.
Q51. Which of the following sectors contributed more of the savings in India?
A Public Sector
B Household Sector
C Corporate Sector
D Private Sector
ANS B
Sol. A higher domestic saving rate makes larger investment possible in an economy and hence is a necessary condition for economic development.
Q52. All of the goods which are scarce and limited in supply are called-
A Luxury goods
B Expensive goods
C Capital goods
D Economic goods
ANS D
Sol. Goods that are scarce (are in limited supply in relation to demand) are called economic goods, whereas those whose supply is unlimited and that require neither payment nor effort to acquire, (such as air) are called free goods.
Q53. Who determines the price in a Capitalistic Economy?
A Demand and Supply
B Government and Authorities
C Buyers in the market
D Sellers in the market
ANS A
Sol. Capitalism is an economic system in which capital goods are owned by private individuals or businesses. In a capitalistic economy the prices of goods, services and labour are determined by supply and demand.
Q54. The BRICS New Development Bank (NDB) has been set up for
A Funding infrastructure projects in emerging economics for sustainable development
B Funding non-infrastructure projects in emerging economics for sustainable development
C Funding infrastructural projects in developed countries
D Funding infrastructural projects in African countries only
ANS A
Sol. The New Development Bank’s purpose is to support infrastructure and sustainable development projects in BRICS and other emerging economies.
Q55. The major objective of monetary policy is to?
A Increase government’s tax revenue
B Revamp the Public Distribution System
C Promote economic growth with price stability
D Weed out corruption in the economy
ANS C
Sol. Monetary policy is designed as to maintain the price stability in the economy. Thus, its main objective is to promote economic growth with Price stability. Monetary policy is the macroeconomic policy laid down by central bank.
Q56. according to Malthusian theory of population
A Population increases in geometric ratio, food supply increases in arithmetic ratio
B Population increases in arithmetic ratio, food supply increases in geometric ratio
C Population increases in a harmonic mean, food supply increases in geometric ratio
D Population increases in a harmonic ratio, food supply increases in a arithmetic ratio
ANS A
Sol. Malthusian theory of population states that “By nature human food increases in a slow arithmetical ratio; man himself increases in a quick geometrical ratio unless want and vice stop him. The increase in numbers is necessarily limited by the means of subsistence Population invariably increases when the means of subsistence increase, unless prevented by powerful and obvious checks.
Q57. What is MUDRA?
A Development and Refinance Agency
B Scheme for Agricultural Insurance
C New Planet Discovered
D Development and Regulatory Authority for Urban Township
ANS A
Sol. Micro Units Development and Refinance Agency Bank (or MUDRA Bank) is a public sector financial institution in India. It provides loans at low rates to micro-finance institutions and non-banking financial institutions which then provide credit to MSMEs. It was launched by Prime Minister Narendra Modi on 8 April 2015.
Q58.Who is called the father of Economics?
A J.M. Keynes
B Malthus
C Ricardo
D Adam Smith
ANS D
Sol.Adam Smith is widely regarded as the father of modern economics.
Q59.The theory of distribution relates to which of the following?
A The distribution of assets
B The distribution of only income
C The distribution of factor payments
D Equality in the distribution of the income and wealth
ANS D
Sol. Distribution theory, in economics, the systematic attempt to account for the sharing of the national income among the owners of the factors of production—land, labour, and capital.
Q60.Micro-economics is also called
A Income theory
B Investment theory
C Price theory
D Expenditure theory
ANS C
Sol. Price theory, also known as microeconomics, is concerned with the economic behaviour or individual consumers, producers, and resource owners.
Q61.The concept of joint sector implies cooperation between
A Public sector and private sector industries
B State Government and Central Government
C Domestic and Foreign Companies
D None of these
ANS A
Sol. The joint sector would include units in which both public and private investments have taken place and where the state takes an active part in direction and control.
Q62.A ‘Market Economy’ is one which
A Is controlled by the Government
B Is free from the Government control
C In influenced by international market forces
D All of these
ANS B
Sol. A market economy is an economic system in which economic decisions and the pricing of goods and services are guided solely by the aggregate interactions of a country’s individual citizens and businesses. There is little government intervention or central planning.
Q63.‘Hire and Fire’ is the policy of
A Capitalism
B Socialism
C Mixed economy
D Traditional economy
ANS A
Sol. Capitalism is an economic system based on the freedom of private ownership of the means of production and their operation for profit.
Q64. If cash reserve ratio decreases, credit creation will _______.
A increase
B decrease
C does not change
D first decreases than increases
ANS A
Sol. When the Federal Reserve lowers the reserve ratio, it lowers the amount of cash banks are required to hold in reserves and allows them to make more loans to consumers and businesses. This increases the money supply and expands the economy.
Q65. Stagflation is defined as –
A low inflation, low growth, low unemployment
B high inflation, low growth, high unemployment
C high inflation, high growth, high unemployment
D low inflation, high growth, low unemployment
ANS B
Sol. A condition of slow economic growth and relatively high unemployment accompanied by rising prices, or inflation and a decline in Gross Domestic Product (GDP).
Q66.In a centrally planned economy, the ____________ plans all the important activities in the economy.
A Industrialists
B Citizens
C Government
D Judiciary
ANS C
Sol. A centrally planned economy is an economic system in which the state or government makes economic decisions rather than the these being made by the interaction between consumers and businesses.
Q67. ‘Law of demand’ implies that when there is excess demand for a commodity, then
A Price of the commodity falls
B Price of the commodity remains same
C Price of the commodity rises
D Quantity demanded of the commodity falls
ANS C
Sol. The law of demand states that quantity purchased varies inversely with price.
Q68.A horizontal demand curve is-
A Relatively elastic
B Perfectly elastic
C Perfectly inelastic
D Relatively inelastic
ANS B
Sol. In the case of a product with a horizontal demand curve, elasticity is said to be perfectly elastic. When the price of a perfectly elastic good or service increases above the market price, the quantity demanded falls to zero.
Q69. The Removal of prohibitions and hindrance by government is called-
A Globalisation
B Privatisation
C Liberalisation
D None of these
ANS C
Sol. The economic liberalisation in India refers to the changes and reforms, initiated in 1991, of the country’s economic policies, with the goal of making the economy more market- and service-oriented, and expanding the role of private and foreign investment.
Q70. Which of the following is not the infrastructure Sector?
A Food Production
B Construction of roads
C Power generation
D Expansion of air ports
ANS A
Sol. Infrastructure sector is a key driver for the Indian economy. The sector is highly responsible for propelling India’s overall development and enjoys intense focus from Government for initiating policies that would ensure time-bound creation of world class infrastructure in the country. Infrastructure sector includes power, bridges, dams, roads and urban infrastructure development.
Q71. Which of the following sectors contributed more of the savings in India?
A Public Sector
B Household Sector
C Corporate Sector
D Private Sector
ANS B
Sol. A higher domestic saving rate makes larger investment possible in an economy and hence is a necessary condition for economic development.
Q72. The term Economic rent refers to
A Profit
B Payment made for the use of land
C Producer’s surplus
D None of these
ANS B
Sol. The classical economists used the term economic rent as that part of the total payment which is made for the use of land only as distinguished from the payment made for the capital invested therein.
Q73. Who among the following pro-pounded Wage fund theory?
A J.S. Mill
B J.B. Say
C J.R. Hicks
D J.M. Keynes
ANS A
Sol. Wage fund theory of wage is developed by classical economist named J.S Mill. According to Mill, wage level is determined by wage fund and the number of worker’s employed. To pay the laborer, a wage fund is raised.
Q74. Minimum payment to factor of production is called-
A Transfer payment
B Rent
C Wages
D Quasi Rent
ANS A
Sol. In economics, a transfer payment (or government transfer or simply transfer) is a redistribution of income and wealth (payment) made without goods or services being received in return. These payments are considered to be non-exhaustive because they do not directly absorb resources or create output.
Q75. Surplus earned by a factor other than land in the short period is referred to as
A Economic rent
B Net rent
C Quasi-rent
D None of these
ANS C
Sol. The earnings from machines and instruments are termed as quasi-rent. The quasi-rent refers to the income produced when the demand for products increases suddenly.
Q76. The break-even point (BEP) in economics is the point at which –
A Marginal revenue equals marginal cost
B Average revenue equals average cost
C Total revenue equals total cost
D None of the above
ANS C
Sol. The break-even point (BEP) in economics, business—and specifically cost accounting—is the point at which total cost and total revenue are equal, i.e. “even”.
Q77. In which type of economy property and businesses are owned and controlled by individuals?
A Capitalist economy
B Socialist economy
C Mixed economy
D Command economy
ANS A
Sol. In a capitalist economy, property and businesses are owned and controlled by individuals.
Q78. The existence of a parallel economy or Black Money
A Makes the economy more competitive
B Makes the monetary policies less effective
C Ensures a better distribution of income and wealth
D Ensures increasing productive investment
ANS B
Sol. Black money is funds earned on the black market, on which income and other taxes have not been paid. Also, the unaccounted money that is concealed from the tax administrator is called black money.
Q79. Barter transactions means
A Money acts as a medium
B Coins are exchanged for goods
C Goods are exchanged with goods
D Private ownership
ANS C
Sol. Bartering occurs when two or more parties – such as individuals, businesses and nations – exchange goods or services evenly without the use of a monetary medium.
Q80. Fluctuation of economy including economic expansion and recession over a period of time is called ____.
A Expansion
B Recession
C Business cycle
D Deficits
ANS C
Sol. Business cycle can be referred to as fluctuation of economy over a period of time. This fluctuation includes economic expansion and recession. One example to explain this would be my stock portfolio. During the economic expansion, technology and banking stocks tend to outperform.
Q81. ________ is a good that is in greater demand as its price increases.
A Essential goods
B Capital goods
C Veblen goods
D Giffen goods
ANS D
Sol. A Giffen good, in economic theory, is a good that is in greater demand as its price increases. For example, if the price of an essential food staple, such as rice, rises it may mean that consumers have less money to buy more expensive foods, so they will actually be forced to buy more rice.
A Second Five Year Plan
B Third Five Year Plan
C Fourth Five Year Plan
D Fifth Five Year Plan
ANS B
Q2. The first bank managed by Indians was ?
A Oudh Bank
B Punab National Bank
C Oriental Bank of Commerce
D State Bank of India.
ANS A
Q3. Export-Import bank of India was established in ?
A 1981
B 1982
C 1983
D 1984
ANS B
Q4. The Executive head of a state Government is ?
A Chief Justice of High Court
B The Governor
C Chief Minister
D Prime Minister
ANS B
Q5. Balance sheet shows
A Assets
B Liabilities
C Both assets and liabilities
D Neither of them
ANS C
Q6. What is the mainstay of the Indian economy?
A Manufacturing
B Business
C Public sector
D Agriculture
ANS D
Q7. Which state is the biggest tea producer in the country ?
A Andhra Pradesh
B Sikkim
C Assam
D West Bengal
ANS C
Q8. Gross domestic capital formation is defined as
A flow of expenditure devoted to increased or maintaining of the capital stock
B expenditure incurred on physical assets only
C production exceeding demand
D net addition to stock after depreciation
ANS D
Q9. States earn maximum revenue through
A Tax Fines
B Customs
C License sales
D Commercial taxes
ANS D
Q10. Green Revolution started in
A 1964-65
B 1965-66
C 1966-67
D 1967-68
ANS C
Q11. Operating Surplus arises in the
A Government Sector
B Production for self-consumption/
C Subsistence farming
D Enterprise Sector
ANS D
Sol. The operating surplus of an enterprise measures the difference between revenue and expenditure – i.e. the surplus or deficit – accruing from production.
Q12. Cost of production of the producer is given by
A Sum of wages paid to labourers
B Sum of wages and interest paid on capital
C Sum of wages, interest rent and supernormal profit
D Sum of wages, interest, rent and normal profit
ANS D
Sol. The concept of cost of production is very significant in economics because it influences the production, supply, sales and the determination of price in the market.
Q13. The major aim of a country to devalue its currency is:
A encourage imports
B discourage both exports and imports
C encourage both exports and imports
D encourage exports
ANS D
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| INDIAN ECONOMY |
Sol. Devaluation is the deliberate downward adjustment of the value of a country’s money relative to another currency, group of currencies, or currency standard. Devaluation reduces the cost of a country’s exports, rendering them more competitive in the global market.
Q14. The internal prices during Devaluation usually
A FALL
B RISE
C REMAIN UNCHANGED
D NONE
ANS C
Sol. Devaluation is the deliberate downward adjustment of the value of a country’s money relative to another currency, group of currencies, or currency standard. It has effects on a country’s international trade by alluring traders. But internal prices remain unaffected.
Q15. Dear money refers to money with
A low rate of interest
B high rate of interest
C depression
D inflation
ANS B
Sol. Dear money refers to money that is hard to obtain because of abnormally high interest rates.
Q16. Narrow money is a category of money supply that includes
A The sum of currency in circulation and the demand deposits in banks
B The sum of MI money and the time deposits
C The market value of the stocks held by all the holders excluding the promoters
D None of these
ANS A
Sol. Narrow money is a category of money supply that includes all physical money such as coins and currency, demand deposits and other liquid assets held by the central bank.
Q17. A specified minimum fraction of the total deposits of customers, which commercial banks have to hold as reserves either in cash or as deposits with the central bank is called the
A Variable Reserve Ratio
B Cash Reserve Ratio
C Statutory Liquidity Ratio
D Minimum Reserve Ratio
ANS B
Sol. Cash Reserve Ratio (CRR) is a specified minimum fraction of the total deposits of customers, which commercial banks have to hold as reserves either in cash or as deposits with the central bank. CRR is set according to the guidelines of the central bank of a country.
Q18. “Legal Tender Money” refers to :
A Cheques
B Currency notes
C Drafts
D None of these
ANS B
Sol. Legal tender is any official medium of payment recognized by law that can be used to extinguish a public or private debt, or meet a financial obligation. The national currency is legal tender in practically every country.
Q19. The terms ‘bear’ and ‘bull’ are used to describe general actions and attitudes related to which of the following commercial activity ?
A Banking
B E-commerce
C International trade
D Stock market
ANS D
Sol. The terms bear and bull are used to describe general actions and attitudes, or sentiment, either of an individual or the market. A bear market refers to a decline in prices, usually for a few months, in a single security or asset, group of securities or the securities market as a whole. A bull market is when prices are rising.
Q20. Gresham’s law is related to
A Consumption and demand
B Supply and demand
C Circulation of money
D None of these
ANS C
Sol. Gresham’s law is a monetary principle stating that “bad money drives out good.”
Q21. Who are the creditors of a Corporation ?
A Bond holders
B Stock holders
C Both Bond and Stock holders
D None of these
ANS C
Sol. A creditor is an entity (person or institution) that extends credit by giving another entity permission to borrow money intended to be repaid in the future. Shareholders are those who own stock in a company, whereas bondholders are those who own bonds issued by a company.
Q22. What is USP in marketing field?
A Uninterrupted power supply
B Universal standards of production
C US Programme based
D Unique Selling Proposition
ANS D
Sol. Unique Selling Proposition or USP is the one feature or the perceived benefit of a good which makes it unique from the rest of the competing brands in the market. It is that very reason which motivates a buyer to purchase that product even though it might be costlier than other products.
Q23. The tax placed on legal documents, usually in the transfer of assets or property is known as?
A Excise Tax
B Stamp duty
C VAT
D Octroi
ANS B
Sol. A stamp duty is the tax placed on legal documents, usually in the transfer of assets or property.
Q24. “The General Equilibrium Analysis” was developed by
A Leon Walras
B Ricardo
C Marshall
D Adam Smith
ANS A
Sol. General equilibrium theory, or Walrasian general equilibrium, attempts to explain the functioning of the macroeconomy as a whole, rather than as collections of individual market phenomena. The theory was first developed by the French economist Leon Walras in the late 19th century.
Q25. The first computer made available for commercial use was
A MANIAC
B ENIAC
C UNIVAC
D None of these
ANS C
Sol. The first computer made available for commercial use was UNIVAC. This was designed principally by J. Presper Eckert and John Mauchly, who were inventors of the ENIAC.
Q26. ‘Take-off stage’ in an economy means
A Steady growth begins
B Economy is stagnant
C All controls are removed
D None of these
ANS A
Sol. The third significant stage of growth is the stage of take-off. The period of this stage is 20 to 30 years during which the economy development process is automatic and the economy becomes self-reliant. Self-reliance, means that the economy can develop without external assistance.
Q27. Malthusian theory of population shows the relationship between-
A food supply and demand
B food supply and population growth
C population growth and development
D Employment and resources
ANS B
Sol. Thomas Robert Malthus, an English cleric, and scholar published this theory in his 1798 writings, An Essay on the Principle of Population. He believed that through preventative checks and positive checks, the population would be controlled to balance the food supply with the population level.
Q28. The average income earned per person in a given area in a specified year is known as?
A Per capita monetary income
B National income
C Per capita rural income
D None of these
ANS A
Sol. Per capita income (PCI) or average income measures the average income earned per person in a given area (city, region, country, etc.) in a specified year. It is calculated by dividing the area’s total income by its total population.
Q29. Gross National Product – Depreciation Allowance = ?
A Per Capita Income
B Gross Domestic Product
C Personal Income
D Net National Product
ANS D
Sol. Net national product (NNP) is the monetary value of finished goods and services produced by a country’s citizens, overseas and domestically, in a given period (i.e., the gross national product (GNP) minus the amount of GNP required to purchase new goods to maintain existing stock (i.e., depreciation).
Q30 Liberalism stands for
A religious orthodoxy
B freedom in social, political and economic aspects
C self-emancipation
D None of these
ANS B
Q30. The Great Depression occurred during
A 1914
B 1929
C 1939
D 1922
ANS B
Sol. The Great Depression was the worst economic downturn in the history of the industrialized world, lasting from the stock market crash of 1929 to 1939.
Q31. Pakistani economist Mahbub ul Haq created HDI in
A 1991
B 1947
C 1990
D None of these
ANS C
Sol. Pakistani economist Mahbub ul Haq created HDI in 1990 which was further used to measure the country’s development by the United Nations Development Program (UNDP).
Q32. The Indian economy can be most appropriately described as a-
A Capitalist economy
B Socialist economy
C Mixed economy
D Both (a) and (b)
ANS C
Sol. The economy of India is a developing mixed economy.
Q33. Arthashastra by “Kautilya” is related with-
A Military Phase
B Political Reign
C Social Phase
D None of these
ANS B
Sol. The Arthashastra summarizes the political thoughts of Kautilya.
Q34. The term ‘Mixed Economy’ denotes
A Existence of both rural and urban sectors
B Existence of both private and public sectors
C Existence of both heavy and small industries
D None of these
ANS B
Sol. A mixed economic system is a system that combines aspects of both capitalism and socialism. A mixed economic system protects private property and allows a level of economic freedom in the use of capital, but also allows for governments to interfere in economic activities in order to achieve social aims.
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Q35. The demand for Luxury goods __________ as income increases.
A Rises
B Falls
C Remians constant
D None of these
ANS A
Sol. Luxury items have income elasticity of demand, which means as people become wealthier, they will buy more of such goods. In the same way, if there is a decline in income, demand for luxury items will decline.
Q36. Who coined the phrase “Tragedy of the commons”?
A Garett Hardin
B Seligman
C Adolph Wagner
D A.P Lernier
ANS A
Sol. The tragedy of the commons is a term coined by scientist Garrett Hardin in 1968 describing what can happen in groups when individuals act in their own best self interests and ignore what’s best for the whole group.
Q37. Price mechanism is a feature of-
A Capitalist economy
B Socialist economy
C Mixed economy
D None of these
ANS A
Sol. Price mechanism refers to the system where the forces of demand and supply determine the prices of commodities and the changes therein. It is the buyers and sellers who actually determine the price of a commodity.
Q38. Which of the following are consumer semi-durable goods?
A Cars and television
B Milk and Milk products
C Food grains and other food products
D Both A and B
ANS C
Sol. Semi-durable goods are goods that are neither perishable nor lasting, such as clothing or furniture.
Q39. Production of a commodity mostly through the natural process is an activity of-
A Primary sector
B Secondary sector
C Tertiary sector
D None of these
ANS A
Q40. The terms “Micro Economics” and Macro Economics” were coined by
A Ranger Frisch
B Ranger Nurkse
C Alfred Marshall
D J.M. Keynes
ANS A
Sol. The terms micro and macro are used by Ragnar Frisch. Economics is studied by dividing into two types, they are Micro Economics and Macro Economics.
Q41. According to the classical system, Saving is a function of
A Income
B The interest rate
C The real wage
D The price level
ANS A
Sol. Saving function (or propensity to save) relates the level of saving to the level of income. It is the desire or tendency of the households to save at a given level of income. Thus, saving (S) is a function (f) of income (Y).
Q42. Average Revenue means
A the profit realised from the marginal unit sold
B the profit realised by sale of all commodities
C the revenue per unit of commodity sold
D the revenue generated per month
ANS C
Sol. Average revenue is the revenue generated per unit of output sold. It plays a role in the determination of a firm’s profit. Per unit profit is average revenue minus average (total) cost.
Q43. Which of the following is one of the essential conditions of perfect competition market
A product differentiation
B multiplicity of prices for identical products at any one time.
C many sellers and a few buyers.
D Only one price for identical goods at any one time.
ANS
Q44. If cash reserve ratio decreases, credit creation will _______.
A increase
B decrease
C does not change
D first decreases than increases
ANS A
Sol. When the Federal Reserve lowers the reserve ratio, it lowers the amount of cash banks are required to hold in reserves and allows them to make more loans to consumers and businesses. This increases the money supply and expands the economy.
Q45. Stagflation is defined as
A low inflation, low growth, low unemployment
B high inflation, low growth, high unemployment
C high inflation, high growth, high unemployment
D low inflation, high growth, low unemployment
ANS B
Sol. A condition of slow economic growth and relatively high unemployment accompanied by rising prices, or inflation and a decline in Gross Domestic Product (GDP).
Q46.In a centrally planned economy, the ____________ plans all the important activities in the economy.
A Industrialists
B Citizens
C Government
D Judiciary
ANS C
Sol. A centrally planned economy is an economic system in which the state or government makes economic decisions rather than the these being made by the interaction between consumers and businesses.
Q47. ‘Law of demand’ implies that when there is excess demand for a commodity, then
A Price of the commodity falls
B Price of the commodity remains same
C Price of the commodity rises
D Quantity demanded of the commodity falls
ANS C
Sol. The law of demand states that quantity purchased varies inversely with price.
Q48.A horizontal demand curve is
A Relatively elastic
B Perfectly elastic
C Perfectly inelastic
D Relatively inelastic
ANS B
Sol. In the case of a product with a horizontal demand curve, elasticity is said to be perfectly elastic. When the price of a perfectly elastic good or service increases above the market price, the quantity demanded falls to zero.
Q49. The Removal of prohibitions and hindrance by government is called
A Globalisation
B Privatisation
C Liberalisation
D None of these
ANS C
Sol. The economic liberalisation in India refers to the changes and reforms, initiated in 1991, of the country’s economic policies, with the goal of making the economy more market- and service-oriented, and expanding the role of private and foreign investment.
Q50. Which of the following is not the infrastructure Sector?
A Food Production
B Construction of roads
C Power generation
D Expansion of air ports
ANS A
Sol. Infrastructure sector is a key driver for the Indian economy. The sector is highly responsible for propelling India’s overall development and enjoys intense focus from Government for initiating policies that would ensure time-bound creation of world class infrastructure in the country. Infrastructure sector includes power, bridges, dams, roads and urban infrastructure development.
Q51. Which of the following sectors contributed more of the savings in India?
A Public Sector
B Household Sector
C Corporate Sector
D Private Sector
ANS B
Sol. A higher domestic saving rate makes larger investment possible in an economy and hence is a necessary condition for economic development.
Q52. All of the goods which are scarce and limited in supply are called-
A Luxury goods
B Expensive goods
C Capital goods
D Economic goods
ANS D
Sol. Goods that are scarce (are in limited supply in relation to demand) are called economic goods, whereas those whose supply is unlimited and that require neither payment nor effort to acquire, (such as air) are called free goods.
Q53. Who determines the price in a Capitalistic Economy?
A Demand and Supply
B Government and Authorities
C Buyers in the market
D Sellers in the market
ANS A
Sol. Capitalism is an economic system in which capital goods are owned by private individuals or businesses. In a capitalistic economy the prices of goods, services and labour are determined by supply and demand.
Q54. The BRICS New Development Bank (NDB) has been set up for
A Funding infrastructure projects in emerging economics for sustainable development
B Funding non-infrastructure projects in emerging economics for sustainable development
C Funding infrastructural projects in developed countries
D Funding infrastructural projects in African countries only
ANS A
Sol. The New Development Bank’s purpose is to support infrastructure and sustainable development projects in BRICS and other emerging economies.
Q55. The major objective of monetary policy is to?
A Increase government’s tax revenue
B Revamp the Public Distribution System
C Promote economic growth with price stability
D Weed out corruption in the economy
ANS C
Sol. Monetary policy is designed as to maintain the price stability in the economy. Thus, its main objective is to promote economic growth with Price stability. Monetary policy is the macroeconomic policy laid down by central bank.
Q56. according to Malthusian theory of population
A Population increases in geometric ratio, food supply increases in arithmetic ratio
B Population increases in arithmetic ratio, food supply increases in geometric ratio
C Population increases in a harmonic mean, food supply increases in geometric ratio
D Population increases in a harmonic ratio, food supply increases in a arithmetic ratio
ANS A
Sol. Malthusian theory of population states that “By nature human food increases in a slow arithmetical ratio; man himself increases in a quick geometrical ratio unless want and vice stop him. The increase in numbers is necessarily limited by the means of subsistence Population invariably increases when the means of subsistence increase, unless prevented by powerful and obvious checks.
Q57. What is MUDRA?
A Development and Refinance Agency
B Scheme for Agricultural Insurance
C New Planet Discovered
D Development and Regulatory Authority for Urban Township
ANS A
Sol. Micro Units Development and Refinance Agency Bank (or MUDRA Bank) is a public sector financial institution in India. It provides loans at low rates to micro-finance institutions and non-banking financial institutions which then provide credit to MSMEs. It was launched by Prime Minister Narendra Modi on 8 April 2015.
Q58.Who is called the father of Economics?
A J.M. Keynes
B Malthus
C Ricardo
D Adam Smith
ANS D
Sol.Adam Smith is widely regarded as the father of modern economics.
Q59.The theory of distribution relates to which of the following?
A The distribution of assets
B The distribution of only income
C The distribution of factor payments
D Equality in the distribution of the income and wealth
ANS D
Sol. Distribution theory, in economics, the systematic attempt to account for the sharing of the national income among the owners of the factors of production—land, labour, and capital.
Q60.Micro-economics is also called
A Income theory
B Investment theory
C Price theory
D Expenditure theory
ANS C
Sol. Price theory, also known as microeconomics, is concerned with the economic behaviour or individual consumers, producers, and resource owners.
Q61.The concept of joint sector implies cooperation between
A Public sector and private sector industries
B State Government and Central Government
C Domestic and Foreign Companies
D None of these
ANS A
Sol. The joint sector would include units in which both public and private investments have taken place and where the state takes an active part in direction and control.
Q62.A ‘Market Economy’ is one which
A Is controlled by the Government
B Is free from the Government control
C In influenced by international market forces
D All of these
ANS B
Sol. A market economy is an economic system in which economic decisions and the pricing of goods and services are guided solely by the aggregate interactions of a country’s individual citizens and businesses. There is little government intervention or central planning.
Q63.‘Hire and Fire’ is the policy of
A Capitalism
B Socialism
C Mixed economy
D Traditional economy
ANS A
Sol. Capitalism is an economic system based on the freedom of private ownership of the means of production and their operation for profit.
Q64. If cash reserve ratio decreases, credit creation will _______.
A increase
B decrease
C does not change
D first decreases than increases
ANS A
Sol. When the Federal Reserve lowers the reserve ratio, it lowers the amount of cash banks are required to hold in reserves and allows them to make more loans to consumers and businesses. This increases the money supply and expands the economy.
Q65. Stagflation is defined as –
A low inflation, low growth, low unemployment
B high inflation, low growth, high unemployment
C high inflation, high growth, high unemployment
D low inflation, high growth, low unemployment
ANS B
Sol. A condition of slow economic growth and relatively high unemployment accompanied by rising prices, or inflation and a decline in Gross Domestic Product (GDP).
Q66.In a centrally planned economy, the ____________ plans all the important activities in the economy.
A Industrialists
B Citizens
C Government
D Judiciary
ANS C
Sol. A centrally planned economy is an economic system in which the state or government makes economic decisions rather than the these being made by the interaction between consumers and businesses.
Q67. ‘Law of demand’ implies that when there is excess demand for a commodity, then
A Price of the commodity falls
B Price of the commodity remains same
C Price of the commodity rises
D Quantity demanded of the commodity falls
ANS C
Sol. The law of demand states that quantity purchased varies inversely with price.
Q68.A horizontal demand curve is-
A Relatively elastic
B Perfectly elastic
C Perfectly inelastic
D Relatively inelastic
ANS B
Sol. In the case of a product with a horizontal demand curve, elasticity is said to be perfectly elastic. When the price of a perfectly elastic good or service increases above the market price, the quantity demanded falls to zero.
Q69. The Removal of prohibitions and hindrance by government is called-
A Globalisation
B Privatisation
C Liberalisation
D None of these
ANS C
Sol. The economic liberalisation in India refers to the changes and reforms, initiated in 1991, of the country’s economic policies, with the goal of making the economy more market- and service-oriented, and expanding the role of private and foreign investment.
Q70. Which of the following is not the infrastructure Sector?
A Food Production
B Construction of roads
C Power generation
D Expansion of air ports
ANS A
Sol. Infrastructure sector is a key driver for the Indian economy. The sector is highly responsible for propelling India’s overall development and enjoys intense focus from Government for initiating policies that would ensure time-bound creation of world class infrastructure in the country. Infrastructure sector includes power, bridges, dams, roads and urban infrastructure development.
Q71. Which of the following sectors contributed more of the savings in India?
A Public Sector
B Household Sector
C Corporate Sector
D Private Sector
ANS B
Sol. A higher domestic saving rate makes larger investment possible in an economy and hence is a necessary condition for economic development.
Q72. The term Economic rent refers to
A Profit
B Payment made for the use of land
C Producer’s surplus
D None of these
ANS B
Sol. The classical economists used the term economic rent as that part of the total payment which is made for the use of land only as distinguished from the payment made for the capital invested therein.
Q73. Who among the following pro-pounded Wage fund theory?
A J.S. Mill
B J.B. Say
C J.R. Hicks
D J.M. Keynes
ANS A
Sol. Wage fund theory of wage is developed by classical economist named J.S Mill. According to Mill, wage level is determined by wage fund and the number of worker’s employed. To pay the laborer, a wage fund is raised.
Q74. Minimum payment to factor of production is called-
A Transfer payment
B Rent
C Wages
D Quasi Rent
ANS A
Sol. In economics, a transfer payment (or government transfer or simply transfer) is a redistribution of income and wealth (payment) made without goods or services being received in return. These payments are considered to be non-exhaustive because they do not directly absorb resources or create output.
Q75. Surplus earned by a factor other than land in the short period is referred to as
A Economic rent
B Net rent
C Quasi-rent
D None of these
ANS C
Sol. The earnings from machines and instruments are termed as quasi-rent. The quasi-rent refers to the income produced when the demand for products increases suddenly.
Q76. The break-even point (BEP) in economics is the point at which –
A Marginal revenue equals marginal cost
B Average revenue equals average cost
C Total revenue equals total cost
D None of the above
ANS C
Sol. The break-even point (BEP) in economics, business—and specifically cost accounting—is the point at which total cost and total revenue are equal, i.e. “even”.
Q77. In which type of economy property and businesses are owned and controlled by individuals?
A Capitalist economy
B Socialist economy
C Mixed economy
D Command economy
ANS A
Sol. In a capitalist economy, property and businesses are owned and controlled by individuals.
Q78. The existence of a parallel economy or Black Money
A Makes the economy more competitive
B Makes the monetary policies less effective
C Ensures a better distribution of income and wealth
D Ensures increasing productive investment
ANS B
Sol. Black money is funds earned on the black market, on which income and other taxes have not been paid. Also, the unaccounted money that is concealed from the tax administrator is called black money.
Q79. Barter transactions means
A Money acts as a medium
B Coins are exchanged for goods
C Goods are exchanged with goods
D Private ownership
ANS C
Sol. Bartering occurs when two or more parties – such as individuals, businesses and nations – exchange goods or services evenly without the use of a monetary medium.
Q80. Fluctuation of economy including economic expansion and recession over a period of time is called ____.
A Expansion
B Recession
C Business cycle
D Deficits
ANS C
Sol. Business cycle can be referred to as fluctuation of economy over a period of time. This fluctuation includes economic expansion and recession. One example to explain this would be my stock portfolio. During the economic expansion, technology and banking stocks tend to outperform.
Q81. ________ is a good that is in greater demand as its price increases.
A Essential goods
B Capital goods
C Veblen goods
D Giffen goods
ANS D
Sol. A Giffen good, in economic theory, is a good that is in greater demand as its price increases. For example, if the price of an essential food staple, such as rice, rises it may mean that consumers have less money to buy more expensive foods, so they will actually be forced to buy more rice.
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