Objective Type Questions And Answers In Economics

Multiple Choice Questions for Economics with Answers

Indian Economy General Knowledge Questions and Answers
1. Who among the following did not estimate the incidence of poverty in India?
(A) B. S. Minhas
(B) P.K.Bardhan
(C) V. M. Dandekar and N. Rath
(D) Raj Krishna
2. Which one of the following areas is related to blue revolution in Agriculture sector?
(A) Horticulture
(B) Aqua-culture
(C) Poultry
(D) Dairy
3. Soft currency means whose
(A) Supply is less than its demand in the international market
(B) Supply is more than its demand in the international market
(C) Supply and demand both are less in international market
(D) Demand tends to increase in the international market
4. Which one of the following is the basis of the comparative cost theory of David Ricardo?
(A) Supply and demand
(B) Labour theory of value
(C) Benefit theory of trade
(D) Marginal utility theory
5. Which one of the following is the cause of international trade as per Heckschar Ohlin Trade Theory?
(A) Difference in factor avail ability
(B) Difference in costs
(C) Difference in wants
(D) Difference in currency system
6. Which one of the following is matching with free trade?
(A) Encouragement for balanced growth
(B) Absence of tariff
(C) Restrictions on the movement of goods
(D) Existence of anti-dumping policy
7. If the slope of offer curves is constant, the terms of trade will
(A) Become indeterminate
(B)Become continuously favourable
(C)Continuously become unfavourable
(D) Become constant
8. Let elasticity of demand for exports for a certain country be e
x
and elasticity of demand for imports be
e
m
. Assume that the country devalues its currency. Its balance of payment will almost certainly show an
improvement
if
(A) e
x
=em=1
(B) e
x
+ e
m
>l
(C) e
x
+ e
m
<l
(D) e
x
+ e
m
=1
9. Who among the following is not a neoclassical Economist?
(A) Robert Solow
(B) J. E. Meade
(C) Paul Rom
(D) T. W. Swan
10. What is the objective of hedging in international foreign exchange transactions?
(A) To bear the risk in foreign exchange
(B) To secure risk in foreign exchange
(C) Speculation in foreign exchange
(D) Arbitrage operations in foreign exchange
11. EURO came into circulation since
(A) January 1, 1996
(B) January 1, 1997
(C) January 1, 1998
(D) January 1, 1999
12. If the marginal propensity to save is 020 and the marginal propensity to imports is 0 the effect of an
increase in exports of Rs. 100 million on national income is equal to
(A) Rs. 450 million
(B) Rs. 300 million
(C) Rs. 250 million
(D) None of the above
13. Open market operation means
(A) Borrowing by scheduled banks from the Central Bank
(B) Purchase and sale of Government Securities by the
Central Bank
(C) Lending by Commercial Banks to industry and trade
(D) Deposit mobilization
14. In which one of the following situations, should a country pursue a cheap money policy
(A) Level of economic activities and employment is low
(B) Gold is likely to flow out side the country
(C) Price level is rising
(D) BOP is unfavourable
15. Which of the following is not used by RBI for controlling credit?
(A) Increase in CRR
(B) Increase in SLR
(C) Increase in Bank Rate
(D) Increase in purchase of
Government Securities
16. Which one of the following does not affect credit creation power of Commercial Banks?
(A) Cash reserve ratio
(B) Statutory liquidity ratio
(C) C adequacy ratio
(D) Cash-deposit ratio
17. For revival and restructure of weak banks of public sector, which committee was constituted?
(A) Verma Committee
(B) Goiporia Committee
(C) Rekhi Committee
(D) Narsimham Committee
18. If the Budget of the Government does not get passed by 31st March how is the Government
expenditure undertaken?
(A) Vote on credit
(B) Supplementary demands
(C) Vote on account
(D) None of the above
19. When interest payments are subtracted from fiscal deficit, the remainder is known as
(A) Revenue deficit
(B) Primary deficit
(C) Monetized deficit
(D) None of the above
20. Which one of the following will result iii crowding out of private sector in the credit market?
(A) Low level of Government borrowing
(B) Low rate of interest
(C) Large repayment of Government debt
(D) Large market borrowing by the Government
21. Which one of the following is not true for the Repo operations?
(A) It is conducted by Commercial Banks
(B) It increases availability of foreign exchange
(C) In a Repo operation object is to regulate credit flow
(D) In a Repo operation, object is to control liquidity in the financial system
22. Zero Based Budgeting lays emphasis on
(A) Unlimited deficit financing
(B) Preparing the budget neglecting history of expenditure
(C) Both (A) and (B)
(D) None of the above
23. Relative taxable capacity is a reality while absolute taxable capacity is a myth. This statement was
given by
(A) R. A. Musgrave
(B) H. Dalton
(C) F. Shirras
(D) J. K. Mehta
24. Which fiscal measure should be adopted in correcting inflationary Gap?
(A) Reduction in Public Expenditure
(B) Increase in Taxes
(C) Increase in Public debt
(D) All the above
25. National income at market-price in an economy in one year is equal to
(A) The sum of wages, interest, rent and profit
(B) National income at factor costs plus indirect taxes
(C) The sum of all factor payments plus indirect taxes minus subsidies
(D) Value of goods and services produced in a country
26. Full employment according to Keynesian Theory of Employ ment is full
(A) Employment of labour
(B) Utilization of capital
(C) Utilization of natural resources
(D) Utilization of all the resources
27. For a price reduction, the demand for inferior goods
(A) Increases due to substitution effect
(B) Increases due to income effect
(C) Increases both due to substitution and income effect
(D) Decreases due to both substitution and income effect
28. An empirical study on relation ship between the rate of money wage increase and rate of
unemployment in the economy was given by
(A) A. W. Phillips
(B) J. M. Keynes
(C) R. F. Kahn.
(D) Ernst Engel
29. If Nominal GDP is equal to real GDP, then
(A) The GDP deflator is equal to zero
(B) The GDP deflator is equal to one
(C) The GDP deflator is less than one
(D) None of the above is correct
30. Potential output is determined by the economys productive capacity, which depends upon
(A) The inputs available (capital, labour, land etc.)
(B) The economys technologi al efficiency
(C) Both (A) and (B) together
(D) None of the above
31. Estimate gross national product from the data given below Value of consumer goods and
services: Rs. 20,000 crores
Value of capital goods and
services: Rs. 10,000 crores
Value of Exports: Rs. 4,000 crores
Value of Imports: Rs. 2,600 crores
Total depreciation: Rs. 1,600 crores
Which one of the following is correct?
(A) Rs. 31,400 crores
(B) Rs. 38,600 crores
(C) Rs. 29,800 crores
(D) Rs. 29,200 crores
32. Investment in human capital is related with expenditure in
(A) Education
(B) Training
(C) Health services
(D) All the above
33. Other things remaining the same to increase the employment as per Marginal Productivity Theory of
Distribution we should
(A) Increase wages
(B) Decrease wages
(C) Increase the marginal productivity of labourers
(D) Decrease the marginal productivity of labourers
34. Monopolistic competition in comparison to perfect competition ensures
(A) Lower price and higher output
(B) Price equal to marginal cost
(C) Output at the minimum average cost
(D) Higher price and lower output
35. For a monopolist, price is 16 and marginal revenue is 4, the elasticity of demand will be
(A)4/3
(B)3/4
(C)4
(D)1/4
36. If the total expenditure on a commodity increases after a price increase, the elasticity of demand
is
(A) Less than one
(B) Equal to one
(C) Greater than one
(D) Infinite
37. In the Cobb-Douglas production function the elasticity of substitu tion between factors is
(A) Zero
(B) Equal to one
(C) Greater than one
(D) Less than one
38. In economic theory, the term Ceteris Paribus is used to indicate
(A) Demand and supply are equal
(B) Other things are equal
(C) Condition of full employment exists
(D) Cost and revenue are constant
39. Who, among the following economists, used the technique of kinked demand curve to explain price
rigidity under oligopoly?
(A) Paul Sweezy
(B) Hall and Hitch
(C) Chamberlin
(D) Stigler
40. Which law states that, with given taste and preferences, the pro portion of income spent on food
stuff diminishes as income increases?
(A) Engels law
(B) Greshams law
(C) Giffins law
(D) Says law
41. Money was introduced in the growth models for the first time by
(A) R. F. Harrod
(B) E.Domar
(C) J.Robinson
(D) None of the above
42. According to Ragner Nurkse in the contest of an underdeveloped economy, the inducement to invest
is limited by
(A) Lack of saving
(B) The policy of the Government
(C) Lack of investment oppor tunities
(D) The size of the market
43. Inflationary gap measures the excess of aggregate expenditure over the aggregate supply at
(A) Before full employment
(B) At full employment
(C) Beyond full employment
(D)Both (A) and (B) above
44. Determinant of the maximum profit for a firm is
(A) Price
(B) Average cost
(C) Both average cost and price
(D) The output level
45. The theory of big-push was propounded by
(A) R. Rodan
(B) A. O. Hirschman
(C) R. Nurkse
(D) W. A. Lewis
46. The Balanced Growth Theory is associated with
(A) W. A. Lewis
(B) Rostow
(C) Streeton
(D) R. Nurkse
47. If prices rise, the direct real burden of public debt will
(A) Also increase
(B) Fall
(C) Remain unchanged
(D) Be uncertain
48. When current income of the Government is less than its current expenditure, it is known As
(A) Budget deficit
(B) Fiscal deficit
(C) Revenue deficit
(D) Primary deficit
49. If income elasticity of demand is high
(A) Tax rates should be decreased
(B) Tax rates should be increased
(C) Tax should not be imposed
(D) None of the above
50. Which Economist first suggested imposition of Expenditure tax?
(A) J. Hicks .
(B) Dalton
(C) N. Kaldor
(D) Musgrave
Answers
1 D
2 B
3 B
4 B
5 A
6 B
7 D
8 B
9 D
10 C
11 D
12 D
13 B
14 D
15 D
16 C
17 D
18 C
19 B
20 B
21 B
22 B
23 B
24 D
25 C
26 A
27 D
28 A
29 B
30 C
31 A
32 D
33 C
34 D
35 A
36 A
37 B
38 B
39 A
40 A
41 D
42 A
43 C
44 C
45 A
46 D
47 B
48 A
49 B
50 C