MCQs Bank (I mark for each question)

is taken into
1) Under method of measuring national income, consumption
consideration
a. Income b. Dividend Expenditure d. Interest

2) Per Capita income is calculated by dividing national income by

- - -

a. Wage rate b. Interest rate Population d. Nominal rate

While calculating national income at factor cost, we consider - -

3)
a. Price of raw material b. Price of Final goods 1Pice of Factors of production
d. Price of intermediate goods

4) Gross Domestic product is calculated by - - .

a. Central Bank b. Indian Statistical Organization

National Statistical Office d. Government

- - is the consumption of fixed capital and deducted from gross national income
5)
a. Interest b. Wages LDepreciation d. foreign Exchange

--- is considered.
6) While calculating national income at marketprice,
a. Real income b. non-monetary income Money income d. Money expenditure

7) When depreciation is deducted from GNP, the net value is -

a. NDP NNP c. disposable income d. borrowed income

is
8) Major economic attribute for comparing countries
- - -

a. GDI b. HDI c. Population d. incomne

9) NNP at factor cost is always

- .--

a. More than national income b. Less than national income

C. Unrelated to national incomedEqual to national income

nominal GDP and

10) GDP deflator shows the relationship between
a. GDP b. GNP R e a l GDP d. NDP

11) Human development concept was developed by

a. Keynes b. Marshall c. Pigue Mahbub-al-Haq

12) is not a part of the human development of people

a. Health Number of people C. Opportunity d. Freedom

13) In ---- . Human development index was created

a. 1980 T990 c. 1989 d. 1992

14) PPP theory has version

a. One b. Three d. Four

 15) What is
the score of the High Development Index?
0 . 7 and above b. 0.5 and above c. 0.4 and above d. 0,8 and above

16) country does not fall under high HDI

a. Sweden b. Germany South Sudan d. Norway

17) is not a key dimension of the Human Development Index

a. Standard of Living b. Life expectancy
c. Education and
knowledge Consumption pattern
18) Human development report is released by
a. UNCTAD b. World Bank c. IMF LA.UNDP

19) India's HDI rank in the year 2021 was ****** *"***
a. 128th b. 130th LT3 d. 129th

20) Countries with HDI value below 0.5 are considered to have.----wwuww=wwom- level of human
development
a. High b. Very high c. Moderate L o w

21) --- index shews the inequality between men and women in human
a. HDI
GDI c. MDI d. PDI
development
22) Popular macroeconomic analysis metric to
compare economic productivity and standards of
living between countries is - - - - .
a. HDI b. GDI Purchasing Power Parity d. GEM

23) PPP is well known as ---====-wo===wou-

Basket of good approach b. Basket of price
approach
c. Basket of interest approach d. Basket of wages
approach
24) Theory of PPP is propounded by----*----~-*-----*-*
a. Brahmadanda b. Keynes
CaSsel Gustav d. Marshall

25) According to PPP theory, the value of the

currençy should remain constant in terms of
a. Bonds b. labour c. Land
Goods ----
26) The Cxchange rate is expressed in units of ong
a. Real b. Expected c. Compared irrency per unit of the other.
a. Nominal
27) A exchange rate adjusts this for changes in price levels in both
LiReal b. Expected c. Compared
currencies.
d. Nominal.
28) Disposable income= Income
a. Wealth tax Income tax c. Capital gain d. Properly tax
 29)GDP- Depreciation
ANDP b. NNP c. GNP d. Disposable income

30) Real interest rate explains us a change in--

a. Money income b. Inflation rate c. Real income a . Purchasing power
31)Ahe Gcneral Theory of Employment, Interest and Money was written by..
d) Alfred Marshall
J.M. Keynes b) Adam Smith c) Paul Samuelson

32) The point when ADF and ASF intersects is called...

a) Total Demand b) Effective demand c. Inflatinary Gap d. Market Demand

33) According to Keynes,.should be increased to increase real income.

a. Aggregate Supply b. Aggregate Investment sAggregate Demand d. Aggregate Saving

34)The aggregate supply curve slopes...

a. Upward b. downwards c. Horizontal d. Parallel to Y axis from the beginning
35) The components of effective demand are....
C++G b. only C+G c. only C+I d. only +G

3 6 ) . . explains the relationship between unemployment rate and inflation rate.

a. Engel Curve b. Offer curve c. Demand Curve Phillips curve

37) The short run Philips curve slopes..

a. Horizontal Downward c. Vertical
d.Upward
38) The normal rate of unemployment around which unemployment rate fluctuates is called...
a. Frictional unemployment, bNátural rate of unemployment c. Seasonal unemployment d.
Voluntary unemployment
) . . . . . Cxists when there is an excess of anticipated expenditure over available output at base
period.
Anflationary gap b. Underemployment c.
Employment gap d. deflationary gap

40) Aggregate supply is the same as...

domestic product b. national Product c. international product d. gross product
41) According to Keynes what causes
changes in inducement to invest by entrepreneurs?
a. MPC and MEI b. MEC and MPS CMEC and rate of interest d. MPC and rate of interest

42) The deficiency of aggregate demand during depression period leads to

a. Seasonal unemployment b. Voluntary unemployment cJoluntary unemployment d.
Frictional unemployment

43) In Keynesian model of income determination autonomous investment occurs due to

CChange in income b. Change In employnent e. hnnpe in profi d Change in secial
welfare prgramme

44) Use of tight... help to remove the intlationary gap.

a.monetary poliey bTiscal poliey 0,monetary and fiscal d.govement policy
45) The pont of intersection of ADi and
a. optimum point
AN ewve ia called
b. brenkeven
point. elfeetive demand point d shut down point
46) The...show relationship between unemployment rate and intlation rate
a.
Aggregate demand curve b. Aggregate Supply curve, Phillips curve d, offer curve

47) The Aggregate demand curve is..

aupward sloping b. downward sloping c.Horlzontal straight line d. vertieal straight line
48) Jhe downward sloping Phillips curve is applicable oven in the...
R Short run b. long run o. mcdium term d. very long run

49) In the. Phillips curve is vertical.

a. short run bAóng run c. medium term d. very long run

50) The Phillips curve shows the

a.income and employment
relationship between..s
d. wage rate and
btiicome und unemployment c.Wage ratc and employment
unemployment
51) The starting point of Keynesian theory of income and
a. law of markets employment is...
bprinciple of effective demundc. Supply side cconomies d, Law of
underemployment
52) JM Keynes theory is applicable in the
r Short run b. long run C. short to medium d. medium to long run
Answerl
53) Effective demand refers to-
Y) b.d-/(p) c. Y-C-1-G d.C-Y
54) Keynesian macroeconomics concentrated on of the market.
a. Supply side
rdemand side c. Both a and b d. saving side
55. The point when ADF & ASF intersect is
a. Total demand
called....
bllective demand c.
Equilibrium price d. Intlationary gap
56) According to Kgynes in order to inerecase real income we
have to inerease
a. Supply emand aggregate.
c.Unemployment d. None of the above

57) The curve which is a schedule of minimm amount of

levels of output is called... proceeds required to provide various
AAgeregate supply b. Aggregate demand c. Unemployment d. Total spending

58) . . presented an empirical theory of inflation is known as the Phillips curve

a. J.M. Keynes b. Adam Smith c. David Ricardo 1 dAW. Phillips

59) Aggregate demand can be increased by..

a.increasing bank rate b. selling government securities by RBI C. increasing cash reserve ratio snone
of these

60) Which is the determining factor for investment?

a. Marginal Efficiency of Capital b. Interest Rate Both a. and b. d. None of these

61) curve shows the goods market equilibrium.

ÍS b. LM C. Demand d. Supply

62) _curye shows the money market equilibrium.

a. IS L M c. Demand d. Supply

63) The slope of the IS curve is

a. Positive b. Direct c. Zero Negative

64) The slope ofthe LM curve is

Positive b. Indirect c. Zero d. Negative

65) markets are in equilibrium when IS curve and LM curve intersect.

a. Goods and capital Goods and money c. Money and Capital d. Foreign Exchange

66) will cause the IS curve to shift to the left.

a. Increase in government spending ncrease in taxes
c.Increase in transfer payments d. Decrease in Taxes
67) will cause the LM curve to shift to the right.
ABecrease in money supply b. Increase in money
supply
Decrease in
government expenditure d. Increase in Taxes
68) The LM curve is in caseofa Keynesian liquidity trap.
a. Vertical Horizontal c.
Steeper d. Flatter

69) In classical case, where the demand for

money is completely insensitive to the interest rate, the
LM curve will be
aVertical b. Horizontal c. Steeper d. Flatter
70) At all points opthe IS
a.
curve
Capital \bGoods c. Money
market is in equilibrium.
d. Foreign Exchange
71) At all points on the LM curve market is in equilibrium.
a.
Capital b. GoodstMoncy d. Foreign Exchange
72)policy brings put the crowding out effect.
a.
Monetary Fiscal c. Foreign Exchange Rate d. Income

73) When the IS curve is the crowding out effect of fiscal policy is nil.
a. Horizontal tbertical c. Steeper d. Flatter

74) There is full crowding out ofthe effect of fiscal expansion when the LM curve is
a. Horizontal bVertical c. Steeper d. Flatter

75) The erówding out effect of fiscal expansion is nil when the LM curve is
a. Horizontal b. Vertical c. Steeper d. Flatter

76). is an instrument of fiscal policy.

a. Bank Rate b. CRR c. OMO, d,Tax
77) s an instrument of monetary policy.
Bank Rate b. Public debt c. Public expenditure d. Tax

78) The simultaneous equilibrium in goods and money markets is attained when curves
interscetEach other.
aTS and LM b. DD and SS c. C and Y d. S and

79) will cause the IS curve to shift to the right.

a. Decrease in government spending Increase in government spending
c. Decrease in transfer payments d. Increase in Taxes

80) will cause the LM curve to shift to the left

a. Increase in money supply Decrease in money supply
c. Decrease in government expenditure d. Increase in Taxes

81) According to classical quantity theory the demand for money depends only on level.
Income b. Tax c. Interest rate d. Investment

82) policy involves use of government spending and tax policies to achieve the goals of the
county.
LFiscal b. Disinvestment c. Foreign Exchange Rate d. Monetary

83) The dampening eficet of higher interest rate on spending is also called effect.
a. Inflation
bCrowding out c. Disinvestment d. Depreciation
84)Crowding out takes place when expansionary fiscal policy increases the
. Interest rate b. Aggregate Supply c. Tax rate d. Foreign Exchange rate

85) The extent of crowding out depends upon the extent ofise in
a. Income level b. Price level c. Tax Revenue d Interest rate
 fiscal policies in the
86) model is helpful to analyze the effectiveness of both monetary and
economy.
,aA`-LM b. AD c. AS d. Input-Output

87) In India during 1995-96 to 2000-01, the rightward shift in the IS curve was the rightward
shift in LM curve
a. Less than bMore than c. equal to d. None of the above

88)In India during 2001-02 to 2005-06, the rightward shift in the LM curve wasthe rightward
shift in IS curve.
a. Less than bMore than c. equal to d. None of the above

89) If the expansion in monetary policy is greater than the fiscal expansion, the interest rate
yill
Fall b. Rise c. Remain same d. None of the above

90) If the expansion in Fiscal policy is greater than the monetary expansion, the interest rate
will
a. Fall, bRise c. Remain same d. None of the above

91)Thecyrrent account in the balance of payments ......

********
încludes merchandise trade and services b. is a total of all the visible items of trade
c. includes borrowings d. includes autonomous and accommodating flows

92) Foreign direct investmeat1s a part of...

a. Trade account .Capital account c. Current account d. Expenditure Account

93) The current account balance of BOP does not include....

*°*°**°**
Foreign Direct Investment b. Exports of Services
c. Unilateral Payments d. Export of Goods

94) ******* ..is not a

direct measure to correct BOP disequilibrium.
a. Tariffs b. Quotas Exchange Depreciation d. Import substitution
95) Expenditure switching policies to correct BOP deficit include of .....
a. Increase in rate of interest b. Appreciation c. Revaluation dDevaluation

96) Tariffs and quotas are imposed on imports to correct BOP deficit are called as...
measures.
a TDirect b. Indirect c. Passive d. Monetary
97) Apexpansionary fiscal policywill.
Lar Tncrease deficit b. Reduce deficit c. Not affect BOP d. Normalize deficit
98) Toeorrect inflation and deficit both monetary and fiscal policy should be .. *****°**"

Cheaper b. Expansionary c. Neutral d. Contractionary

99) Contractionary fiscal policy will lead to ,
a. Decrease in inflow of foreign capital b. Increase in government expenditure
 c. Increase in imports
Tall in rate of interest
100) Lowering the value of domestic currency against foreign currency by the govermment is
knownas....
a. Revaluation b. Depreciation eevaluation d. Appreciation

101) Balance of trade is the

aDitterence between export and import of goods b. Difference between cxport and import of
services C. Total of export and import of services d. Total of export and import of goods

102)Which of the following is not a component of the Balance of Payments?

Real account b. Current account c. Capital account d. Trade Account

103) The Current account of the Balance of Payments includes transactions like
a. Income to and from abroad b. Imports and exports of goods and services
c. Transfers to and from abroad
All of the above
104) The Capital account of the Balance of Payments includes transactions like
a. Borrowings and landings to and from abroad in foreign exchange
c. Investments to and from abroad
b.Changes reserves
. All of the above

105)Trade Deficit occurs when

Export of goods is less than imports of goods
b. Export of goods is more than imports of goods
c. Export of services is less than imports of services
d. Export of services is more than imports of services

106) When payments offoreign exchange are more than receipts, then the Balance of Payments is

a. Surplus bDeficit c. Balanced d. Zero

107) The measures taken to improve the negative Balance of Payments include
a. Import substitution b. Exchange control c. Currency devaluation L Al of the above

108) Which of the following isnot a non-monetary measure to correct the disequilibrium in BOP?
a. Export promotion Tariff c. Import quotas d. Devaluation

109) Reducing publicexpenditure to correct BOP disequilibrium is a. measure.

a. Fiscal
bMonetary c. Special d. Commercial

110)Expenditure switching policy is also known as

Devaluation b. Revaluation C. Appreciation d. Depreciation

111) The tendency of a nations trade balance to deteriorate before it improves following a
devaluation iscalled..
a. S curve effect curve effect c. IS curve effect d. LM curve effect
 12) Devalation results in..
Impetiate Inerease in Domestic Price
a.
b. Cheaper imports
Cheaper exports d. Costly Exports

13) Depreciation of curreney takes place through.

a. CGovernment b. Central bank c. IMF .
...
Market forces

114) Deflation through expenditure adjusting measure....

a. Atracts foreign capital b. Increasce imports
Tnerease exports d. Increase prices of domestic goods
15) Expenditure adjusting policy refe
a.
Expenditure switching policy .Expenditure reducing policy
c. Expansionary Policy d. Income Policy

16) The Mundell-Fleming framework is relevant for Europe. Which reason does not support
this argument?
a. Non-Eurozone countries have different policy options.
b. Most European countries are certainly open and rather smal.
c. The Monetary Union provides an extreme case of fixed-exchange rates.
nflation was brought to a low level.

117) In the Mundell-Fleming model with fixed exchange rates, attempts by the central bank to
decrease the money supply:
a. must be abandoned in order to maintain the fixed exchange rate.
b. lead to a higher equilibrium level of income.
lead to a lower equilibrium level of income.
d. must be offset by expansionary fiscal policy.
118)The J-curve effect refers to the observation that?
. the trade balance usually gets worse before it improves after a currency depreciation
b. GDP usually decreases before it increases after a currency depreciation
c. the trade balance usually gets better before it gets worse aftera currency appreciation
d. GDP usually decreases before it increases after a currency appreciation
19) Devolution of Currency is more beneficial if prices of .
a. import remains constants b. Domestic Goods remains constant
LsPxports becomes cheaper to Jmfo6t d. Importers export rise proportionately

120 is a direct measure to correct BOP disequilibrium.

a . Tariffs b. Devaluation ofexchange rate c. Increase in ROI d. Exchange control