Competitive Exams: Economics MCQs (Practice-Test 28 of 122)

  1. A disequilibrium in the balance of payments, owing to an excess of imports can be counteracted by

    1. a reduction in the interest rate

    2. and increase in the value of the monetary unit and other measures designed to strengthen the financial structure

    3. a rise in the interest rate along with other deflationary monetary and fiscal measures.

    4. a rise in the government expenditures along with other expansionary monetary and fiscal measure

  2. In the given diagram, the curve shows the demanded for money in a liquid form: Which of the following would cause the curve to move to the right?

    1. People's belief that prices are very low now and will rise soon.

    2. businessmen's belief that sellers might be pression for an early settlement of outstanding debts.

    3. People's belief that the price of bonds is high in relation to their idea of the normal price.

    Select the correct answer

    1. 1, 2 and 3

    2. 1 and 2

    3. 2 and 3

    4. 1 and 3

  3. Which of the following are relevant to the explanation of secular deterioration of terms of trade of developing countries as presented by Raul Prebisch?

    1. Low income elasticity of demand for primary products.

    2. Structure of markets for manufactured goods is more monopolistic than that for primary goods.

    3. Increase in productivity resulting from technological progress has not been reflected in lower prices of industrial goods.

    4. quality of manufactured goods has risen substantially.

    Select the correct answer using the codes given below:

    Select the correct answer using the codes given below:

    Codes:

    1. 2 and 3 and 4

    2. 1, 3 and 4

    3. 1, 2 and 4

    4. 1, 2 and 3

  4. Match list I with list II and select the correct answer using the codes given below the lists:

    List-I List-II
    1. Multiplier

    2. Liquidity Trap

    3. neutrality of Money

    4. Liquidity Spectrum

    1. Don Patinkin

    2. R. R. Kahn

    3. J. M. Keynes

    4. James Tobin

    • A
    • B
    • C
    • D
      • 1
      • 3
      • 2
      • 4
      • 2
      • 3
      • 4
      • 1
      • 2
      • 3
      • 1
      • 4
      • 3
      • 2
      • 1
      • 4
  5. Friedman's aggregate demand for money apart from income (Y) depends on which of the following factors?

    1. Bond yields on market bond interest rate

    2. Equity yields or market interest rate of equities

    3. Utility determining variables which influence taste and preference of the consumers.

    4. demand for luxury goods

    Select the correct answer using the codes given below:

    Codes:

    1. 1, 3 and 4

    2. 2, 3 and 4

    3. 1, 2 and 4

    4. 1, 2 and 3

  6. If the authorities decided to stabilise the interest rate then as LM0 shifts to LM1 in the figure given below, the income will remain

    1. at Y1

    2. at Y0

    3. beyond Y0

    4. at the middle of Y1 and Y0

  7. If there is an exogenious increase in money supply, then

    1. the demand for transaction balances will rise

    2. there will be more money available for speculative purposes

    3. there will e not effect on precautionary balance

    4. the price of bonds will fall as people attempt to sells bonds.

  8. Forced savings refer to

    1. taxes on individual income and wealth

    2. compulsory deposits imposed on income tax payers

    3. provident fund contributions of private sector employees

    4. reduction of fund contributions of private sector employees

  9. The basic construction of price index number involves which of the following steps? LM0 Y1 Y0 Income Rate of Interest r1 r1 IS0 LM1 LM0

    1. Selection of a base year and price of a group of commodities in that year

    2. Prices of a group of commodities for the given year that are to be compared

    3. Change in the price of the given year are shown as percentage variation for the base year

    4. Index number of price of a given year is denoted as 100

    Select the correct answer using the codes given below:

    Codes:

    1. 1, 2 and 3

    2. 1, 2, 3, and 4

    3. 1, 3 and 4

    4. 1, 2, and 3

  10. Which of the following would reduce the credit creation capacity of a commercial bank?

    1. Time and Demand deposits

    2. Loans

    3. Deposits with the Central Bank

    4. ash-in-hand

    Select the correct answer using the codes given below:

    Codes:

    1. 1 and 2

    2. 2 and 3

    3. 3 and 4

    4. 1 and 4

  11. High-powered money is the sum of

    1. loans given to private people and the government bonds held by the banks

    2. demand deposits with banks and cash held by the public

    3. demand deposits with banks and cash held by the public

    4. cash held by the banks in their vaults and their deposits with the Central

    Bank

  12. The credit multiplier coefficient is

    1. the reciprocal of cash reserve ratio

    2. equal to cash reserve ratio

    3. a ratio of excess reserves to primary deposits

    4. a ratio of interest rate of primary deposits

  13. Consider the following statements: If the Central Bank sells government securities in the open market, then it will lead to

    1. an increase in money supply

    2. a rise in the cost of credit

    3. a decrease in money supply

    4. a decrease in the cost of credit

    Of these statements

    1. 1 and 2 are correct

    2. 3 and 4 are correct

    3. 1 and 4 are correct

  14. Which one of the following will tend to increase the reserves of commercial banks?

    1. An increase in the Bank rate

    2. The sale of government securities in the open market by the Reserve bank of India

    3. The purchase of government securities in the open market by the reserve Bank of India

    4. A cut in the Bank Rate

  15. Which of the following tools are available to the Central Bank for the control of money supply?

    1. Variation of the discount rate

    2. Clearing house operations

    3. changes in margin requirements

    Select the Correct answer using the codes given below:

    1. 1, 2 and 3

    2. 1 and 3

    3. 2 and 3

    4. 1 and 2