Competitive Exams: Economics MCQs (Practice-Test 75 of 122)

  1. Between two periods, in a closed economy, the savings propensity triples while the level of investment remains unchanged. As a result of this, which one of the following is correct?

    1. Savings triple

    2. National Income triples

    3. National Income remains unchanged

    4. Savings remain unchanged

  2. If money supply rises, then in the IS-LM framework which one of the following statements is correct?

    1. LM curve shifts to the right

    2. IS curve shifts to the right

    3. IS and LM curves both shift to the right

    4. LM curve does not undergo any change

  3. Reserve Bank of India calculates four components of money supply, M1, M2, M3, M4. Which one of the following statements is correct?

    1. M1 = currency with public + demand deposits with banks

    2. M2 = M1 + post office savings deposit

    3. M3 = M1 + M2

    4. M4 = M3 + total post office deposits

  4. Which one of the following factors does not influence velocity of circulation of money?

    1. Quantity of money

    2. Selling costs of business firms

    3. Credit facilities

    4. Business conditions

  5. Slutsky's decomposition of price effect is not possible without a prior knowledge of which one of the following?

    1. Income-elasticity of demand

    2. Price elasticity of demand

    3. Substitution-elasticity

    4. Cross-elasticity of demand

  6. Which one of the following statements is correct? In India, estimates of National Income are based on:

    1. net income method only

    2. net output method only

    3. net income, net output and net expenditure methods

    4. net expenditure method only

  7. Consider the following statements:

    1. Whenever a bank grants a loan, it creates a deposit or a liability against itself.

    2. Deposits of the bank circulate as money, the creation of such deposits lead to a net increase in the money stock.

    3. Whenever a bank grants a loan, it creates a loan.

    Which of the statement (s) given above is/are correct?

    1. 1 only

    2. 2 and 3

    3. 3 only

    4. 1 and 2

  8. Which one of the following statements is correct? The money multiplier in an economy increases with

    1. improvement in banking habit of the population

    2. increase in statutory liquidity ratio

    3. increase in the case reserve ratio

    4. increase in the population of the country

  9. Match List-I (Activity of bank) with List-II (Function performed) and select the correct answer using the codes given below the lists

    List-I (Activity of bank) List-II (Function performed)
    1. Bank of Issue

    2. Custodian of foreign balances of the country

    3. Lender of last resort

    4. Controller of credit

    1. It is the provision of extra liquidity to an illiquid but presumably solvent bank by the central bank

    2. Government delegates the right to print currency notes

    3. It maintains both gold and foreign currencies as reserves against note issue

    4. It controls credit operation of commercial banks

    • A
    • B
    • C
    • D
      • 1
      • 3
      • 2
      • 4
      • 2
      • 4
      • 1
      • 3
      • 1
      • 4
      • 2
      • 3
      • 2
      • 3
      • 1
      • 4
  10. How can the inflationary gap at full employment be wiped out?

    1. By rise in voluntary saving of the community.

    2. By imposition of tax to mop up the surplus.

    3. By increasing output to absorb excess demand.

    4. Through increase in money supply.

    Select the correct answer using the codes given below:

    1. 1 only

    2. 1, 2 and 3

    3. 2, 3 and 4

    4. 1 and 2

  11. In which one of the following sequences the change in quantity of money leads to change in price level in the Keynesian models?

    1. Change in quantity of money-change in investment-change in employment and output-change in rate of interestchange in price level

    2. Change in quantity of money-change in employment and output-change in investment-change in rate of interestchange in price level

    3. Change in quantity of money-change in investment-change in rate of interest-change in employment and output-change in price level

    4. Change in quantity of money-change in rate of interest-change in investment-change in employment and output-change in price level

  12. 39. Match List-I (Type of Inflation) with List-II (Characteristic) and select the correct answer using the codes given below the lists

    List-I (Type of inflation) List-II (Characteristic)
    1. Demand-pull Inflation

    2. Cost-push Inflation

    3. Suppressed Inflation

    4. Creeping Inflation

    1. Initially price rises

    2. Price-rise controlled by rationing and other means

    3. Inflation in which prices increase as a result of increased production costs, as labour and raw materials, even when demand remains the same

    4. Inflation in which rising demand results in a rise in prices

    5. Fall in price of raw materials

    • A
    • B
    • C
    • D
      • 4
      • 1
      • 2
      • 5
      • 2
      • 3
      • 4
      • 1
      • 4
      • 3
      • 2
      • 1
      • 2
      • 1
      • 4
      • 5
  13. Match List-I (Nature of price change) with List-II (Linked phenomenon) and select the correct answer using the codes given below the lists

    List-I (Nature of price change) List-II (Linked phenomenon)
    1. Relation between a monetary and a real variable

    2. Price rise at full employment

    3. Reflation

    4. Stagflation

    1. Inflation deliberately undertaken to relieve a depression

    2. Relationship between money wage increase and level of unemployment

    3. Rise in prices with little change in output

    4. Continuous inflation

    • A
    • B
    • C
    • D
      • 3
      • 4
      • 1
      • 2
      • 2
      • 1
      • 4
      • 3
      • 3
      • 1
      • 4
      • 2
      • 2
      • 4
      • 1
      • 3
  14. Match List-I (Economic function) with List-II (Used for) and select the correct answer using the codes given below the lists

    List-I (Economic function) List-II (Used for)
    1. Allocation function

    2. Distribution function

    3. Stabilisation function

    4. Management of public debt

    1. Manage government borrowing

    2. Control of economic fluctuation

    3. Efficient public distribution

    4. Efficient provision of government fund for various uses

    5. To reduce inequality in the Society

    • A
    • B
    • C
    • D
      • 4
      • 1
      • 2
      • 5
      • 2
      • 5
      • 3
      • 1
      • 4
      • 5
      • 2
      • 1
      • 2
      • 1
      • 3
      • 5
  15. What is the excess burden of a Lumpsum tax?

    1. 1.0

    2. 0.0

    3. 2.0

    4. >5