Competitive Exams: Economics MCQs (Practice-Test 99 of 122)

  1. Which one of the following is correct under perfect competition?

    1. AR curve is a straight line and parallel to X-axis

    2. AR curve is a straight line and parallel to Y-axis

    3. AR curve is a convex to origin

    4. AR curve is a concave to origin

  2. the effectiveness of monetary policy in a recession will be reduced if

    1. The level of borrowing is highly responsive to small changes in the level of interest rate

    2. The security prices start to go up as soon as the cheap money policy is initiated.

    3. Money holders prefer to retain money rather then buy securities at any lower rate.

    4. The ‘asset demand’ or ‘liquidity demand’ for money is very low

  3. The essential difference between money and non-money assets is that

    1. Money is a means of payments whereas non-money assets are stores of value

    2. Money is a measure of value whereas non-money assets are stores of value, money is a generally accepted means of payment.

    3. Money yields non-pecuniary income whereas non-money assets yield pecuniary income

  4. Which one of the following functions of money helps it to become a link between the present and the future?

    1. measure of value

    2. Store of value

    3. medium of exchange

    4. Transfer of value

  5. Which one of the following functions of money can be categorised as its contingent functions?

    1. To act as a medium of exchange

    2. To work as a measure of value

    3. To work as a standard of deferred payment

    4. To help in equalising the marginal utility and marginal productivity

  6. Friend man asserts that the Quantity. Theory of Money is basically a theory of

    1. the demand for money

    2. The price level

    3. Money income

    4. the value of money

  7. ‘V’ in MV = PT and ‘K’ in M = KT P are

    1. The same

    2. not related

    3. interdependent

    4. The reciprocals of each other

  8. Monopolistic exploitation of labour occurs when

    1. wage is less than marginal revenue product

    2. both wage and marginal revenue product are equal

    3. wage is more than the marginal revenue product

    4. Wage is equal to marginal physical product.

  9. Under the Keynesian Liquidity trap conditions, an increase in money supply will

    1. reduce the rate of interest

    2. both wage and marginal revenue product are equal

    3. wage is more than the marginal revenue product

    4. Wage is equal to marginal physical product.

  10. Under the Keynesian Liquidity trap conditions, an increase in money supply will

    1. deposit mobilization in India

    2. branch expansion in various parts of the world

    3. financing India's foreign trade

    4. lending to weaker sections in India

  11. Excess reserves of member banks equal

    1. a total reserves minus required reserves minus bank borrowing from the Central Bank.

    2. required reserves minus member bank borrowing at the Central Bank

    3. Total reserves minus free reserves

    4. total reserve minus required reserves

  12. Which one of the following statements correctly defines the Balance Sheet of a commercial bank?

    1. It is index of its financial position

    2. It is an account of its profit and loss

    3. It is a statement of the volume of business done by the bank

    4. It is a statement of the foreign exchange business of the bank

  13. The following is a list of banks other than the Central Bank. Which one of them can create money?

    1. Commercial banks

    2. Industrial development banks

    3. Agricultural banks

    4. Exchange banks

  14. Which one of the following is not a function of commercial banks?

    1. Advancing loans

    2. Accepting deposits

    3. Issuing notes

    4. Discounting bills of exchange

  15. During inflation, a family with an unchanged real disposable income and an unchanged stock of fixed-rupee financial assets

    1. is likely to increase its real consumption expenditures

    2. finds the real value of its financial assets rising

    3. is likely to reduce its real consumption expenditures

    4. is in no way affected by inflation.