# Competitive Exams: Economics MCQs (Practice_Test 117 of 122)

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1. with the introduction of the money market, the balance, budget multiplier would be
1. unity
2. less than unity
3. more than unity
4. zero
2. According to classical theory, a 10 percent increase in money supply will
1. increase money wage rate by 10 percent, but have no effect on real wages
2. increase real wage rated by 10 percent
3. decrease real wave rates by 10 percent
4. increase both money wage rate and real wage rages by 10 percent.
3. The equation, 0.5Y + 50i − 240 = 0 (where Y denotes national income and i the real rate of interest) , is that of a/an
1. consumption function
2. investment function
3. IS function
4. LM function
4. an increase in the money supply results in
1. a change in the slope of the LM curve
2. rightward shift of the LM curve
3. no change in the LAM curve
4. leftward shift of the LM curve
5. According to Keynes, which one of the following is the basic causes of involuntary unemployment?
1. a general deficiency in the demand for goods and services
2. the reluctance of workers to move to other parts of the country where their is work.
3. The inability of change occupations because of lack of the necessary skills
4. Workers ′ ignorance of opportunities of employment in other occupations and districts
6. Speculative demand for money would increase if
1. prices of securities are expected to rise
2. prices of goods are expected to fall
3. the interest rate is expected to the constant
4. the interest rate is expected to rise
7. consider the following liquid assets:
1. Demand deposits with the banks
2. time deposits with the banks
3. saving deposit with the banks
4. Currency

The correct sequence of these assets in the decreasing order of liquidity is

1. 1,4, 3,2
2. 2,3, 4,1
3. 2,3, 1,4
4. 4,1, 3,2
8. The relationship between fisher՚s V and K in Cambridge equation of exchange is
1. V = 1/K
2. V = + k
3. V = 1 + k
4. V = 1 − K
9. Under the liquidity trap situation, the liquidity preference curve
1. is perfectly inelastic
2. is per erectly elastic
3. intersects the horizontal axis
4. intersects the vertical axis
10. The Bank Rate means the rate which the
1. commercial banks offer on savings deposits
2. commercial banks offer on current accounts deposits
3. commercial banks change on shortterm loans
4. Central Bank charges in rediscounting first-class bills exchange
11. consider the following items includes in a balance she
1. Demand Deposits
2. Borrowings from the other banks
3. Cash kept with other banks
4. Endorsement of bills of exchange

Which of these are shown in the liability column of the Balance Sheet of a commercial bank?

1. 1,2 and 3
2. 1,2 and 4
3. 1 and 3
4. 2 and 4
12. All other factors being held constant, the relationships between liquidity and profitability of a bank is that these two are
1. positively linearly related
2. positively non-linearly related
3. not related al all
4. inversely related
13. The incidence of a sales tax will be on the sellers when
1. the demand for the commodity is perfectly elastic
2. the demand for the commodity is perfectly inelastic
3. the demand curve is a rectangular hyperbola
4. the demand for the commodity is moderately elastic
14. Match List with List II and select the correct answer:
 List-I List-II Corporation TaxSales TaxHouse TaxWealth Tax State GovernmentMunicipal corporationGovernment of India
• A
• B
• C
• D
• 3
• 1
• 2
• 3
• 2
• 1
• 1
• 3
• 2
• 3
• 3
• 2
• 3
• 2
• 2
• 1
15. Consider the following statements: Devaluation results in a
1. rise in the domestic price of imports
2. rise in the domestic price of exports
3. rise in the domestic price of exports and imports
4. fall in the foreign price of exports

Which of the above statements are correct?

1. 1,2 and 3
2. 1 and 2
3. 2,3 and 4
4. 1 and 4

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