# Competitive Exams: Economics MCQs (Practice-Test 45 of 122)

1. Income inequalities in a country can be measured by

1. Lorenz curve

2. Gini coefficient

3. proportion of income received by different size groups

4. all of the above

2. Market failure may NOT arise in the case of

1. increasing returns to scale

2. public goods

3. the consumption externalities

4. income inequalities

3. A given economic state is Pareto-optimal if a policy-change can

1. make everyone better off

2. make someone better off and someone worse off

3. make someone better off and all others worse off

4. not make anyone better of without making someone worse off:

4. Which one of the following represents the savings the private corporate sector?

1. Total profits of a company

2. Undistributed profits

3. excess of income over expenditure

4. dividends paid to shareholders

5. An economy's Net national Income is $20, 000 million indirect taxes are$2, 000 million, subsidies are $1, 000 million and its population 150 million. What will be the national Income at factor cost? 1.$21, 000 million

2. $19, 000 million 3.$23, 000 million

4. \$22, 000 million

6. The aggregate output is determined by the production function Q = Ka L1 − a, where a = 0.40, K is capital and L is labour. Suppose, K and L are growing respectively at the rate of 10% and 20%, the growthrate of aggregate output will equal

1. 12%

2. 15%

3. 16%

4. 18%

7. Given: C = 50 0.5 Y I = 80 G = 100. The equilibrium level of income is

1. 4600

2. 560

3. 230

4. 360

8. Given the total investment expenditure, an increase in the propensity to save will lead to a

1. rise in income

2. rise in the rate of interest fall in income

3. fall in savings

4. fall in income

9. If the investment multiplier is 4, the relevant consumption function is given by

1. C = 28 + 0.75 y

2. C = -28 + 0.78y

3. C = 28 + 0.70 y

4. C = 28 + 0.40 y

10. consider the following statements

1. bond prices and interest rates vary directly.

2. supply creates its own demand is known as Walras'law

3. the rate that equalizes the discounted cash flow expected from an investment in a capital asset to its supply price is the marginal efficiency of investment.

4. disposable income varies inversely with a tax on personal income

Which of the above statements are correct?

1. 3 and 4

2. 1 and 3

3. 2 and 4

4. 1, 2 and 3

11. Which of the following is consistent with the cross-sectional consumption function?

1. APC = MPC

2. MPC = 0

3. APC > MPC

4. APC = 0

12. The speculative demand for money depends on

1. interest rate

2. income

3. profit

4. output

13. An entrepreneurs plans to acquire a capital asset, which is expected to yield Rs. 660 at the end of the first year and Rs. 1, 452 at the end of the second year after which it will become useless. The discount rate is 0.10 what is its equilibrium supply price?

1. 2, 112

2. 1, 200

3. 1, 800

4. 2, 000

14. Consider the following statements:

1. when prices fall, with no change in costs, marginal efficiency of capital falls.

2. when prices fall, with no change in costs, marginal efficiency of capital increases.

3. marginal efficiency of capital falls with increased output of capital goods.

4. marginal efficiency of capital rises with increased investment because of the increased output of capital goods.

Which of the above statement are correct?

1. 1 and 2

2. 1 and 3

3. 1 and 4

4. 2 and 3

15. Consider the following statements: Classical economists believed that unemployment in an economy would persist because of

1. Labour-saving technical progress.

2. Deficiency in demand for goods.

3. Government intervention in the free working of the economy

Which of the above statements is/are correct?

1. 1, 2 and 3

2. 1 and 2

3. 2 and 3

4. 3 alone