# Competitive Exams: Economics MCQs (Practice_Test 50 of 122)

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- Given the demand function q = 20/P, where p = price of product and q = quantity of product, the elasticity of demand at p 10 would be
- 0
- -1
- -2
- -

- Match List I (marginal Rate of substitution MRSxy) with List II (The Shape of Indifference Curve IC) and select the correct answer:
List-I List-II - MRSXY = Zero
- MRSXY = Constant but non-zero
- Decreasing MRSXY
- Increasing MRSXY

- Right-angled
- Straight line with negative slope
- IC is concave to the origin
- IC is convex to the origin

- A
- B
- C
- D

- 1
- 2
- 4
- 3

- 3
- 4
- 2
- 1

- 1
- 4
- 2
- 3

- 3
- 2
- 4
- 1

- In a fixed exchange rate system, automatic adjustments of balance of payments are brought about by variation in Quantities demanded X d Y Price P1 P2 O d
- fiscal policy interventions
- trade policy interventions
- internal prices
- external prices

- Which one of the following assumptions is NOT correct for the revealed preference analysis?
- Consistency
- Transitivity
- Rationality
- Weak ordering

- A consumer spend all his income of ₹ 500 equally goods X and y by purchasing 50 unit X@ ₹ 5 per unit and 25 units of Y at the rate of ₹ 10 per unit. Because of recession, prices of X and Y fall by 50 % and his employer reduces his salary from ₹ 500 to ₹ 250. In this situation he is expected to
- increase the purchase of both X and Y as they are now cheaper
- decrease the purchase of both x and Y as his income goes down
- leave the purchase basket unaltered at 50 X and 25 of Y
- alter his purchase in a uncertain way.

- Let I = 5 + 0.2 Y, s =-15 + 0.3 Y and G = 5 (where I = Investment, Y = Y = national Income, s = Savings and G = government Spending) . What is the equilibrium level of Y?
- 200
- 100
- 250
- 300

- Consider the following statements:
- Absolute Income Hypothesis is associated with Keynes
- S =-20 + 0.4y and C = 20 + 0.6y yield the same investment multiplier
- Investment multiplier rises whenever income tax is introduced in the system
- Bond price and interest rates are directly related

Which of the above statements is/are correct?

- 1 alone
- 2 and 3
- 3 and 4
- 1 and 2

- Given are the following informations about an economy: Consumption = ₹ 5,000 Gross Investment = ₹ 1,000 Govt. Purchases = ₹ 800 Exports = ₹ 600 Imports = ₹ 800 Depreciation = ₹ 250 What is the GNP at market prices?
- ₹ 7,100
- ₹ 6,850
- ₹ 6,600
- ₹ 6,350

- Consider the following statements relating to classical theory of employment:
- Classical theory is based on the assumption of full employment.
- Classical version of full employment is a situation where involuntary unemployment is present
- Classical version of full employment is consistent with seasonal unemployment and frictional unemployment
- Classical economists advocated wage cuts to reduce the unemployment level

Which of the above statement are correct?

- 1,2 and 3
- 2,3 and 4
- 1,3 and 4
- 1 and 2

- Which one of the following saving functions corresponds to the investment multiplier of 5?
- S =-28 + 0.25 Y
- S =-40 + 0.75 Y
- S =-60 + 0.20 Y
- s =-75 + 0.60 Y

- When investment is negatively related to the rate of interest, the equilibrium output in the goods market is
- unrelated to the rate of interest
- inversely related to the rate of interest
- positively related to the rate of interest
- indeterminate

- Consider the following statement denoting the relationship between marginal propensity to consume and value of multiplier:
- higher the marginal propensity to consume, higher is the multiplier
- higher the marginal propensity to consume lower is the multiplier
- when the marginal propensity to consume is one, multiplier takes the value of infinity

Which of the above statements is/are correct?

- 1 alone
- 2 and 3
- 1,2 and 3
- 1 and 3

- Consider the following statement
- In an economy where productive capacities are increasing, gross private domestic investment exceeds depreciation
- Interest on the public debt is not a part of national income but is included in personal income
- disinvestment occurs when inventories expand
- The purchase of new home is included in the GNP as a part of investment.

Which of the above statements are correct?

- 1 and 2
- 3 and 4
- 1,2 and 4
- 1,3 and 4

- An increase in fiscal spending leads to
- a shift of the Philips curve to the right
- a shift of the Philips curve to the left
- movement along the Phillips curve such that unemployment rises and inflation falls
- movement along the Phillips curve such that unemployment falls and inflation rises

- Consider the following statements:
- According to the accelerator model, investment demand is proportional to the change in GNP
- The real rate of interest is the nominal rate of interest plus the inflation rate
- the higher the real interest rate, the higher is the rental cost of capital
- Investment is a stock concept
- 2 and 3
- 1 and 2
- 1 and 3
- 1,2, 3 and 4