# MPSET: Economics MCQs (Practice-Test 22 of 122)

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In the Ricardian theory of distribution, agricultural sector being subject to diminishing returns, as production, increase

Rent share (R/q) will remain constant, wage-share (W/Q) will rise and profitshare (P/q) will also rise.

R/Q wil rise, W/Q will rise and P/Q will fall

R/Q will fall, W/Q will fall and P/q will rise

R/Q will rise, W/q will fall and P/Q will fall.

The distribution of two commodities between two individuals is said to be Pareto optimal, when

any change in the distribution makes the two individuals better off than before

any change that makes one individual better off must make, the other worse off:

any change in the economic organization increases the welfare of some and reduces the welfare of other's and those who gain are able to compensate the losers.

the marginal social products are equal in all industries and production of wealth is maximized.

The GNP gap is the gap between

GNP and NNP

GNP and depreciation

GNP an GDP

potential and actual GNP

In an economy where people always consume half of any additional income and save the other half, an additional govt. Expenditure of Rs. 20, 000 can create an additional income of

Rs. 10, 000

Rs. 40, 000

Zero

Rs. 20, 000

When a linear consumption function undergoes a parallel shift downwards, the investment multiplier will

fall

rise marginally

remain as before

become double

If the consumption function passes through the origin, then APC = MPC it must be

linear without any intercept

non-linear without any intercept

linear with a negative intercept on the income axis

linear with a positive intercept on the consumption axis

Consider the following:

Investment demand

Aggregate demand

Rate of interest

money supply

The correct sequence for the impact of change in money supply as visualized by

Keynes is

1, 2, 3, 4

2, 1, 3, 4

4, 3, 2, 1

4, 3, 1, 2

If the rate of interest is greater than zero, it follows that

present goods an future goods always have an equal value

present goods are worth less than future goods

present consumption is worth more than future consumption.

present consumption is worth less than future consumption.

Given the consumption function: C = 205 + 0.9 Y what is the multiplier?

0.09

10.0

0.9

9.00

The Phillip's curve is the schedule showing the relationship between

aggregate supply and demand

total savings and investment

the rate of unemployment and rate of inflation

demand for the supply of loan-able funds

suppose that the money supply in an economy is constant rate, then life the level of income increases, thee will be

a decrease in the quantity of money demand and an increase in the rate o interest.

an increase in the quantity of money demanded an increase in the rate of interest.

a decrease in the quantity of money demanded and a decrease in the rate of interest.

an increase in the quantity of money demanded and decrease in the rate of interest.

For a production function q = 1.45, L = 0.45, K = 0.55, the output elasticity for labour is

1.45

0.45

0.45 + 0.55

0.55

Which one of the following is the most important limitation of the per capita GNP as the measure of welfare?

The increase in the per capita GNP may not always raise the real standard of living of the masses.

this measure does not take into account the increase in the population.

This measure does not take into account the employment aspect.

This measure does not take into consideration government expenditures

Which one of the following pairs of countries is part of G = 7?

India and Pakistan

Russia and China

USA and UK

Australia and Hungary

Which of the following was/were assume in the neo-dissocial growth as propounded be Shows

A variable savings rate

a constant population growth rate.

a variable capital-output ratio.

Select the correct answer using the codes given below:

1 alone

1 and 2

3 alone

2 and 3