Practice Introduction to macro economics - indian economy mcq Online Quiz (set-2) For All Competitive Exams

In economics, the backward bending supply curve is related to labour.

Also known as the backwards-bending supply curve of labour, This curve models a situation where workers choose to substitute leisure time for work time, i.e. wages, thus reducing the pool of labour available.

It shows how the change in real wage rates affects the number of hours worked by employees.

British economist John Hicks said that National income is a collection of goods and services reduced to a common basis by being measured in terms of money. Hicks was one of the most important and influential economists of the twentieth century.

The most familiar of his many contributions in the field of economics were his statement of consumer demand theory in microeconomics, and the IS/LM model (1937), which summarized a Keynesian view of macroeconomics.

His book Value and Capital (1939) significantly extended general-equilibrium and value theory.

An indifference curve may be defined as the locus of points, each representing a different combination of two substitute goods, which yield the same utility or level of satisfaction to the consumer. Therefore, he is indifferent between any two combinations of goods when it comes to making a choice between them.

So if, for example, a consumer makes five combinations a, b, c, d and e of two substitute commodities, X and Y, all these combinations yield the same level of satisfaction indicated by U.

French economist Leon Walras put forward the General Equilibrium Theory in his pioneering 1874 work ‘Elements of Pure Economics.

The theory attempts to explain the functioning of economic markets as a whole, rather than as individual phenomena. It tried to show how and why all free markets tended toward equilibrium in the long run.

Investment multiplier is simply the multiplier effect of an injection of investment into an economy.

The multiplier effect refers to the idea that an initial spending rise can lead to an even greater increase in national income.

Insider trading is the trading of a public company’s stock or other securities by individuals with access to non-public information about the company. It is related to share markets.

Insider trading is an unfair practice, wherein the other stockholders are at a great disadvantage due to the lack of important insider nonpublic information.

The matrix method is a structural analysis method used as a fundamental principle in many applications in civil engineering. The method is carried out, using either a stiffness matrix or a flexibility matrix.

Primarily there are three methods of measuring national income. The methods are product method, income method and expenditure method.

The primary sector of the economy is the sector of an economy making direct use of natural resources. This includes agriculture, forestry, fishing, mining, and extraction of oil and gas.

The price mechanism is an economic term that refers to the manner in which the prices of commodities affect the demand and supply of goods and services.

It is essentially a feature of market-driven or capitalist economic systems. It is based on the principle that only by allowing prices to move freely will the supply of any given commodity match demand.

Saving function is a mathematical relation between saving and income by the household sector.

This function captures the saving-income relation, the flip side of the consumption-income relation that forms one of the key building blocks for Keynesian economics.

The gross national product (GNP) measures the welfare of a nation’s economy through the aggregate of products and services produced in that nation.

Although GNP is a proficient measurement of the magnitude of the economy, many economists, environmentalists and citizens have been arguing the validity of the GNP in respect to measuring welfare.

They are calling for a green national product that would indicate if activities benefit or harm the economy and well-being. This new national product would differ from the traditional GNP by addressing both the sustainability and well-being of the planet and its inhabitants.

Octroi is a local tax that is collected by the state government on those goods that have been bought into the city/state for the purpose of personal use and sale.

The charges on the items are generally levied after on the weight, value and a total number of goods. It is levied on certain articles, such as foodstuffs, on their entry into a city.

Services provided by housewives can be categorized as non-economic services and thus cannot be accounted in national income which is the sum total of all the goods and services produced in a country, in a particular period of time.

1. The processing of agricultural products;
2. The production of grain by threshing;
3. The production of flour by milling;
4. The curing of skins and the production of leather;
5. The production and preservation of meat and fish products; 
6. The preservation of fruit by drying, bottling, etc.;
7. The production of dairy products such as butter or cheese;
8. The production of beer, wine or spirits; the production of baskets and mats; etc,

comes under processing of primary commodities for own consumption.

For the private corporate sector, retained profits adjusted for non-operating surplus/deficit is considered as its Net Saving.

Retained profits are those which are ploughed back into business after making commitments to depreciation provision for various fixed assets, debts, government and to share-holders.

Full employment refers to a situation in which every able-bodied person who is willing to work at the prevailing rate of wages is, in fact, employed.

It implies an absence of involuntary unemployment which occurs when those who are willing to work at the going wage rate do not get work.

Barter is a system of exchange where goods or services are directly exchanged for other goods or services without using a medium of exchange, such as money.

Barter, as a replacement for money as the method of exchange, is used in times of monetary crisis, such as when the currency may be either unstable or simply unavailable for conducting commerce.

Market Equilibrium is determined when the quantity demanded of a commodity becomes equal to the quantity supplied.

The price determined corresponding to market equilibrium is known as equilibrium price and the corresponding quantity is known as equilibrium quantity.

The price of a commodity is always determined by the forces of demand and supply in the market.

The price at which the amount demanded and the amount supplied are equal is known as ‘equilibrium price.’

The equilibrium price definitely increases when there is an increase in demand combined with a decrease in supply.

Demand-pull inflation is asserted to arise when aggregate demand in an economy outpaces aggregate supply. It involves inflation rising as real gross domestic product rises and unemployment falls, as the economy moves along the Phillips curve. This is commonly described as “too much money chasing too few goods.”