Practice Quiz set 1 - indian economy mcq Online Quiz (set-1) For All Competitive Exams

Q-1)   A hammer in the hands of a house-wife is a ______ good.

(a)

(b)

(c)

(d)

Explanation:

Good is any tangible item, whether produced or found naturally and which is available for exchange. A free good is a good that is so abundant in supply that it has no opportunity cost, for example, air.

Intermediary good is a firm’s product that is used as an input into the production process of either the same firm or another.


Q-2)   Tax on inheritance is called

(a)

(b)

(c)

(d)

Explanation:

Estate duty is a tax on the total market value of a person’s assets at the date of his or her death. The deceased person’s assets, as a whole, are called an estate. Inheritance tax is levied on assets that legal heirs inherit, while estate duty is applicable on the assets of those who are dead.


Q-3)   Malthusian theory is associated with which of the following ?

(a)

(b)

(c)

(d)

Explanation:

The most well-known theory of population is the Malthusian theory. It explains the relationship between the growth in food supply and in population. It states that population increases faster than food supply and if unchecked leads to vice or misery.

Thomas Robert Malthus enunciated his views about population in his famous book, Essay on the Principle of Population as it Affects the Future Improvement of Society, published in 1798.


Q-4)   Which curve shows the inverse relationship between unemployment and inflation rates ?

(a)

(b)

(c)

(d)

Explanation:

The Phillips curve shows the inverse relationship between inflation and unemployment: as unemployment decreases, inflation increases.

The relationship, however, is not linear. Graphically, the short-run Phillips curve traces an L-shape when the unemployment rate is on the x-axis and the inflation rate is on the y-axis.


Q-5)   ‘Supply creates its own demand’. This statement is related to

(a)

(b)

(c)

(d)

Explanation:

Jean Baptiste Say was a French economist. He is well known for Say’s Law (or Say’s Law of Markets), often summarized as:

  • “Aggregate supply creates its own aggregate demand”;
  • “Supply creates its own demand”, or “Supply constitutes its own demand”.

He argued that the production and sale of goods in an economy automatically produce an income for the producers of the same value, which would then be reinjected into the economy and create enough demand to buy the goods.

Thus production is determined by the supply of goods rather than demand.


Q-6)   The term ‘Macro Economics’ was used by __________ .

(a)

(b)

(c)

(d)

Explanation:

Ragnar Frisch coined the widely-used term pair macroeconomics/microeconomics in 1933. He was a Norwegian economist and the co-recipient of the first Nobel Memorial Prize in Economic Sciences in 1969. He is known for having founded the discipline of econometrics.


Q-7)   The book which is at the centrepiece of the study of Macro - Economics was written by

(a)

(b)

(c)

(d)

Explanation:

J.M. Keynes’s magnum opus, ‘The General Theory of Employment, Interest and Money’ is often viewed as the foundation of modern macroeconomics.

Macroeconomics deals with the performance, structure, behaviour, and decision-making of an economy as a whole, rather than individual markets.


Q-8)   ‘Hire and Fire’ is the policy of

(a)

(b)

(c)

(d)

Explanation:

In capitalism, people may sell or lend their property, and other people may buy or borrow them.

In many countries with mixed economies (part capitalism and part socialism), there are laws about what we can buy or sell, or what prices we can charge, or whom we can hire or fire.


Q-9)   A ‘Transfer Income’ is an

(a)

(b)

(c)

(d)

Explanation:

Income which is not produced by any production process is called Transfer Income.


Q-10)   The functional relationship between income and consumption expenditure is explained by

(a)

(b)

(c)

(d)

Explanation:

Keynes defined Psychological Law of Consumption in terms of, “The fundamental psychological law, upon which we are entitled to depend with great confidence both a priori from our knowledge of human nature and from the detailed facts of experience, is that men are disposed of, as a rule, and on the average, to increase their consumption as their income increases but not by as much as the increase in the income.”