Practice Quiz set 7 - indian economy mcq Online Quiz (set-1) For All Competitive Exams
Q-1) “Interest is a reward for parting with liquidity” is according to
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In macroeconomic theory, liquidity preference refers to the demand for money, considered as liquidity. The concept was first developed by John Maynard Keynes in his book The General Theory of Employment, Interest and Money (1936) to explain the determination of the interest rate by the supply and demand for money. The demand for money as an asset was theorized to depend on the interest foregone by not holding bonds.
Interest rates, he argues, cannot be a reward for saving as such because, if a person hoards his savings in cash, keeping it under his mattress say, he will receive no interest, although he has nevertheless refrained from consuming all his current income. Instead of a reward for saving, interest in the Keynesian analysis is a reward for parting with liquidity.
Q-2) Quasi rent is a_________ phenomenon.
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Quasi-rent is a term in economics that describes certain types of returns to firms. It differs from pure economic rent in that it is a temporary phenomenon. It can arise from the barriers to entry that potential competitors face in the short run, such as the granting of patents or other legal protections for intellectual property by governments.
Q-3) A situation of large number of firms producing similar goods is termed as :
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The fundamental condition of perfect competition is that there must be a large number of sellers or firms. Homogeneous Commodity is the second fundamental condition of a perfect market. The products of all firms in the industry are homogeneous and identical.
Q-4) Rent is a factor payment paid to
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Factor payments refer to payments made to scarce resources, or the factors of production (labour, capital, land, and entrepreneurship), in return for productive services.
Wages are paid for the services of labour; interest is the payment for the services of capital, rent is the services for land, and profit is the factor payment to entrepreneurship.
Q-5) When there is a change in demand leading to a shift of the Demand Curve to the right, at the same price as before, the quantity demanded will
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In economics, the demand curve is the graph depicting the relationship between the price of a certain commodity and the amount of it that consumers are willing and able to purchase at that given price. The shift of a demand curve takes place when there is a change in any non-price determinant of demand, resulting in a new demand curve.
There is movement along a demand curve when a change in price causes the quantity demanded to change. When there is a change in an influencing factor other than price, there may be a shift in the demand curve to the left or to the right, as the quantity demanded increases or decreases at a given price.
For example, if there is a positive news report about the product, the quantity demanded at each price may increase, as demonstrated by the demand curve shifting to the right.
Q-6) A demand curve, which is parallel to the horizontal axis, showing quantity, has the price elasticity equal to
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Price elasticity of demand measures consumer response to price changes. If consumers are relatively sensitive to price changes, demand is elastic; if they are relatively unresponsive to price changes, demand is inelastic.
Perfectly inelastic demand is graphed as a line parallel to the vertical axis; perfectly elastic demand is shown by a line above and parallels to the horizontal axis.
When the demand for a commodity is perfectly elastic, the quantity of demand keeps changing with the price. So the coefficient of price elasticity of demand is infinity.
Q-7) Buyers and Sellers will have perfect knowledge of market conditions under
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Complete market information is one of the main features of Perfect Competition. This condition implies close contact between buyers and sellers.
Both of them possess complete knowledge about the prices at which goods are being bought and sold and the prices at which others are prepared to buy or sell.
Q-8) Who developed the innovations theory of profit ?
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Joseph Alois Schumpeter (1883-1950) was an Austrian-born American economist and social scientist. He did important early analyses of business cycles and economic growth.
He pinpointed technical innovation as the chief contributor to growth. In Capitatism, Socialism and Democracy (1942), he argued that capitalism would naturally evolve into socialism through its very success.
Q-9) An exceptional demand curve is one that moves
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A demand curve that violates the law of demand is termed an exceptional demand curve. If a household expects the price of a commodity to increase, it may start purchasing a greater amount of the commodity even at the presently increased price. Similarly, if the household expects the price of the commodity to decrease, it may postpone its purchases.
Thus, the law of demand is violated in such cases. In this case, the demand curve does not slope down from left to right; instead, it presents a backward slope from the top right to down left. This curve is known as an exceptional demand curve.
Q-10) The law of diminishing returns applies to
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The classical economists were of the opinion that – the law of diminishing returns applies only to agriculture and to some extractive industries, such as mining, fisheries urban land, etc. However, it is applicable to other sectors such as manufacturing as well.