introduction to macro economics section 1 MCQ Questions & Answers Detailed Explanation

Answer: (d)

Per capita income or average income or income per person is a measure of mean income within an economic aggregate, such as a country or city.

It is calculated by taking a measure of all sources of income in the aggregate (such as GDP or Gross National Income) and dividing it by the total population.

Answer: (d)

Speculative demand is the demand for financial assets, such as securities, money or foreign currency that is not dictated by real transactions such as trade, or financing.

The assets demand for money is inversely related to the market interest rate. This is because, at a lower interest rate, more people will expect a rise in interest rate (or a fall in bond prices).

Answer: (c)

Say’s law, or the law of the market is an economic principle of classical economics named after the French businessman and economist Jean-Baptiste Say (1767–1832), who stated that “supply creates its own demand”. “Supply creates its own demand” is the formulation of Say’s law by John Maynard Keynes.

The rejection of this doctrine is a central component of The General Theory of Employment, Interest and Money (1936) and a central tenet of Keynesian economics.

Answer: (b)

The marginal efficiency of capital (MEC) is that rate of discount which would equate the price of a fixed capital asset with its present discounted value of expected income.

The term “marginal efficiency of capital” was introduced by John Maynard Keynes in his General Theory, and defined as “the rate of discount which would make the present value of the series of annuities given by the returns expected from the capital asset during its life just equal its supply price

Answer: (d)

Labour includes both physical and mental work undertaken for some monetary reward. In this way, workers working in factories, services of doctors, advocates, ministers, officers and teachers are all included in labour.

Any physical or mental work which is not undertaken for getting income, but simply to attain pleasure or happiness, is not labour.

Answer: (a)

The estimates of expenditure included in the Budget and required to be voted by Lok Sabha are in the form of Demands for Grants.

These Demands are arranged Ministry-wise and a separate Demand for each of the major services is presented. Each Demand contains first a statement of the total grant and then a statement of the detailed estimate divided into items.

A demand becomes a grant after it has been voted. The voting of demands for grants is the exclusive privilege of the Lok Sabha and not of Rajya Sabha.