introduction to macro economics section 1 MCQ Questions & Answers Detailed Explanation
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The following question based on Introduction to Macro Economics topic of indian economy mcq
(a) Subsistence expenditure
(b) Per capita production
(c) Subsistence level
(d) Per capita income
The correct answers to the above question in:
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.
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Read more introduction to macro economics Based Indian Economy Questions and Answers
Question : 1
Speculative demand for cash is determined by
a) the general price level
b) the market conditions
c) the level of income
d) The rate of interest
Answer »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).
Question : 2
Say’s Law of Market holds that
a) demand creates its own supply
b) supply is greater than demand
c) supply creates its own demand
d) supply is not equal to demand
Answer »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.
Question : 3
A hammer in the hands of a house-wife is a ______ good.
a) free
b) intermediary
c) capital
d) consumer
Answer »Answer: (b)
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.
Question : 4
An increase in per capital income is not an indication of an increase in the economic welfare of the people
a) When it is the result of an increase in the production of industrial goods
b) When such increase is the result of increased production of intoxicants
c) When such increase is the result of an increase in agricultural production
d) When such increase is the result of an increased production of comforts
Answer »Answer: (b)
An increase in per capita income due to increased production of intoxicants cannot be taken as economic welfare as it defeats the very notion of welfare.
Economic welfare refers to the level of prosperity and living standards of either an individual or a group of persons.
Factors used to measure the economic welfare of a population, include:
- GDP,
- Literacy,
- Access to health care, and
- Assessments of environmental quality.
Question : 5
Which of the following concepts are most closely associated with J.M. Keynes ?
a) Indifference curve analysis
b) Marginal efficiency of captial
c) Marginal utility theory
d) Control of money supply
Answer »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
Question : 6
One of the following is ‘Labour’ in Economics.
a) Reading a book as a hobby
b) A Mother teaching her own son
c) A Painter working for his own pleasure
d) A Musician performing for a benefit fund
Answer »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.
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