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

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.

Answer: (d)

Joint sector industries are owned jointly by the government and private individuals who have contributed to the capital.

In the joint sector, both the public sector and private sector join hands to establish new enterprises. The joint sector is an extension of the concept of a mixed economy.

Answer: (a)

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.

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: (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: (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:

1. GDP,
2. Literacy,
3. Access to health care, and
4. Assessments of environmental quality.