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

Answer: (c)

Per capita income or average income or income per person is the 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.

It does not attempt to reflect the distribution of income or wealth. Per capita income is often used to measure a country’s standard of living.

However, it is not a good standard of measuring standard of living as it is the income of one person in the country.

Answer: (b)

Effective Demand is "the demand in which the consumer is able and willing to purchase at conceivable price" simply saying if the product price is low more will buy, but if the rates go high then the quantity of the demand goes down.

Keynes used two terms: Aggregate Demand Function or Price and Aggregate Supply Function or Price to explain the determination of effective demand.

Answer: (b)

The elasticity of demand, also known as price elasticity of demand, is the degree of responsiveness of demand to a change in price.

Its measure depends upon comparing the percentage change in the price with the resultant percentage change in the quantity demanded.

Thus, the elasticity of demand is the ratio of percentage change in the amount demanded to a percentage change in price.

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)

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: (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.