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

Answer: (a)

According to Keynes, money is demanded because of three motives -transaction, precautionary and speculative.

The first two motives provide a yield of convenience and certainty. The third motive provides money yield. Keynes has termed the demand for money as liquidity preference.

Answer: (d)

The Human Development Index (HDI) is an aggregate measure of progress in three dimensions—health, education and income which are used to rank countries into four tiers of human development.

The HDI was developed by the Pakistani economist Mahboob ul Haq working alongside Indian economist Amartya Sen.

Answer: (b)

The gross national product (GNP) measures the welfare of a nation’s economy through the aggregate of products and services produced in that nation.

Although GNP is a proficient measurement of the magnitude of the economy, many economists, environmentalists and citizens have been arguing the validity of the GNP in respect to measuring welfare.

They are calling for a green national product that would indicate if activities benefit or harm the economy and well-being. This new national product would differ from the traditional GNP by addressing both the sustainability and well-being of the planet and its inhabitants.

Answer: (c)

Ragnar Frisch coined the widely-used term pair macroeconomics/microeconomics in 1933. He was a Norwegian economist and the co-recipient of the first Nobel Memorial Prize in Economic Sciences in 1969. He is known for having founded the discipline of econometrics.

Answer: (d)

Income which is not produced by any production process is called Transfer Income.

Answer: (d)

Demand-pull inflation is asserted to arise when aggregate demand in an economy outpaces aggregate supply. It involves inflation rising as real gross domestic product rises and unemployment falls, as the economy moves along the Phillips curve. This is commonly described as “too much money chasing too few goods.”