introduction to macro economics section 2 MCQ Questions & Answers Detailed Explanation

Answer: (a)

The terms microeconomics and macroeconomics were coined by Professor Ragnar Frisch of Oslo University for the first time in 1933 and since then they have gained popularity and were widely used by other economists. Now they have become an integral part of economic terminology.

Ragnar Anton Kittil Frisch was a Norwegian economist and the co-winner with Jan Tinbergen of the first Nobel Memorial Prize in Economic Sciences in 1969. Frisch was one of the founders of economics as modern science.

He made a number of significant advances in the field of economics and coined a number of new words.

Answer: (c)

Three of the four options in the question are identical.

Situation analysis refers to a collection of methods that managers use to analyze an organization’s internal and external environment to understand the organization’s capabilities, customers, and business environment.

It is useful for Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis in which internal strengths and weaknesses of an organization and external opportunities and threats faced by it are closely examined to chart a strategy.

Answer: (b)

Depreciation refers to two very different but related concepts: the decrease in value of assets (fair value depreciation), and the allocation of the cost of assets to periods in which the assets are used (depreciation with the matching principle).

The difference between the GNP and NNP is equal to capital depreciation. It is the wearing out, breaking down, or technological obsolescence.

Answer: (d)

Octroi is a local tax that is collected by the state government on those goods that have been bought into the city/state for the purpose of personal use and sale.

The charges on the items are generally levied after on the weight, value and a total number of goods. It is levied on certain articles, such as foodstuffs, on their entry into a city.

Answer: (d)

According to the Keynesian Consumption theory, “men are disposed, as a rule, and on average, to increase their consumption as their income increases, but not by as much as the increase in their income.”

Another feature of consumer behaviour is that when income increases, people do not spend their entire incremental income on consumption. They save a part of it for their financial security during the period of unemployment, illness, etc.

In simple words, the marginal propensity to consume decreases, i.e., households spend a decreasing proportion of marginal income on consumption.

That is why families on a lower-income scale save a lower percentage of their income and those on a higher scale of income save a larger proportion of their income.

Answer: (a)

The gross national product is the sum total of all final goods and services produced by the people of one country in one year. The GNP is a flow concept. It can be calculated with either the expenditure approach or the income approach.

The expenditure approach sums all that is purchased: in a sense, it is equivalent to the income approach because purchases are only possible if income is present.

GDP can be calculated as the sum of all expenditures: personal consumption expenditure (C), gross private domestic investment (Ig), government purchases (G), and net exports (Xn).

An increase in the stock of unsold articles does not come under any of these heads.