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

Answer: (b)

The tertiary sector or service sector is the third of the three economic sectors of the three-sector theory.

The others are the secondary sector (manufacturing), and the primary sector (agriculture). Tertiary activities are service-based and give non-tangible value to customers such as the provision of services, trading, etc.

Answer: (a)

Net national product at market price is the market value of the output of final goods and services produced at the current price in one year of a country.

If we subtract the depreciation charges from the gross national product, we get the net national product at market price.

Answer: (d)

A superior good is a product that people demand more of as then their incomes grow. These are products that are generally more expensive and rarer like diamonds and classic cars.

Such a good must possess two economic characteristics: it must be scarce, and, along with that, it must have a high price.

Answer: (a)

Economic activities are related to the production, distribution, exchange and consumption of goods and services. The primary aim of the economic activity is the production of goods and services with a view to make them available to consumers.

“Human activities which are performed in exchange for money or money’s worth are called economic activities.” In other words, economic activities are those efforts that are undertaken by man to earn Income, Money, and Wealth for his life and to secure maximum satisfaction of wants with limited and scarce means. A teacher teaching his own daughter at home is a non-economic activity.

“Human activities which are not performed for money or money’s worth are called non-economic activities.” Here, there is no monetary consideration in exchange for such activities.

Answer: (a)

French economist Leon Walras put forward the General Equilibrium Theory in his pioneering 1874 work ‘Elements of Pure Economics.

The theory attempts to explain the functioning of economic markets as a whole, rather than as individual phenomena. It tried to show how and why all free markets tended toward equilibrium in the long run.

Answer: (c)

The term depreciation represents a loss or diminution in the value of an asset consequent upon wear and tear, obsolescence, effluxion of time or permanent fall in market value. Physical deterioration of an asset is caused by movement, strain, friction, erosion etc.

For instance, building, machinery, furniture, vehicles, plant etc. Wear and tear is the general but primary cause of depreciation.