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

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: (c)

A capital gain is a profit that results from a disposition of a capital asset, such as stock, bond or real estate, where the amount realised on the disposition exceeds the purchase price. The gain is the difference between a higher selling price and a lower purchase price.

Capital gains may refer to "investment income" that arises in relation to real assets. In other words, a capital gain represents an appreciation in value accruing over a prescribed period of time on the asset.

Answer: (a)

In economics, the Lorenz curve is a graphical representation of the distribution of income or of wealth. It was developed by Max O.

Lorenz in 1905 for representing inequality of the wealth distribution.

On the graph, a straight diagonal line represents perfect equality of wealth distribution; the Lorenz curve lies beneath it, showing the reality of wealth distribution.

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: (b)

Barter is a system of exchange where goods or services are directly exchanged for other goods or services without using a medium of exchange, such as money.

Barter, as a replacement for money as the method of exchange, is used in times of monetary crisis, such as when the currency may be either unstable or simply unavailable for conducting commerce.

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.