introduction to macro economics section 3 MCQ Questions & Answers Detailed Explanation
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The following question based on Introduction to Macro Economics topic of indian economy mcq
(a) No effect
(b) First increase then decrease
(c) Positive effect
(d) Negative effect
The correct answers to the above question in:
Answer: (d)
In economics, an inferior good is a good that decreases in demand when consumer income rises (or rises in demand when consumer income decreases), unlike normal goods, for which the opposite is observed.
Normal goods are those for which consumers’ demand increases when their income increases. Cheaper cars are examples of inferior goods.
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Read more introduction to macro economics Based Indian Economy Questions and Answers
Question : 1
Who propounded the ‘market law ?
a) T.R. Malthus
b) David Recardo
c) J.B. Say
d) Adam Smith
Answer »Answer: (c)
Say’s law, or the law of market, is an economic principle of classical economics named after the French businessman and economist Jean-Baptiste Say (1767–1832), who stated that “products are paid for with products” and “a glut can take place only when there are too many means of production applied to one kind of product and not enough to another.
Question : 2
Which one of the following items is included in the national income account?
a) Services of Sadhus
b) Services of night-watchmen
c) Income of smugglers
d) Services of housewives
Answer »Answer: (b)
National income is the total value of a country's final output of all new goods and services produced in one year.
Services provided by housewives, the income of smugglers and services of sadhus can be categorized as non-economic services and thus cannot be accounted for.
Question : 3
While estimating national income which of the following is not taken into account?
a) Services of a housewife
b) Services of a maid servant
c) Services of a doctor
d) Services of a teacher
Answer »Answer: (a)
Services provided by housewives can be categorized as non-economic services and thus cannot be accounted in national income which is the sum total of all the goods and services produced in a country, in a particular period of time.
Question : 4
When average product of an input is at its maximum then : (AP= Average product) (MP= Marginal product)
a) AP > MP
b) AP < MP
c) AP = MP
d) AP = 0
Answer »Answer: (c)
There is a close relationship between marginal product and average product because both are derived from the total product. When marginal product is equal to average product, the average product is at its maximum.
In the short-run production function, since marginal product starts off as greater than average product and then falls below average product, we can assume that at the “cross-over point,”
when MP = AP, AP is at its maximum.
Question : 5
The self-employed in a developing country who are engaged in small scale labour intensive work belong to the
a) Secondary sector
b) Tertiary sector
c) Primary sector
d) Informal sector
Answer »Answer: (c)
Such a scenario is seen in the case of primary economic activities such as agriculture in the developing countries like India. Most of the primary activities are labour intensive where the volume of manpower substitutes the lack of technology. Besides, farmers are ‘self-employed.’
Question : 6
Imputed gross rent of owneroccupied buildings is a part of
a) intermediate consumption
b) consumer durable
c) final consumption
d) capital formation
Answer »Answer: (c)
The figure of final private consumption expenditure includes the imputed gross rent of owner-occupied dwellings, consumption of own-account production and payment by households of wages and salaries in kind valued at cost, e.g., provision for food, shelter and clothing to the employees, wherever they exist.
Production for self-consumption is a part of the production and hence an income and is also a part of final consumption expenditure.
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introduction to macro economics section 1
introduction to macro economics section 2
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introduction to macro economics section 6
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