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) increase in production cost
(b) increase in capital return
(c) decrease in loan
(d) increase in saving
The correct answers to the above question in:
Answer: (b)
Interest rates increase the cost of borrowing, which results in lesser investment activity and the purchase of consumer durables.
In a low interest-rate environment, shares become a more attractive buy, raising households’ financial assets. This may also contribute to higher consumer spending, and makes companies’ investment projects more attractive.
Lower interest rates also tend to cause currencies to depreciate: Demand for domestic goods rises when imported goods become more expensive. All of these factors raise output and employment as well as investment and consumer spending.
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Read more introduction to macro economics Based Indian Economy Questions and Answers
Question : 1
Value of out put and value added can be distinguished if we know:
a) the value of the sales
b) the value of consumption of fixed capital
c) the value of net indirect taxes
d) the value of intermediate consumption
Answer »Answer: (d)
Intermediate consumption is an accounting flow that consists of the total monetary value of goods and services consumed or used up as inputs in production by enterprises, including raw materials, services and various other operating expenses.
Intermediate consumption (unlike fixed assets) is not normally classified in national accounts by type of good or service, because the accounts will show net output by sector of activity.
Because this value must be subtracted from Gross Output to arrive at GDP, how it is exactly defined and estimated will importantly affect the size of the GDP estimate.
Question : 2
Capital output ratio of a commodity measures
a) the ratio of capital depreciation to quantity of output
b) the ratio of working capital employed to quantity of output
c) the amount of capital invested per unit of output
d) its per unit cost of production
Answer »Answer: (c)
Capital Output Ratio is the ratio of capital used to produce output over a period of time. This ratio has a tendency to be high when capital is cheap as compared to other inputs.
For instance, a country with abundant natural resources can use its resources in lieu of capital to boost its output; hence the resulting capital-output ratio is low. The capital-output ratio tends to increase if the capital available in a country is cheaper than the other inputs.
Therefore, the countries that are rich in natural resources have a low capital-output ratio. This is because they can easily substitute capital with natural resources in order to increase the output. When countries use their natural resources instead of capital then COR reduces.
Question : 3
Excise duty is levied on
a) import of goods
b) export of goods
c) production of goods
d) sale of goods
Answer »Answer: (c)
Excise duty is a tax on manufacture or production of goods. Excise duty on alcohol, alcoholic preparations, and narcotic substances is collected by the State Government and is called “State Excise” duty. The Excise duty on rest of goods is called “Central Excise” duty.
Question : 4
Backward bending supply curve belongs to which market?
a) Money
b) Inventories
c) Labour
d) Capital
Answer »Answer: (c)
In economics, the backward bending supply curve is related to labour.
Also known as the backwards-bending supply curve of labour, This curve models a situation where workers choose to substitute leisure time for work time, i.e. wages, thus reducing the pool of labour available.
It shows how the change in real wage rates affects the number of hours worked by employees.
Question : 5
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 : 6
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.
GET Introduction to Macro Economics PRACTICE TEST EXERCISES
introduction to macro economics section 1
introduction to macro economics section 2
introduction to macro economics section 3
introduction to macro economics section 4
introduction to macro economics section 5
introduction to macro economics section 6
Introduction to Macro Economics Shortcuts and Techniques with Examples
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