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) the size of population
(b) All the above
(c) the number of person hours put in by each person
(d) the proportion of the population in the labour force
The correct answers to the above question in:
Answer: (b)
Supply of labour in an economy depends upon both economic as well as non-economic factors. It depends upon the size of population, the number of workers available for work out of a given population, the number of hours worked, the intensity of work, the skills of workers, their willingness to work and the mobility of labour.
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Read more introduction to macro economics Based Indian Economy Questions and Answers
Question : 1
Capacity utilisation
a) is a measure of the proportional of the existing capital stock used for current production.
b) rises as the economy moves into a recession, since firms must replace unemployed workers with some other resources to maintain production.
c) represents the percent of the labour force that is employed.
d) is usually near 100 percent.
Answer »Answer: (a)
Capacity utilisation refers to the extent or level to which the productive capacity of a plant, firm, or country is used in generation of goods and services. Expressed usually as a percentage, it is computed by dividing the total capacity with the portion being utilized.
Question : 2
Savings rate is relatively low in developed economies because of
a) Liquidity/Borrowing constraint
b) High interest rate
c) Welfare programmes
d) Low per capita income
Answer »Answer: (c)
As a general rule, saving is considered as a derivative of consumption. Developed economies have lower saving rates than developing countries because at the same income level, the level of consumption is higher in their cases.
Besides, as seen in the recent case of the United States, welfare programmes have been found to be responsible for falling saving rates.
Redistributing from young and future generations to older generations raises national consumption and lower national saving (The Concise Encyclopedia of Economics).
Question : 3
Depreciation is equal to —
a) Gross national product — Personal income
b) Personal income — Personal taxes
c) Net national product — Gross national product
d) Gross national product — Net national product
Answer »Answer: (d)
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.
So, Depreciation = Gross National ProductNet National Product,
Question : 4
“Supply creates its own demand” – Who said this ?
a) J. M. Keynes
b) Senior
c) J. S. Mill
d) J. B. Say
Answer »Answer: (d)
“Supply creates its own demand” is the formulation of Say’s law by John Maynard Keynes.
The rejection of this doctrine is a central component of The General Theory of Employment, Interest and Money (1936) and a central tenet of Keynesian economics.
Say’s Law (or Say’s Law of Markets), is often summarized as: “Aggregate supply creates its own aggregate demand”, “Supply creates its own demand”, “If you build it, they will come”, and Inherent in supply is the wherewithal for its own consumption”.
Question : 5
Equilibrium output is determined by:
a) the equality between Average cost and Average revenue.
b) the equality between total cost and total revenue.
c) the equality betweem Marginal cost and Marginal revenue.
d) the equality between total Variable cost and Marginal revenue.
Answer »Answer: (c)
Equilibrium Output refers to the level of output where the Aggregate Demand is equal to the Aggregate Supply (AD = AS) in an economy.
It signifies that whatever the producers intend to produce during the year is exactly equal to what the buyers intend to buy during the year.
According to the MR-MC approach, equilibrium refers to the stage of that output level at which,
Marginal Cost (MC) = Marginal Revenue (MR).
As long as MC is less than MR, it is profitable for the producer to go on producing more because it adds to its profits. He stops producing more only when MC becomes equal to MR.
Question : 6
The best measure to assess a country’s economic growth is
a) gross domestic product at current prices
b) gross national product at current prices
c) per capita income at current prices
d) per capita income at constant prices
Answer »Answer: (d)
Gross domestic product (GDP) is the market value of all officially recognized final goods and services produced within a country in a given period of time. Per capita income or average income or income per person is the mean income within an economic aggregate, such as a country or city.
It is calculated by taking a measure of all sources of income in the aggregate (such as GDP or Gross National Income) and dividing it by the total population.
It does not attempt to reflect the distribution of income or wealth. Per capita income is often used as average income, a measure of the wealth of the population of a nation, particularly in comparison to other nations.
It is usually expressed in terms of a commonly used international currency such as the Euro or United States dollar, and is useful because it is widely known, easily calculated from readily available GDP and population estimates, and produces a useful statistic for comparison.
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
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introduction to macro economics section 5
introduction to macro economics section 6
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