introduction to macro economics section 4 MCQ Questions & Answers Detailed Explanation

Answer: (c)

Some of the factors which affect the industrial location are as follows:

1. availability of raw materials,
2. availability of labour,
3. availability of capital,
4. availability of power,
5. availability of market and
6. infrastructure.

A good supply of labour is one of the traditional factors that are indispensable for industry.

Besides, the availability of power/electricity is also a deciding factor.

Answer: (d)

An indifference curve may be defined as the locus of points, each representing a different combination of two substitute goods, which yield the same utility or level of satisfaction to the consumer. Therefore, he is indifferent between any two combinations of goods when it comes to making a choice between them.

So if, for example, a consumer makes five combinations a, b, c, d and e of two substitute commodities, X and Y, all these combinations yield the same level of satisfaction indicated by U.

Answer: (b)

To find the real value of changes in output under inflationary conditions, the effects of any general price increase (price inflation) must be taken into account.

This is done by holding prices constant from a starting measure, called the base year. It holds prices constant in terms of the prices existing in the base year.

Answer: (d)

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.

Answer: (d)

Gross National Product (GNP) can be defined as an economic statistic that includes Gross Domestic Product, plus any income earned by the residents from investments made overseas.

Net factor income from abroad = income earned in foreign countries by the residents of a country – income earned by nonresidents in that country.

Answer: (a)

Investment multiplier is simply the multiplier effect of an injection of investment into an economy.

The multiplier effect refers to the idea that an initial spending rise can lead to an even greater increase in national income.