introduction to macro economics section 5 MCQ Questions & Answers Detailed Explanation
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The following question based on Introduction to Macro Economics topic of indian economy mcq
(a) Foreign trade
(b) Taxation
(c) Exchange
(d) Expenditure
The correct answers to the above question in:
Answer: (d)
Keynesian Economics is an economic theory of total spending in the economy and its effects on output and inflation. It emphasizes that government expenditures (or tax cuts) leads to increase in GDP which is a multiple of the original expenditure.
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Read more introduction to macro economics Based Indian Economy Questions and Answers
Question : 1
The total utility from 9 units of commodity x is 20 and from 10 units is 15. Calculate the marginal utility from 10th unit.
a) 5
b) –5
c) –0.5
d) 0.5
Answer »Answer: (b)
Marginal Utility = Change in Total Utility / Change in number of Units consumed.
The first component of the formula is to calculate the change in total utility. The second component of the marginal utility formula is the change in the number of units that have been consumed.
This is done by subtracting the number that is currently being consumed from a previously consumed amount.
So, Marginal Utility (MU) from 10th Unit = TU10 - TU9
= 15 – 20= –5
Question : 2
Which of the following is a consequence of inflationary price rise ?
a) All of these
b) Adverse effect on the balance of payment
c) Increase in economic inequalities
d) Obstacle in development
Answer »Answer: (a)
Inflationary price rise is harmful to a country’s economic performance and to the welfare of its citizens. It can create a random redistribution of income given that inflation does not have an equal impact on individuals and groups.
The balance of payments may deteriorate because domestic inflation stimulates import spending, given that imports appear relatively cheaper, and dampens export sales.
A continuous price rise can be an obstacle to development as it has an adverse effect on saving and investment and causes a fall in growth.
Question : 3
Selling cost have to be incurred in case of
a) Monopolistic Competition
b) None of the given options
c) Monopoly
d) Perfect Competition
Answer »Answer: (a)
Selling costs are the expenses on an advertisement, salesmanship, free sampling, free service, door-to door canvassing, and so on.
There is no selling problem under perfect competition where the product is homogeneous. Under monopolistic competition where the product is differentiated, selling costs are essential to push up the sales.
They are incurred to persuade a buyer to purchase one product in preference to another.
Question : 4
In a business, raw materials, components, work in progress and finished goods are jointly regarded as
a) investment
b) net worth
c) inventory
d) capital stock
Answer »Answer: (c)
Inventory refers to raw materials, work-in-process goods and completely finished goods that are considered to be the portion of a business’s assets that are ready or will be ready for sale.
Inventory represents one of the most important assets that most businesses possess because the turnover of inventory represents one of the primary sources of revenue generation and subsequent earnings for the company’s shareholders/owners.
Question : 5
Average propensity to consume is defined as
a) Change in consumption ¸ Change in income
b) Aggregate consumption ¸ Aggregate income
c) Aggregate income ¸ Aggregate consumption
d) Aggregate consumption ¸ Total population
Answer »Answer: (b)
In economics, the average propensity to consume (APC) is defined as the ratio of aggregate or total consumption to aggregate income in a given period of time.
Thus, the value of average propensity to consume, for any income level, may be found by dividing consumption by income.
Question : 6
Internal economies
a) accrue to a firm when it expands its output.
b) arise when there is expansion in internal trade.
c) arise in an economy as it makes progress.
d) arise when there is expansion in an industry.
Answer »Answer: (d)
Internal economies are those economies in production—those reductions in production costs—which accrue to the firm itself when it expands its output or enlarges its scale of production.
The internal economies arise within a firm as a result of its own expansion independent of the size and expansion of the industry as a whole.
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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