introduction to macro economics section 1 Practice Questions Answers Test with Solutions & More Shortcuts

Question : 1 [SSC CGL 2016]

When will demand become a grant?

a) After the demand is granted

b) When the budget session is closed.

c) After the discussion on demand is over

d) When a demand is proposed

Answer: (a)

The estimates of expenditure included in the Budget and required to be voted by Lok Sabha are in the form of Demands for Grants.

These Demands are arranged Ministry-wise and a separate Demand for each of the major services is presented. Each Demand contains first a statement of the total grant and then a statement of the detailed estimate divided into items.

A demand becomes a grant after it has been voted. The voting of demands for grants is the exclusive privilege of the Lok Sabha and not of Rajya Sabha.

Question : 2 [SSC CGL 2016]

One of the following is ‘Labour’ in Economics.

a) Reading a book as a hobby

b) A Mother teaching her own son

c) A Painter working for his own pleasure

d) A Musician performing for a benefit fund

Answer: (d)

Labour includes both physical and mental work undertaken for some monetary reward. In this way, workers working in factories, services of doctors, advocates, ministers, officers and teachers are all included in labour.

Any physical or mental work which is not undertaken for getting income, but simply to attain pleasure or happiness, is not labour.

Question : 3 [SSC SO 2003]

Which of the following concepts are most closely associated with J.M. Keynes ?

a) Indifference curve analysis

b) Marginal efficiency of captial

c) Marginal utility theory

d) Control of money supply

Answer: (b)

The marginal efficiency of capital (MEC) is that rate of discount which would equate the price of a fixed capital asset with its present discounted value of expected income.

The term “marginal efficiency of capital” was introduced by John Maynard Keynes in his General Theory, and defined as “the rate of discount which would make the present value of the series of annuities given by the returns expected from the capital asset during its life just equal its supply price

Question : 4 [SSC CML 2002]

An increase in per capital income is not an indication of an increase in the economic welfare of the people

a) When it is the result of an increase in the production of industrial goods

b) When such increase is the result of increased production of intoxicants

c) When such increase is the result of an increase in agricultural production

d) When such increase is the result of an increased production of comforts

Answer: (b)

An increase in per capita income due to increased production of intoxicants cannot be taken as economic welfare as it defeats the very notion of welfare.

Economic welfare refers to the level of prosperity and living standards of either an individual or a group of persons.

Factors used to measure the economic welfare of a population, include:

  1. GDP,
  2. Literacy,
  3. Access to health care, and
  4. Assessments of environmental quality.

Question : 5 [SSC SO 2005]

Which of the following results by dividing national income by size of population ?

a) Subsistence expenditure

b) Per capita production

c) Subsistence level

d) Per capita income

Answer: (d)

Per capita income or average income or income per person is a measure of 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.

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