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

Answer: (c)

Estate duty is a tax on the total market value of a person’s assets at the date of his or her death. The deceased person’s assets, as a whole, are called an estate. Inheritance tax is levied on assets that legal heirs inherit, while estate duty is applicable on the assets of those who are dead.

Answer: (c)

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 to measure a country’s standard of living.

However, it is not a good standard of measuring standard of living as it is the income of one person in the country.

Answer: (b)

Effective Demand is "the demand in which the consumer is able and willing to purchase at conceivable price" simply saying if the product price is low more will buy, but if the rates go high then the quantity of the demand goes down.

Keynes used two terms: Aggregate Demand Function or Price and Aggregate Supply Function or Price to explain the determination of effective demand.

Answer: (b)

The elasticity of demand, also known as price elasticity of demand, is the degree of responsiveness of demand to a change in price.

Its measure depends upon comparing the percentage change in the price with the resultant percentage change in the quantity demanded.

Thus, the elasticity of demand is the ratio of percentage change in the amount demanded to a percentage change in price.

Answer: (b)

The most well-known theory of population is the Malthusian theory. It explains the relationship between the growth in food supply and in population. It states that population increases faster than food supply and if unchecked leads to vice or misery.

Thomas Robert Malthus enunciated his views about population in his famous book, Essay on the Principle of Population as it Affects the Future Improvement of Society, published in 1798.