introduction to macro economics section 2 Practice Questions Answers Test with Solutions & More Shortcuts

Answer: (c)

The Consumer Price Index Numbers for Industrial Workers CPI (IW) is utilized for fixation and revision of wages and determination of variable Dearness Allowances payable to workers in organized sectors of the economy.

Despite the coverage being limited to Industrial Workers, presently, the CPI (IW) is also utilized as an indicator for measuring inflationary trends in the country and for policy formulations.

Answer: (c)

The term depreciation represents a loss or diminution in the value of an asset consequent upon wear and tear, obsolescence, effluxion of time or permanent fall in market value. Physical deterioration of an asset is caused by movement, strain, friction, erosion etc.

For instance, building, machinery, furniture, vehicles, plant etc. Wear and tear is the general but primary cause of depreciation.

Answer: (a)

French economist Leon Walras put forward the General Equilibrium Theory in his pioneering 1874 work ‘Elements of Pure Economics.

The theory attempts to explain the functioning of economic markets as a whole, rather than as individual phenomena. It tried to show how and why all free markets tended toward equilibrium in the long run.

Answer: (a)

Economic activities are related to the production, distribution, exchange and consumption of goods and services. The primary aim of the economic activity is the production of goods and services with a view to make them available to consumers.

“Human activities which are performed in exchange for money or money’s worth are called economic activities.” In other words, economic activities are those efforts that are undertaken by man to earn Income, Money, and Wealth for his life and to secure maximum satisfaction of wants with limited and scarce means. A teacher teaching his own daughter at home is a non-economic activity.

“Human activities which are not performed for money or money’s worth are called non-economic activities.” Here, there is no monetary consideration in exchange for such activities.

Answer: (b)

Barter is a system of exchange where goods or services are directly exchanged for other goods or services without using a medium of exchange, such as money.

Barter, as a replacement for money as the method of exchange, is used in times of monetary crisis, such as when the currency may be either unstable or simply unavailable for conducting commerce.