introduction to macro economics section 3 Practice Questions Answers Test with Solutions & More Shortcuts
Introduction to Macro Economics PRACTICE TEST [6 - 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
Question : 21 [SSC CHSL 2014]
Savings rate is relatively low in developed economies because of
a) Liquidity/Borrowing constraint
b) High interest rate
c) Welfare programmes
d) Low per capita income
Answer »Answer: (c)
As a general rule, saving is considered as a derivative of consumption. Developed economies have lower saving rates than developing countries because at the same income level, the level of consumption is higher in their cases.
Besides, as seen in the recent case of the United States, welfare programmes have been found to be responsible for falling saving rates.
Redistributing from young and future generations to older generations raises national consumption and lower national saving (The Concise Encyclopedia of Economics).
Question : 22 [SSC DEO 2009]
Depreciation is equal to —
a) Gross national product — Personal income
b) Personal income — Personal taxes
c) Net national product — Gross national product
d) Gross national product — Net national product
Answer »Answer: (d)
Net national product at market price is the market value of the output of final goods and services produced at the current price in one year of a country. If we subtract the depreciation charges from the gross national product, we get the net national product at market price.
So, Depreciation = Gross National ProductNet National Product,
Question : 23 [SSC CAPFs 2015]
The market equilibrium for a commodity is determined by:
a) The intervention of the Government.
b) The market demand of the commodity.
c) The balancing of the forces of demand and supply for the commodity
d) The market supply of the commodity.
Answer »Answer: (c)
Market Equilibrium is determined when the quantity demanded of a commodity becomes equal to the quantity supplied.
The price determined corresponding to market equilibrium is known as equilibrium price and the corresponding quantity is known as equilibrium quantity.
Question : 24 [SSC CPO 2004]
According to Keynesian theory of income determination, at full employment, a fall in aggregate demand causes
a) a rise in real gross National product and investment
b) a rise in prices of output and resources
c) a fall in real gross National product and employment
d) a fall in prices of output and resources
Answer »Answer: (d)
In 1936, John Maynard Keynes published the book “The General Theory of Employment, Interest and Money to explain the prolonged and massive unemployment in the Great Depression.
The book criticises the classical model. Keynes turns Say’s Law on its head, arguing that aggregate demand determines national output and employment in the economy.
In this sense, demand creates its own supply. Unlike the Classical economists, Keynes believes that prices and wages are rigid, especially in the downward direction and hence the economy is not a self-correcting mechanism.
In other words, Keynes believes that as prices and wages are rigid, the economy can stay at a below-full-employment equilibrium. Suppose that the economy is at the full-employment equilibrium.
Further, suppose that aggregate demand falls. When this happens, the national output will fall below the full-employment level which will lead to unemployment resulting in downward pressure on wages.
Question : 25 [SSC SO 2003]
The method of calculating the national income by the product method is otherwise known as :
a) Expenditure method
b) Net output method
c) Value added method
d) Income method
Answer »Answer: (b)
Primarily there are three methods of measuring national income. Which method is to be employed depends on the availability of data and purpose. The methods are product method, income method and expenditure method.
According to the production method, the total value of final goods and services produced in a country during a year is calculated at market prices.
According to this method, only the final goods and services are included and the intermediary goods and services are not taken into account.
In this method, National Output = National Expenditure (Aggregate Demand) = National Income.
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Introduction to Macro Economics Shortcuts »
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indian economy MCQ CATEGORIES
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» Introduction to Indian Economy
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» Planning, Economic Development & Five year Plans
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» National Income & Human Development Index
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» Agriculture Sector, Subsidy and Food Processing
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» Industries, Manufacturing & Service Sectors
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» Inclusive growth, Sustainable development and employment
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» Poverty & Unemployment
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» Introduction to Micro Economics
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» Introduction to Macro Economics
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» Macro fundamentals, GDP, Investment, Growth
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» Demand & Supply, Profit Loss, Inflation & Price Index
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» Fiscal Policy, Public Finance and Monetary Policy
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» Money Supply, Banking and Financial Institutions
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» Taxes Types, Methods & Budgeting Process
-
» Banking, Security Market & Insurance
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