introduction to macro economics section 6 Practice Questions Answers Test with Solutions & More Shortcuts

Answer: (b)

Capitalism is an economic system that is based on private ownership of the means of production and the production of goods or services for profit.

Other elements central to capitalism include capital accumulation and often competitive markets.

Answer: (b)

Net national product (NNP) is the total market value of all final goods and services produced by residents in a country or other polity during a given time period (gross national product or GNP) minus depreciation.

The net domestic product (NDP) is the equivalent application of NNP within macroeconomics, and NDP is equal to gross domestic product (GDP) minus Depreciation:

NDP = GDP - Depreciation.

Answer: (b)

Bank Rate is determined by the Reserve Bank of India. The rate of interest is determined by the commercial banks in India.

As per RBI notification, banks are free to determine rates of interest subject to BPLR and spread guidelines. Banks may, however, offer loans at below BPLR to exporters or other creditworthy borrowers including public enterprises based on a transparent and objective policy approved by their Boards.

Answer: (c)

The consumption function is a mathematical formula laid out by famed economist John Maynard Keynes.

The formula was designed to show the relationship between real disposable income and consumer spending, the latter variable being what Keynes considered the most important determinant of short-term demand in an economy.

Answer: (a)

National Income Accounting is a set of principles and methods used to measure the income and production of a country.

There are basically two ways of measuring national economic activity:

1. as the money value of the total production of goods and services during a given period (usually a year) or
2. as the total of incomes derived from economic activity after allowance has been made for capital consumption.