Q:1 Choose Correct Answer.
(i). In the equation C = a + b*Y, a represent?
a) Slope
b) Intercept
c) Indirect Consumption
d) Independent variable
(ii). Which statement is true?
a) National Expenditure = National income
b) National Expenditure = National income + National savings
c) National Expenditure = National income + Taxes
d) National Expenditure = National income – Taxes
(iii). Select the correct statement.
a) Transfer payment are included in national income
b) Depreciation allowance is a part of GNP
c) Taxes are not included in NNP
d) GDP means Gross Direct Production
(iv). Demand-pull inflation may be caused by
a) An increase in costs
b) A reduction in interest rates
c) A reduction in government spending
d) An outward shift in aggregate supply
(v). An increase in injections into the economy may lead to
a) An outward shift of aggregate demand and demand-pull inflation
b) An outward shift of aggregate demand and cost-push inflation
c) An outward shift of aggregate supply and demand-pull inflation
d) An outward shift of aggregate supply and cost-push inflation
(vi). According to the Phillips curve, unemployment will return to the natural rate when
a) Nominal wages are equal to expected wages
b) Real wages are back at long-run equilibrium level
c) Nominal wages are growing faster than inflation
d) Inflation is higher than the growth of nominal wages
(vii). A TV set purchased from a retail store is an example of.
a) Intermediate good
b) Capital good
c) Surplus good
d) Final good
(viii). If savings exceed investment then:
a) National income rises
b) National income falls
c) National income is not affected
d) None of the above
(ix). Net Investment is?
a) Gross Investment minus household Investment
b) Gross Investment minus govt. Investment
c) Gross Investment minus capital consumption allowance
d) None of the above
(x). Who will suffer most from inflation?
a) Creditors
b) Government pensioners.
c) debtors
d) merchants
(xi). When high inflation and low economic growth is occurred in a period, the period is termed
as.
a) Stagflation
b) Stagnation
c) Reflation
d) Hyperinflation
(xii). The average income of a country is called
a) Per capita income
b) Disposable income
c) Inflation rate
d) Real national income
(xiii). Product method of calculating national income is also known as
a) Income method
b) Value added method
c) Expenditure method
d) Distribution method
(xiv). National Income doesn’t include
a) Interest on unproductive national debt
b) Income for government expenditure
c) The payments by the household to firm for the purchase of goods and service
d) Undistributed profit
(xv). Consumption spending does not include
a) Household's purchases of food
b) Household's purchase of a car
c) Household's payment of rent for an apartment
d) Household's purchase of stock in any XYZ corporation
(xvi). Which of the following would increase national income?
a) Increase in taxation
b) Increase in savings
c) Increase in govt spending
d) Decrease in consumption spending
(xvii). If tea and coffee are substitutes, a reduction in the price of coffee will
a) Increase the sale of tea
b) Decrease the sale of coffee
c) Increase the sale of coffee
d) Decrease the price of tea
(xviii). Gross National Product is the sum total of
a) The money value of all goods produced
b) The money value of all finished goods and services
c) Payments to factors for the production of finished goods
d) Market values of all goods minus the value of inventory
(xix). Economic development
a) Is the same as economic growth
b) Means improvement in lifestyle
c) Exists when there is equal distribution of income
d) All of the above
(xx). The govt can control inflation by
a) Increasing demand for goods
b) Increasing supply of goods
c) Increasing money supply
d) Decreasing taxes
(xxi). Open Market Operations is
a) Buying and selling bills of exchange
b) Buying and selling govt securities
c) Buying and selling shares of companies
d) Buying and selling foreign exchange
(xxi). Hyperinflation is caused by?
a) Rapid increase in money demand
b) Rapid increase in price of goods
c) Rapid increase in the money supply
d) Rapid increase in demand for goods
(xxii). Where there is no control on the rising prices, called?
a) Suppressed inflation
b) Open inflation
c) Stagflation
d) Hyperinflation
(xxiii). Supply creates its own demand” is the idea of
a) JB Say
b) Samuelson
c) JM Keynes
d) Milton Friedman
(xxiv). There are methods of measuring national income:
a) 5
b) 2
c) 1
d) 3
(xxv). To avoid double counting when GDP is estimated, economists:
a) Use GDP deflator
b) Calculate value added at each stage of production
c) Use retail prices
d) Use price of only intermediate goods
(xxvi). Macroeconomics is concerned with:
a) Aggregate economic activity
b) Spending decisions of households
c) How to produce goods
d) How to but stocks and bonds
(xxvii). It is considered as transfer payment:
a) Salary of an employee
b) Bonus paid to bank employees
c) Payment of house rent
d) Unemployment allowance paid by govt.
(xxviii). Market value of all final goods and services produced in a country during a year is
definition of:
a) NI
b) NNP
c) GNP
d) Consumption
