Macroeconomics Objective

Questions – MR AMPOH

Macroeconomics Multiple Choice Questions

1. Which one of the following is the objective of fiscal policy?
A. achieve full employment.

B. stabilize the price level.

C. maintain equilibrium in the Balance of Payments.

D. all of the above

Answer: D.all of the above

2. An economy is at equilibrium output when

A. Y = C + I + G+ NX

B. Y = AD + C + G + NX

C. Y = AD + C + I + G + NX

D. Y = AD + C+ I + G

Answer: C.Y = AD + C + I + G + NX
3. CENTRAL BANK use contractionary monetary policy
A. to increase govt expenditure

B. to reduce inflation

C. all of the above

D. none of the above

Answer: B.to reduce inflation

4. Contractionary Fiscal Policy includes:

A. slow economic growth

B. stamp out inflation

C. all of the above

D. none of the above

Answer: C.all of the above

5. Under fisher’s quantity theory of money,M denoted

A. medium

B. the total quantity of legal tender money

C. measurement tool

D. money

Answer: B.the total quantity of legal tender money

6. Who is the head of the MONETARY POLICY committee?
A. RBI, governor

B. RBI, deputy governor

C. Prime Minister

D. President

Answer: A.RBI, governor

7. The phenomenon of sticky wages usually leads to

unemployment during a recession.
A. higher

B. lower

C. stabalize

D. none of the above

Answer: A.higher

8. If inflation is 6% and you receive a 1% raise in your nominal

wage, by how much did your real wage change?
A. -5%

B. 1%

C. -6%
D. 6%

Answer: A.-5%

9. If inflation is 1% and you receive a 1% raise in your nominal

wage, by how much did your real wage change?
A. 0%

B. 1%

C. 2%

D. 3%

Answer: A.0%

10. The quantity theory of money is expressed by the identity

equation: A. M*Y=P+Y

B. M*V=P*Y

C. M+V=P

D. none of the above

Answer: B.M*V=P*Y

11. In the quantity theory of money, P and Y represent the price

and quantity of:
A. all finished goods and services in an economy.

B. all finished goods sold in an economy.

C. all finished goods and services sold in an economy.

D. none of the above

Answer: C.all finished goods and services sold in an economy.

12. Which of the following is not a component of Aggregate

Demand?
A. Saving

B. Investment

C. ConsumptionD. Net Exports

Answer: A.Saving

13. An example of a government expenditure is

A. a social security payment to an elderly person.

B. employing a public school teacher.

C. an unemployment insurance check.

D. All of the above

Answer: B.employing a public school teacher.

14. Which of the following items is an investment?

A. purchase of a mutual fund.
B. purchase of a U.S. government bond.
C. purchase of a new farm tractor.

D. purchase of a stock.

Answer: C.purchase of a new farm tractor.

15. Which factor would shift the Aggregate Demand curve to the
right?
A. a fall in interest rates which increases investment

B. an increase in real incomes due to a rise in GDP.

C. an increase in real wages.

D. an appreciation of the dollar.

Answer: A.a fall in interest rates which increases investment

16. In the IS–LM model, the impact of an increase in government

purchases in the goods market has ramifications in the money
market, because the increase in income causes a(n) in money .
A. increase; supply

B. increase; demand

C. decrease; demand

D. decrease; supply

Answer: B.increase; demand

17. In the IS–LM model under the usual conditions in a closed
economy, an increase in government spending increases the
interest rate and crowds out:
A. prices

B. investment

C. the money supplyD. taxes

Answer: B.investment

18. A decrease in the price level shifts the curve to the right, and
the aggregate demand curve .
A. IS; shifts to the right

B. IS; does not shift

C. LM: shifts to the right

D. LM; does not shift

Answer: D.LM; does not shift

19. If the short-run IS–LM equilibrium occurs at a level of income

below the natural level of output, then in the long run the price
level will , shifting the curve to the right and returning output to
the natural level.
A. increase; IS

B. decrease; IS
C. increase; LM

D. decrease; LM

Answer: D.decrease; LM

20. When using AD/AS analysis to illustrate changes within an

economy, which of the following would NOT need to be considered
when looking at changes to economic growth?
A. Increased labor productivity

B. More efficient use of the capital stock

C. Developing a more efficient capital and finance sector

D. Increased availability of social capital

Answer: D.Increased availability of social capital

21. Which of the following is a major influence on AS?

A. The quality of the factors available

B. Consumption

C. Government spending

D. The advice of government

Answer: A.The quality of the factors available

22. The Phillips curve implied that there was a trade- off available
to governments between: A. The price level and unemployment
B. The price level and employment

C. Out put and employment

D. Inflation and unemployment

Answer: D.Inflation and unemployment

23. A belief that expectations were exogenous could lead one to

the view that judgement about the future were likely to be based
on:
A. The best available information

B. Past experience

C. all of the above

D. none of the above

Answer: B.Past experience

24. Which of these is NOT a monetary policy tool?

A. open market operations

B. balanced accounts

C. reserve requirementsD. discount rates

Answer: B.balanced accounts

25. Stagflation results from

A. a shift of the AS curve to the left.

B. a shift of the AS curve to the right.

C. a shift of the AD curve to the left.

D. a shift of the AD curve to the right.

Answer: A.a shift of the AS curve to the left.

26. An increase in aggregate demand (given no change in

aggregate supply) will cause inflation.
A. constant

B. higher

C. lower

D. none of the above

Answer: B.higher

27. Which of the following would NOT cause a SHIFT in AS?

A. Incentives

B. The structure of the economy

C. The level of government spending

D. The costs of the factors of production

Answer: C.The level of government spending

28. Which of the following events will shift the Aggregate Supply
curve to the left?
A. a fall in interest rates.

B. land costs fall.

C. real wages rise.

D. inflation expectations decrease.

Answer: C.real wages rise.

29. The short-run Aggregate Supply curve is upward sloping only

because we assume that resource costs are held .
A. constant

B. flexible

C. need more information

D. none of the aboveAnswer: A.constant

30. If Aggregate Demand exceeds Aggregate Supply, unwanted

inventories will begin to accumulate, forcing firms to– prices to
get rid of those inventories.
A. zero

B. none of these

C. increase
D. reduce

Answer: D.reduce

31. In equation C= a+by, the value of b lies between

a. 0<b<1 b. 0>b<1

c. 0=b<1 d. 0>b<1

Answer: a

32. The relation between APC and MPC in Keynes Psychological

consumption function is

a. MPCAPC

d. None of the above

Answer: a

33. Under Keyne’s consumption function consumption is a _______

function of income

a. Unstable

b. Inverse

c. Stable

d. Neutral
Answer: c

34. Under Classical theory, demand for labour is the same as

a. MP curve of labor

b. MRP curve of labor

c. MC curve of labor

d. MPP curve of labour

Answer: a

35. The reason for existence of proportional relationship between

money stock and price level is

a. Money illusion

b. Inflation

c. Full employment

d. Wage price flexibility

Answer: c

36. Which among the following is not a feature of Keynesian theory?

a. Short run
b. Wage price flexibility

c. Fiscal policy

d. Underemployment equilibrium

Answer: b

37. Money on wings indicates

A. Store value function of money

B. Medium of exchange function of money

C. Measure of value function of money

D. All of the above

Answer: b

38. Cash balance approach in Quantity theory emphasis on

A. Money as a medium of exchange

B. Money as a store of value

C. Money as a measure of value

D. Money as a transfer of value

Answer: b

39. In the classical theory, output and employment are determined by

A. Production function

B. Demand for labor and supply of labour

C. Effective demand

D. Both A & B

Answer: d

40. Under Keynesian theory employment and output is determined by

A. Saving investment equality

B. Production function

C. Effective demand

D. Demand for money and supply of money

Answer: c

41. The concept money illusion is firstly coined out by

A. Irving Fischer

B. Milton Friedman
C. Alfred Marshall

D. J M Keynes

Answer: a

42. Which of the following equation is not true?

A. APC+APS=1

B. 1-APC=APS

C. 1-APS=APC

D. APC-1=APS

Answer: d

43. Under classical theory, rate of interest is determined by

A. Demand for money and supply of money

B. Demand for capital and supply of savings

C. Demand for investment and price level

D. Demand for investment and supply of money

Answer: b

44. This independence of real variables from changes in money supply

and nominal variables is called
A. Money illusion

B. Neutrality of money

C. Classical dichotomy

D. Money multiplier

Answer: c

45. The expansion in money supply doesn’t affect the real output and
employment in the economy indicates

A. Effectiveness of monetary policy

B. Effectiveness of fiscal policy

C. Neutrality of money

D. Money illusion

Answer: c

46. An increase in output and employment in the economy which

arise out of increasing consumption demand and rise in real wealth is
called

A. Demonstration effect

B. Keynes effect
C. Income effectD. Pigou effect

Answer: d

47. Which of the following measures have to be adopted to curb out

inflation from the economy?

A. Increase in government expenditure and reduction in taxation

B. Decrease in Government expenditure and increase in taxation

C. Increase in transfer payments and increase in taxation

D. Decrease in transfer payments and decrease in taxation

Answer: b

48. During great depression period unemployment in USA rose by

A. 15%

B. 25%

C. 5%

D. 24%

Answer: b

49. Keyne’s introduced the book General theory of employment,

interest and money in the year

A. 1929

B. 1933

C. 1936

D. 1935

Answer: c

50. Which of the following have to be adopted to remove recession

from the economy?

A. increase in Government welfare programs and increase in taxation

B. Increase in Government welfare projects and decrease in taxation

C. Increase in Public borrowing and decrease in taxation

D. Decrease in public borrowing and increase in taxation

Answer: b

51. The two cornerstones of classical economics are

A. The Phillips Curve and Say’s Law

B. Say’s Law and the Quantity Theory of Money

C. The Quantity Theory of Money and the Liquidity Preference Theory

D. Say’s Law and the Liquidity Preference Theory

Answer: b

52. In the classical view, the price level is determined by

A. aggregate supply

B. aggregate demand and supply

C. supply of money

D. aggregate demand

Answer: c

53. Assume a consumption function of the following form: C = 50 + .8Y.

If income is equal to $1,000, then consumption is

A. $50
B. $1,050

C. $1,000

D. $850

Answer: d

54. During period of recession

A. aggregate output declines

B. price level starts rising

C. unemployment declines

D. aggregate output rises

Answer: a

55. Keynesian economics came to be widely accepted because it finds

solution to
A. Stagflation of 1970s
B. Recession in 2008
C. Low growth rates in 1950s
D. Great depression of 1930s

Answer:

56. Macroeconomics is a study of economics that deals with which 4

major factors:
A. households, firms, government, and demand-supply
B. households, firms, government and external sector
C. profits, price level, cost and expenditure
D. none of the above

Answer: d

57. Average number of times a unit of money changes from one

hand to another is called A. price level
B. Money supply
C. Value of money
D. Velocity of circulation

Answer: d

58. Who is considered as the father of modern macroeconomics?

A.Ragner Frisch

B. Adam smith

C. J M Keynes

D. Milton Friedman

Answer: c

59. Under Keynesian theory of income determination, investment

A. Depends on income

B. Endogenous

C. Exogenous
D. Depends on money supply

Answer: c

60. In a three sector economy, Y equals

A. C+I

B. C+I+G

C. C+I+G=(X-M)

D.None of these

Answer: b

61. Under equation C= a+by, b=0.8, what is the value of expenditure

multiplier
A. 4

B. 2

C. 5

D. 1

Answer: c

62. In equation C= a+by, a indicates

A. consumption at zero level of income
B. Average propensity to consume
C. MPC
D. None of the above

Answer: a

63. Under Keynesian framework income is measured along

A. 450 line
B. Vertical line
C. Horizontal line
D. None of the above

Answer: c

64. Factor income of household sector is equal to

A. Factor payments by firms

B. Factor income of firms

C. Expenditure of households

D. Income of households

Answer: a

65. Those goods which are meant for final use of consumption
are known as A. Consumer goods

B. Value added goods

C. Intermediate goods

D. All the above

Answer: a

66. A laptop purchased by consumer is an example of

A. An intermediate good

B. A consumer good

C. Intermediate consumption

D. None of the above

Answer: b

67. The policy relates to the taxation, expenditure and borrowing of

the government is known as

A. Monetary policy

B. Fiscal policy

C. Taxation policy

D. None of the above

Answer: b

68. Which is the most liquid measure of money supply

A. M1

B. M2
C. M3

D. M4

Answer: a

69. If aggregate demand falls short of current output, it would result in

A. business firms will cut production to keep from accumulating
inventories.
B. business firms will expand production to keep from accumulating
inventories.
C. business firms will cut production to build up inventories.
D. business firms will expand production to build up inventories.

Answer: a

70. The expenditure multiplier is the ratio of

A) the change in equilibrium output to a change in the monetary base.
B) the change in the money supply to a change in the monetary
base.C) the change in the money supply to a change in the
autonomous expenditure.
D) the change in equilibrium output to a change in the autonomous
expenditure.

Answer: d

71. In the Keynesian model of income determination,

consumer expenditure includes spending by A) consumers on
personal computers.
B) businesses on personal computers.
C) governments on personal computers.
D) all of the above since computers are consumer durables.
Answer: a

72. The multiplier concept is important in the Keynesian model

because
A) it explains why a large change in autonomous spending has such
asmall impact on equilibrium output.
B) it explains why a small change in autonomous spending can have
alarge impact on equilibrium output.

C) it is crucial to understanding why changes in investment

spendingare viewed as the root cause of business cycles
fluctuations.
D) both (b) and (c) of the above.

Answer: d

73. Under Keynesian model aggregate expenditure is measures along

A. Vertical axis
B. Horizontal axis
C. Vertical interceptD. 450 line

Answer: a

74. Which of the following is an example of capital expenditure

A. spending on laptops by consumers
B. spending on power-looms by business firms
C. spending on infrastructure by Government
D. Both B&C
Answer: d

75. Under Simple Keynesian model the aggregate price level

A. Vary for a short period
B. Fixed in long run
C. Fixed
D. None of the above

Answer: c

76)The well known work formulated by j.m. Keynes:

A general theory of employment interests and money
B principles of economics
C Principles of Modern Trade
D Modern Theory of Fiscal Policy

Answer: a

77)Transaction demand for money is a function of:

A income
B interest
C prince
C inflation

Answer: a

78) The value of MPC in Keynesian model is:

A greater than zero and less than one
B MPC=1
C MPC greater than one
D None of the above
Answer: a

79) According to Keynesian multiplayer model the value of MPC is 0.75

what would be the value of multiplayer
A 4.0
B 1.33
C 2.00
D None of the above

Answer: a

80) According to two sector Keynesian model the aggregate demand is

A summation of consumption expenditure and investment
expenditKeyne
B consumption expenditure only
C investment expenditure only
D None of texpenditu

Answer: a

81) Choose correct option

Statement 1: Model assumes stickiness prices
Statement 2: Classical model assumes flexibility of prices
A statement one and two are correct
B statement one only correct

C statement two only correct

D both are incorrect
Answer: a

82) Interest rates and bond prices are;

A positively related
B negatively related
C not related
D Either A or B

Answer: b

83) Keynes’s motivation in developing the aggregate

output determination model from his concern with
explaining; A) the hyperinflations of the 1920s.
B) why the Great Depression occurred.
C) the high unemployment in Great Britain before World War I.
D) the high unemployment in Great Britain after World War IIAnswer:

84) Statement 1:There exists an inverse relationship between market

rates of interest and price of bond Statement 2:The liquidity trap is a
situation when at some very low rate of interest all asset holders
become bears
A both are incorrect
B both are correct
C statement one is correct and two is not correct
D statement one is incorrect and two is correct

Answer: b

85) The Foreign Trade Multiplier is the ratio of;

A) the change in equilibrium output to a change in import.
B) the change in the money supply to a change in the monetary
base.C) the change in the money supply to a change in the
autonomous expenditure.

D) the change in equilibrium output to a change in the autonomous

expenditure.

Answer: a

86)) An increase in planned investment spending causes aggregate

output to;
A) increase by an amount equal to the change in investment spending.
B) increase by an amount less than the change in investment
spending.C) increase by an amount greater than the change in
investment spending.
D) decrease by an amount less than the change in investment

Answer: a

87)Keynes assumed that the price level was fixed because A)

inflation was not a serious problem during the Great Depression.
B) his primary focus was on output and employment.
C) his primary focus was on interest rates and investment spending.
D) of both (a) and (b) of the above.

Answer: d

88) IS curve shows that when income increases

A Interest rate must fall to restore equilibrium in the goods market
B Interest rate must fall to restore Equilibrium in the asset market
C Interest rate must rise to restore equilibrium in the asset market
D Interest rate must rise t restore equilibrium in the goods market

Answer: a

89) the LM curve slope:

A vertical
B slope upward
C slope downwards
D HorizontalAnswer: b 90) the slope of IS curve

A vertical
B slope upward
C slope downwards
D Horizontal

Answer: c

91) A significant increase in public expenditure lead to:

A Right ward shift in LM curve
B right ward shift in IS curve
C left ward shift in LM curve
D Left ward shift in IS curve

Answer: b

92) Multiplayer is the ratio of

A change in income to change in investment
B change in investment to change in income
C change in income to change in interest
D None of the above
Answer: a

93 ) In a closed economy, aggregate demand is the sum of

A) consumer expenditure, actual investment spending, and
government spending.
B) consumer expenditure, planned investment spending,
andgovernment spending.
C) consumer expenditure, actual investment spending,
governmentspending, and net exports.
D) consumer expenditure, planned investment spending,
governmentspending, and net exports.

Answer: b

94)) Keynes assumed that the price level was fixed because A)
inflation was not a serious problem during the Great Depression.
B) his primary focus was on output and employment.

C) his primary focus was on interest rates and investment spending.

D) of both (a) and (b) of the above.

Answer: d

95) Accelartor theory of investment is the ratio of:

A) change in income to change investment
B) change in investment to change in income
C) change in income to change in interest
D) None of the above

Answer.:b
96) IS curve represent the combination of:
A combination of income and interest
B Combination of price and out put
C combination of interest and investment
D None of the above

Answer: a

97) LM curve represents the combination of ;

A price and out put

B Demand for money and supply of money

C income and investmen

D. Money supply and nvestment

Answer: b

98) Effective demand is where ;

A aggregate demand is equal to aggregate supply
B Demand for money is equal to supply of money
C saving is equal to supply
D None of the above

Answer: a

99) according to Keynesian theory: statement 1: price are sticky

statement 2: after full employment change in aggregate demand lead
to istatements
A Only statement 1 is correct
B only statement 2 are correct
C both are correct
D None of the above are correct

Answer: c

100) speculative demand for money is a function of

A income
B interest
C prince
D investment

Answer: b

101) Which of the following is NOT a flow variable?

a)Income

b) Wealth

c) Saving

d) InvestmentAns: Wealth

Answer: b

102) Macroeconomics is concerned with:

a)The level of output of goods and services
b) The general level of prices
c) The growth of income
D) All the above
Ans: All the above
Answer: d

103) Which of the following is NOT a stock variable?

a)Capital

b) Wealth

c) Interest

d) SavingAns:Saving

Answer: d

104) The word Macro was first used in Economics by:

a) Keynes

b)Marshall

c)Ragnar Frisch d)

J.R. Hicks
Ans: Ragnar Frisch

Answer: c

105) National Income is a:

a) Stock concept

b) Flow concept

c) Cross section analysis

d)None of the above
Ans: Flow concept

Answer: b

106) A variable which has no time dimension but is described at

a specific moment of time is: a)Stock Variable

b) Flow Variable

c) Ratio Variable

d) None of the aboveAns: Stock Variable

Answer: a

107) Stock variable is measured :

a)At a point of time

b) During a period of time

c) In an accounting year

d) None of theseAns: At a point of time

Answer: a

108)If a model has no equilibrium, it can be analysed only by :

a) Static method

b) Dynamic method
c) Comparative static method

d) static and comparative static methodAns: Dynamic method

Answer: b

109) Macro-static equilibrium implies:

a)A complete absence of change

b) A change at an unchanged rate

c) A change in only absolute values

d) None of these
Ans: A complete absence of change

Answer: a

110) Who introduced the terms ex-ante and ex-post?

a) Myrdal

b) Ricado

c) Malthus

d) SayAns: Myrdal

Answer: a

111) Ct = f(Yt-I) is:

a) Static Model
b) Dynamic model

c) Comparative static

d) None of theseAns: Static Model

Answer: a

112) Which of the following is a phase of Circular flow of income?

a) Generation phase

b) Distribution phase

c) Disposition phase

d) All of theseAns:All of these

Answer: d

113) Which of the following is NOT considered a factor income?

a) Rent

b) Wage

c)Profit

d) Gifts from Abroad

Ans: Gifts from Abroad
Answer: d

114) Two sector economy consists of:

a)Households, firms

b) Households, Government

c)Firms, Foreign sector

d) Firms, Government.
Ans: Households, firms

Answer: a

115) Real flow is also known as:

a) Nominal flow

b) Money flow

c) Physical flow

d) Both a and bAns: Physical flow

Answer: c

116) Which of the following is the consumption sector?

a)Household

b)Firm

c)Government
d)Foreign Ans:
Household

Answer: a

117) Real flow refers to the flow of factor services from —— to —–

a)Firms to households

b) Households to firms

c) Firms to government

d)Households to government
Ans: Households to firms

Answer: b

118. In a closed economy, ————– is not included

a)Households

b)Firm

c)Government

d)Foreign sector
Ans: Foreign sector
Answer: d

119) which of the following constitute the reason for

difference between Market prices and factor cost? a) Indirect
Taxes

b) Subsidies

c) Both A and B

d) neither a nor bAns: Both A and B

Answer: c

120) If factor cost is greater than Market price, then it means that:
a) Indirect taxes > subsidies

b) Indirect taxes = subsidies

c) Indirect Taxes < Subsidies d) Indirect taxes = and > subsidiesAns:

Indirect Taxes < Subsidies

Answer: c

121) Final goods refer to those goods which are used either for ………….
or for ……….
a) Consumption, Investment

b) Consumption,resale

c)Resale,investment
d)Resale,further production.
Ans:Consumption, Investment

Answer: a

122) Net Factor Income from Abroad is:

a) Export minus Imorts

b) Visible Exports minus Visible Imports

c) Factor Income Received FromAbroad Minus Factor Income Paid

Abroad

d) Factor income received from abroad

Ans:F Factor Income Received From Abroad Minus Factor Income Paid
Abroad

Answer: c

123) Depreciation means:

A) destruction of a plant in a fire accident

b) loss of fixed assets over tim due to wear and tear

c) lossof fixed assets in an earthquake

d) closure of the plant due to lockout

Ans: loss of fixed assets over tim due to wear and tear
Answer: b

124) Market price ad factor cost would be equal when there is:
A) no direct tax

b) no indirect tax

c) no subsidy

d) no indirect tax and no subsidyAns:no indirect tax and no subsidy

Answer: d

125) Which of the following is an example of Transfer Income?

a) Bonus

b) Unemployment Allowance

c) Compensation from the employer

d) All of theseAns:All of these

Answer: d

126) Which of the following is an example of an intermediate good?

A) car sold by a dealer of second hand cars

b) steel and cement

used to construct a
flyover
c) fertilizerspurchased
by a farmer

d) all of theseAns:all of
these

Answer: d

127) Out of the following, which aggregate represents ‘National

Income’?
a) NNP MP

b) GNP FC

c) NNP FC

d) GNP MPAns:NNP FC

Answer: c

128) if facor income received from abroad is equal to factor

income paid abroad, then which of the following is not a valid
statement?
A) national income = domestic income

b) ndp fc + depreciation = gnp fc

c) ndp fc + depreciation = gnp mp

d) all are valid

Ans:NDP FC + depreciation = GNP MP
Answer: c

129) Cororate tax is not a part of :

a) Personal Income

b) Naional income

c) Domestic income

d) Private incomeAns: Personal Income

Answer: a

130) National Disposable income is equal to:

a) Private Final Consumption Expenditure + Government Final
Consumption Expenditure + National Saving
b) National Consumption Expenditure + National Saving
c) National Income + Net Indirect Taxes + Net Current Transfers
fromrest of the world. D) all of these.
Ans:all of these.

Answer: d

131) If economic subsidies are added to and Indirect taxes

are substracted from the national income at market prices,
then it will be equal to : a) Domestic Income

b) National Income

c) GNP at Market Price

d) GDP at factor costAns: National Income

Answer: b

132) In which type of economy, domestic income is equal to national

income?
a) OPen economy

b) Closed Economy

c) Both a and b

d) Neither a nor b
Ans:Closed Economy

Answer: b

133) Domestic factor income is another name for:

a) NDP FC

b) NNP MP

c) GDP FC

d) NNP FCAns:NDP FC

Answer: a

134) Which of the following ia a part of National Income?

A) old age pensio

b) unemployment allowance
c) profit

d) scholarshipAns:PROFIT Answer: c 135) NDP at FC is less than

National Income when: a) Net factor income from abroad is positive

b) Net factor income from abroad is negative

c) Net factor income from abroad is zero
d) Net exports are positive
Ans:Net factor income from abroad is positive

Answer: a

136) National income is equal to:

a) Domestic product plus factor income earned from abroad B)
domestic product plus net factor income earned from abroad
c) Domestic product mins factor income earned from abroad
d) Domestic product plus export minus imports
Ans:domestic product plus net factor income earned from abroad

Answer: b

137) ———–is the net amount available to households for consuption

and saving
A) national income

b) personal income

c) personal disposable income

d) government incomeAns: personal disposable income

Answer: c

138) GNP exceeds NNP by:

a) Amount of total taxes
b) Government expenditure
c) Transfer payments
d) Difference between Gross investment and Net Investment

Ans:Difference between Gross investment and Net Investment

Answer: d

139) GDP MP = Rs.1000 and subsidies = Rs.50, then GDP FC will be :

a)1050

b) 950

c) 1000

d) 900Ans:1050

Answer: a

140) “Income method” is also known as:

A) distributive share method

b) income disposal method

c) industrial origin method

d) none of these
Ans: distributive share method

Answer: a

141) Which of the following is a synonym of “Undistributed Profits”?

A) savings of private corporate sector

b) reserves and surpls

c) retained earnings

d) all ofthese Ans:all of these Answer: d

142) Which one is inclded in National Income?

A)winning from lottery

b) milk purchase by a dairy shop

c) national debt interest

d) none ofthese.
Ans:none of these.

Answer: d

143) ‘Distributed Profits’ is also known as:

a)Corporate tax

b) Dividend

c) Retained Earnings
d) None of theseAns:Dividend

Answer: b

144) If a farmer sells Wheat to miller for RS.500 and miller sells flour
to baker for Rs.700 and baker sells bread to consumer for Rs.1000,
then total value added by Miller and baker is: a) 500

b) 300

c) 1700

d) 1200

Ans:500

Answer: a

145) Which of the following is included in domestic income?

A)factor income from abroad

b) windfall gains

c) pension on retirement

d) capial gains

Ans:pension on retirement
Answer: c

146) Expenditure method focuses on measurement of National income

at:
A) phases of production of goods and services

b) phase of income distribution

c) phase of income disposition

d) all of these
Ans: phase of income disposition

Answer: c

147) which of the following is not an economic activity and hence

not included while estimating national income in india? A)medical
services rendered by a dispensary

b) a housewife doing household work

c) a lawyer doing hispracticed)

D.a maid working full time with a family

Ans: a housewife doing household work

Answer: b

148) National product at current prices is higher than national

product at constant prices during a period of : a) Rising prices

b) Falling prices
c) Constant prices

d) Both a and bAns: Rising prices

Answer: a

149) Net Factor Income from Abroad is taken into account

when National Income is calculated by: A) value added method

b) income method

c) expenditure method

d) any of the three methodsAns:any of the three methods

Answer: d

150) Broker’s commission on sale and purchase of second hand goods

is included in national income because:
a) It is a part of compensation of employees
b) It is a part of GRoss Domestic Capital Formation
C) it is an income earned for rendering productive services
d) None of these

Answer: c

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