M.C.Q (1 Marks)

MCQ 11 Mark

In the diagram below, at exchange rate $OP _1$, there is

A
Equilibrium
B
Either Excess demand and Excess supply
C
Excess demand
D
Excess supply

Answer

(d) Excess supply
Explanation: At exchange rate OP, there is more supply of foreign currency than demand, this represents the situation of excess supply.

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MCQ 21 Mark

Credit creation depends on amount of initial deposit and___________.

A
margin requirement
B
legal reserve ratio
C
all of these
D
bank rate

Answer

(b) legal reserve ratio
Explanation: Credit multiplier $=1 /$ LRR
Demand deposits that can be created = credit multiplier $\times$ cash reserves (initial deposits).

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MCQ 31 Mark

Food processor used by the households in their kitchen is an example of:

A
consumption goods
B
intermediate goods
C
Investment goods
D
capital goods

Answer

(a) consumption goods
Explanation: Consumption goods are the goods which are ready for use by their final users and consumers are their final users.

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MCQ 41 Mark

Complete the flow $\Delta I \rightarrow \Delta Y \rightarrow \Delta C \rightarrow$___________.

A
$\Delta D$
B
$\Delta C$
C
$\Delta S$
D
$\Delta Y$

Answer

(d) $\Delta Y$
Explanation:Since we know that MPC is given by $M P C=\frac{\Delta C}{\Delta Y}$
Now, MPC is a function of change of consumption and multiplier is a function of MPC as $K=\frac{1}{1-M P C C}$
So, change in consumption would lead to a change in income via the multiplier process.

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MCQ 51 Mark

Deficient demand leads to:

A
low level of employment
B
deflationary gap
C
excess capacity
D
all of these

Answer

(d) all of these
Explanation: Deficient demand refers to the situation when aggregate demand (AD) is short of aggregate supply (AS) corresponding to full employment in an economy.

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MCQ 61 Mark

If saving function of an economy is given as: $S =-40+0.4( Y )$, then MPC is:

A
0.6
B
1
C
8
D
0.4

Answer

(a) 0.6
Explanation: 0.6

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MCQ 71 Mark

Generally, the value of currency of a country is expressed in terms of___________.

A
Pound Sterling
B
US Dollar
C
Euro
D
japanese yen

Answer

(b) US Dollar
Explanation: Under fixed exchange rate, the most used currency for pegging was US Dollar.

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MCQ 81 Mark

With the increase in income, autonomous expenditure___________.

A
will increase proportionately
B
will remain unaffected
C
will decrease
D
will increase

Answer

(b) will remain unaffected
Explanation: If income increases then autonomous expenditure will remain unaffected.

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MCQ 91 Mark

Which one is the Bank of the Public?

A
Commercial Bank
B
Central Bank
C
Both commercial and central bank
D
SBI

Answer

(a) Commercial Bank
Explanation: A commercial bank is a financial institution that accepts deposits from the public and gives loans for the purposes of consumption and investment to make a profit so, the commercial bank is the bank of the public.

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MCQ 101 Mark

Statement I: External Assistance, e.g. Government Aid, Inter-governmental, Multilateral and Bilateral Loans is a component of capital account of BOP.
Statement II: Current Account Surplus signifies that the nation is a lender to the rest of the world.

A
Statement I is true and statement II is false.
B
Both the statements are false.
C
Both the statements are true.
D
Statement II is true and statement I is false.

Answer

(c) Both the statements are true.
Explanation: Both the statements are true.

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Economics M.C.Q (1 Marks)

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