Macroeconomics 2 MCQs [set-4]

Chapter: Banking

76. In July 1969, 14 major Indian Scheduled Banks were nationalized and 6 more
banks were nationalized in
A. April 1980
B. May 1980
C. April 1981
D. May 1981
Answer: A

77. Which is the largest private sector bank in India?

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A. Axis Bank
. c
B. ICICI Bank
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C. HDFC Bank
a
D. South Indian Bank
Answer: B q M
c
M Chapter: Trade Cycles

78. The term business cycle refers to

A. Fluctuations in aggregate economic activity over time
B. Ups and down in the production of goods
C. Increasing unemployment
D. Declining savings
Answer: A

79. Which one of the following is not the characteristic of business cycle?
A. They are recurrent
B. They are not at regular intervals
C. They have uniform causes
D. All of the above
Answer: C
80. The turning points of the business cycle are
A. Expansion and peak
B. Peak and Contraction
C. Contraction and Trough
D. Peak and Trough
Answer: D

81. Which of the following is referred to the top or the highest point of business
cycle
A. Expansion
B. Peak
C. Expansion and Peak
D. None of the above
Answer: B

82. Trade cycles are caused by

A. Fiscal factors
B. Monetary factors
C. Both monetary and non-monetary factors
D. None of the above
Answer: C

83. During the phase of recovery

A. Aggregate demand remains constant
B. Aggregate demand increases
C. Aggregate demand decreases
D. None of the above
Answer: B

84. Who stated that “Trade Cycle is purely a monetary phenomenon”.

A. Keynes
B. Hawtrey
C. Crowther
D. Hayek
Answer: B

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85. According to Hayek’s overinvestment theory of trade cycle, fluctuation of
investment occurs when
A. Natural rate of interest is not equal to market rate of interest
B. Natural rate of interest is equal to market rate of interest
C. Natural rate of interest is equal to the rate of inflation
D. None of the above
Answer: A

86. According to Keynes, in order to fight depression, stabilization policy should

include
A. High rate of taxation
B. High interest rate
C. Increased public expenditure
D. None of the above
Answer: C

87. According to Keynes, fluctuations in the volumes of investment is due to

A. Fluctuations in the volume of savings
B. Fluctuations in the marginal efficiency of capital
C. Fluctuations in the marginal efficiency of labour
D. None of the above
Answer: B

88. During the phases of recession of a trade cycle

A. Investment, income, employment and demand decline
B. Investment falls but income rises
C. Income, employment and investment rise
D. None of the above
Answer: A

89. During the downward phase of trade cycle, the central bank of the country
should
A. Increase the cash reserve ratio
B. Lower-down the cash reserve ratio
C. Raise the bank rate
D. None of the above
Answer: B

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90. During depression, government expenditure on public works will function as
A. an anti-deflationary tonic
B. a pumb-priming
C. compensatory action
D. None of the above
Answer: B

91. To attain long-term economic stability, the government can introduce

A. Compensatory action
B. Monetary measures
C. Pumb-priming
D. an anti-deflationary tonic
Answer: A

92. When the cause of business cycles is attributed to some factor outside the
economic system, it is called
A. A periodical theory
B. An innovation theory
C. An exogenous theory
D. None of the above
Answer: C

93. During the upward swing of the trade cycle, the central bank of the country
will
A. Raise the cash reserve ratio
B. Raise the bank rate
C. Lower down the cash reserve ratio
D. None of the above
Answer: B

94. Who stated that “a sudden collapse of the marginal efficiency of capital leads to
crisis”
A. Keynes
B. Hawtrey
C. Hayek
D. Schumpeter
Answer: A

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95. The trough of a business cycle is referred to as
A. Expansion
B. Boom
C. Trough
D. Peak
Answer: C

96. When aggregate economic activity is increasing, the economy is said to be in

A. An expansion
B. A contraction
C. A peak
D. A turning point
Answer: A

97. When aggregate economic activity is declining, the economy is said to be in

A. An expansion
B. A contraction
C. A peak
D. A turning point
Answer: B

98. Peaks and troughs of the business cycle are collectively known as
A. Volatility
B. Turning points
C. Equilibrium points
D. Real business cycle events
Answer: B

99. Who officially determines whether the economy is in recession or expansion?

A. The President of the United States
B. The U.S Congress
C. The Federal Reserve Board of Governors
D. The National Bureau of Economic Research
Answer: D

100. In which way recessions affect the real level ofGDP?

A. Recessions cause only temporary reduction in real level of GDP
B. Recessions cause large, permanent reductions in the real level of GDP

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 C. Recessions cause both temporary and permanent declines in real level of GDP
D. None of the above
Answer: C

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