By DeeCee – Divine Classes

MOCK TEST 3

ECONOMICS

1. ………………….. produces goods and services for satisfaction of collective wants.

(a) External sector

(b) Producing sector

(c) Government sector

(d) Households sector

2. When consumption function shoots from Y-axis, it indicates that:

(i) consumption is zero when income is zero

(ii) saving is negative when income is zero.

(iii) consumption is positive when income is zero

(iv) both (ii) and (iii)

(a) Option (i)

(b) Option (iv)

(c) Option (ii)

(d) Option (iii)

3. Which of the following is not a component of domestic income?

(a) Compensation of employees

(b) Operating surplus

(c) Net factor income from abroad

(d) Mixed income

4. The equation of saving function is:

(a) S = - a + (1 - b) Y

(b) C = - a + by

(c) S = - a + (1 - b)

(d) S = f(Y)

5. "In 2016, RBI declared currency notes of 500 and 1000, no longer a legal tender". This function of RBI
is called as ……………………….. . This process is called as …………………….. .

(a) Bank Of Issue, Remonetisation

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(b) Financial Advisor, Demonetisation

(c) Bank of Issue, Demonetisation

(d) Financial Advisor, Remonetisation

6. Which of the following will be included in national income?

(a) Free services of owner occupied building

(b) Money receipt from sale of old car

(c) Scholarships received by students

(d) Remittances from abroad

7. Investment which varies directly with the level of income is known as:

(a) independent investment

(b) induced investment

(c) autonomous investment

(d) none of the above

8. There exists ........... relation between reserve requirements and total deposits created in the
economy.

(a) Direct

(b) Inverse

(c) Can't Say

(d) None of these

9. GDP is equal to

(a) NDPfc + depreciation

(b) NDPmp - depreciation

(c) NDPfc + subsidies

(d) NDPmp + depreciation

10. With the increase in income, autonomous expenditure …………………

(a) will increase proportionately

(b) will remain unaffected

(c) will decrease

(d) will increase

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11. When total deposits created in the economy are 50,000 with value of LRR as 10% the value of initial
deposits are ……………… .

(a) 2,000

(b) 5,000

(c) 10,000

(d) 20,000

12. Which will be included in the national income?

(a) Expenditure on maintenance of the building

(b) Expenditure on adding a floor to the building

(c) Payment of interest on a loan taken by an employee from the employer

(d) Social security contributions by employees

13. In the consumption function, 200 + 0.6Y the value of autonomous saving will be (in Rs crore):

(a) 200

(b) 0.6

(c) 0.4

(d) -200

14. When commercial banks fail to meet its financial requirements from all other sources, it approaches
central bank at the last. This makes central bank as ………………………. .

(a) Clearing House

(b) Custodian of Cash Reserves

(c) Bank of Issue

(d) Lender of Last Resort

15. Depreciation is a:

(a) Fall in the value of fixed assets due to normal wear and tear and expected obsolescence.

(b) Increase in the value of fixed assets due to normal wear and tear.

(c) Fall in the value of financial assets due to normal wear and tear and expected obsolescence.

(d) Fall in the value of fixed assets due to expected obsolescence.

16. At low level of income, saving is negative

(a) False.

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(b) Insufficient information

(c) Can't say

(d) True

17. Which of the following is not correct about the Central Bank?

(a) It is the issuer of money in the economy.

(b) It advances loans and accepts deposits from general public.

(c) It supervises the functioning of the commercial banks.

(d) It manages the public debt of the government.

18. Identify the true statement

A. There is an inverse relationship between MPS and multiplier

B. When APS is negative, MPS will also be negative

C. The value of APS can never be less than zero.

D. If MPC is zero the multiplier will also be zero.

(a) C

(b) D

(c) B

(d) A

19. ………………….. is the fraction of deposits that banks are required to keep as reserves legally with
central bank in the cash form.

(a) Statutory Liquidity Ratio

(b) Reverse Repo Rate

(c) Cash Reserve Ratio

(d) Repo Rate

20. The responsibility of fiscal policy lies with the ……………….. .

(a) commercial banks

(b) local government

(c) central government

(d) stock exchanges

21. When value of money multiplier is 25 and value of CRR is 1%, the value of SLR is …………………….. .

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(a) 1%

(b) 2%

(c) 3%

(d) 4%

22. Which of the following sources of receipts in government budget increase its liabilities?

(a) Borrowings

(b) Recovery of loans

(c) Dividend from public sector undertakings

(d) Direct taxes

23. Under Flexible Exchange Rate System, due to relaxation of global COVID-19 pandemic restrictions on
travel, there is increased movement of tourists from India to Maldives. This leads to ......... in domestic
currency of India.

(a) Depreciation

(b) Appreciation

(c) Devaluation

(d) Revaluation

24. A Balanced budget is one where:

(a) Estimated Receipts = estimated expenditure

(b) Estimated Receipts > estimated expenditure

(c) Estimated Receipts < estimated expenditure

(d) All of these

25. There exists ……………. relation between demand of foreign exchange and foreign exchange rate.

(a) Direct

(b) Inverse

(c) No relation

(d) None of the above

26. One of the Implications of fiscal deficit is:

(a) It increases the supply of money in the economy.

(b) It decreases the supply of money in the economy.

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(c) It maintains the supply of money in the economy.

(d) It does not affect the supply of money in the economy.

27. Which of the following is not true for Current Account?

(a) It records transactions which effect the output, income and employment of the country.

(b) It records accommodating transactions.

(c) It includes balance of trade.

(d) It included net exports.

28. A source to finance the government deficit is …………………….. .

(a) Borrowing from public

(b) Borrowing from private sector

(c) Borrowing from banks

(d) Borrowing from government

29. When receipts of foreign exchange are less than payments of foreign exchange, then BOP is:

(a) balanced

(b) deficit

(c) surplus

(d) none of these

30. The primary deficit is the borrowing requirements of the government for making …………………. .

(a) Some specific payments

(b) All types of payments

(c) Other than interest payments

(d) Interest payments

31. Which of the following statements is true?

(a) India has developed capital goods industry on the eve of Independence.

(b) India generated surplus from its foreign trade during the British rule.

(c) India adopted balanced growth model.

(d) Britishers initiated infrastructure development in India in order to compensate for the damage that
was done in case of handicrafts industry.

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32. Which one of the following organisations regulates the health sector in India?

(a) ICMR

(b) UGC

(c) AICTE

(d) RBI

33. Which of the following marks the negative impact of British rule in India?

(a) Developed commercial outlook of the farmers

(b) Change in composition of India's foreign trade

(c) Introduction of administrative and monetary system in India

(d) Commercialisation of agriculture.

34. Which of the following is not true for Price Support Policy?

(a) Government sets the minimum price at which produce will be sold in the market

(b) Any excess supply at floored price will be purchased by the government

(c) The buffer stock in this policy will be used by government during the time of food shortages

(d) This policy aims to provide benefits to the consumers

35. ……………………. Was set up for the development and promotion of small-scale industries in India.

(a) Karve Committee

(b) Tapas Mojumdar Committee

(c) Village and Small Scale Industries Committee

(d) Both (a) and (c)

36. ……………………. was the finance minister who was responsible for the implementation of New
Economic Policy 1991.

(a) Dr. Manmohan Singh

(b) Urjit Patel

(c) Narendra Modi

(d) Dr. Mahalanobis

37. Which of the following is not an objective of "Sampoorna Gramin Rozgar Yojna"?

(a) Generate employment for educated unemployed in urban areas

(b) Generate employment for surplus labour in rural areas

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(c) Overall development of rural areas

(d) Development of infrastructure

38. In ……………….., economic planning is done via direct participation of state or government.

(a) Directive Planning

(b) Socialistic Planning

(c) Comprehensive Planning

(d) None of the above

39. Assertion (A): India became self sufficient in the production of consumer goods.

Reason (R): India adopted Import Substitution Policy.

(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).

(b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion
(A).

(c) Assertion (A) is true but Reason (R) is false.

(d) Assertion (A) is false but Reason (R) is true.

40. Food for work programme was launched in.....

(a) 2001

(b) 2002

(c) 2003

(d) 2004

41. Human capital formation is a process of adding to exiting stocks of skills an expertise. It is therefore,
called as ………………….. Concept.

(a) Stock

(b) Flow

(c) Liability

(d) Can’t say

42. Which of the following is not a function of NABARD?

(a) To formulate the policies related to credit delivery in rural areas

(b) To provide funds to non institutional sources for solving the problem of rural credit

(c) To coordinate with agencies engaged in formal credit delivery system

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(d) To supervise the credit policies and take remedial measures

43. Statement 1: Rate of participation in rural areas is more than in urban areas.

Statement 2: Rate of participation of women in urban areas is more than that in rural areas.

(a) Both the statements are correct

(b) Both the statements are incorrect

(c) Statement 1 is correct and statement 2 is incorrect

(d) Statement 1 is incorrect and statement 2 is correct

44. the main aim of Great Leap Forward Campaign in China was to ensure rapid increase of ………………….

(a) Agriculture

(b) Industries

(c) Services

(d) Exports

45. ………………. refers to a situation in which number of people employed are more than required. If
extra people are removed, marginal product remains unchanged.

(a) Disguised Unemployment

(b) Seasonal unemployment

(c) Hidden Unemployment

(d) Both (a) and (c)

46. Pakistan introduced its economic reforms in the year ……………………… .

(a) 1974

(b) 1976

(c) 1978

(d) 1988

47. Which of the following statements is correct?

(a) Skill India Campaign was launched in the year 2016.

(b) Atamnirbhar Campaign aims to make India self reliant.

(c) Unorganized sector consists of firms with more than 10 workers.

(d) Female participation is more in urban areas as compared to rural areas.

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48. While Law of Demand explains the ....... relation between the price of own good and quantity
demanded, elasticity of demand expresses the ……………. relation.

(a) Quantitative, qualitative

(b) Qualitative, Quantitative

(c) Quantitative Only

(d) Qualitative Only

49. There exists ........... relation between the slope of demand curve and elasticity of demand.

(a) Direct

(b) Inverse

(c) Either (a) or (b)

(d) Can't Say

50. Inelastic Demand refers to the case where …………………….

(a) Percentage change in quantity demanded is more than percentage change in price

(b) Percentage change in quantity demanded is less than percentage change in price

(c) Percentage change in quantity demanded is equal to percentage change in price

(d) Any units of commodity can be purchased at a given price.

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