MULTIPLE CHOICE QUESTIONS

ECONOMICS
CLASS : XII
MACRO ECONOMICS
1. What is known as the study of individual units?
(A) Macroeconomics (B) Microeconomics
(C) Income and Employment Theory (D) Development economics

2. What is the main cause of all economic problems?

(A) Abundance (B) Convenience
(C) Scarcity (D) None of these

3. Study of aggregates is known as _

(A) Macroeconomics (B) Microeconomics
(C) Price theory (D) Factor price determination

4. What is the name of the book written by J.M. Keynes?

(A) Wealth of Nation (B) Political economy
(C) The General Theory of Employment, Interest and Money
(D) None of these

5. When was the famous book of Prof. Keynes published?

(A) 1930 (B) 1931 (C) 1936 (D) 1940

6. When did the great depression occur?

(A) 1929-30 (B) 1934-35 (C) 1938-39 (D) 1941-42

7. Who is known as the father of modern macroeconomics?

(A) Adam Smith (B) J. M. Keynes (C) Samuelson (D) Hicks

8. Mr. Skund Kumar wants to study the national income. Which branch
of economics will he have to study?
(A) Microeconomics (B) Price theory
(C) Factor price determination (D) Macroeconomics

9. NNPMP =
(A) GNPMP – Depreciation (B) NDPMP + Net factor income from abroad
(C) NNPFC + Net indirect taxes (D) All of these

10. GDPFC =
(A) GDPMP – Net indirect taxes (B) GDPMP + Net indirect taxes
(C) GDPMP + Subsidies (D) GDPMP – Indirect taxes

11. NDPFC =
(A) GDPFC – Indirect taxes (B) GDPFC – Depreciation
(C) GDPFC + Economic subsidy (D) All of these

12. NNPFC =
(A) GNPFC – Depreciation (B) NNPMP + Economic subsidy – Indirect taxes
(C) NDPMP + Net factor income from abroad
(D) All of these

13. Which of the following is the method of measuring National Income?

(A) Income method (B) Product method
(C) Expenditure method (D) All of these

14. Why are the intermediate goods not included in the National Income while
measuring National Income?
(A) To avoid double accounting (B) It decreases income
(C) Intermediate goods are not good (D) All of these
15. Who had made the first attempt at National Income Accounting?
(A) Prof. D.R.Gadgill (B) Simon Kuznets
(C) J.M.Keynes (D) Gregory King

16. Calculation of National Income at Market Prices is known as _

(A) Money income (B) Real income
(C) Non-monetary income (D) None of these

17. Accounting of National Income at constant prices is known as

(A) Money income (B) Real income
(C) Current income (D) Domestic income

18. Which of the following items are excluded from GNP measurement?
(A) Purely financial transactions
(B) Transfer of used goods and non-market goods and services
(C) Illegal activities and the value of leisure (D) All of these

19. The subject of the Study of Macro Economics is:

(a) The Principle of National Income (b) The Principle of Consumer
(c) The Principle of Producer (d) None of these

20. Macro Economics Studies:

(a) Employment opportunities in the economy
(b) Theory of supply of Commodities (c) Elasticity of demand in Scooter
(d) Price of wheat in the market

21. What is the defect of the barter system?

(A) Lack of double coincidence of wants
(B) Difficulty in the measurement of value
(C) Difficulty in store of value (D) All of these

22. Which of the following is the credit money?

(A) Cheque and draft (B) Promissory note
(C) Exchange note (D) All of these

23. Which among the following is the near money?

(A) Bonds (B) Insurance policy
(C) Securities (D) All of these

24. Which of the following is the feature of money?

(A) General acceptability (B) Homogeneous unit
(C) Liquid asset (D) All of these

25. In order to encourage investment in the economy, the Central Bank may
(A) Reduce Cash Reserve Ratio
(B) Increase Cash Reserve Ratio
(C) Sell Government securities in the open market (D) Increase Bank Rate

26. Institution that accepts deposits for lending purpose is known as

(A) Commercial Bank (B) Central Bank (C) Government (D) Public

27. Which of the following is the function of a commercial bank?

(A) Accepting deposits (B) Credit creation
(C) Agency function (D) All of these

28. The central bank can increase the availability of credit by:
(A) Rasing repo rate (B) Raising reverse repo rate
(C) Buying government securities (D) Selling government securities
29. Giving permission to withdraw money by an amount more than deposited to
is known as _
(A) Advance (B) Overdraft (C) Loan (D) None of these

30. What are the alternative measures of money supply in India?

(A) M1 (B) M2 (C) M3 and M4 (D) All of these

31. What is the cause of Keynesian perfectly elastic Aggregate Supply curve?
(A) Wage price rigidity (B) Constant Marginal Product of Labour
(C) Both of these (D) None of these

32. According to classical economists, there always exists equilibrium in the

economy.
(A) Full employment (B) Underemployment
(C) Over full employment (D) None of these

33. What will be APC when APS = 0?

(A) One (B) Zero (C) Two (D) Infinite

34. If the income is ₹ 400 crores and consumption is ₹ 250 crores, what will
be the APC?
(A) 0.67 (B) 0.63 (C) 0.60 (D) 0.58

35. What is a fiscal measure of correcting deficient demand?

(A) Increase in public expenditure and decrease in taxes
(B) Decrease in public debt
(C) Deficit financing (D) All of these

36. Which is the measure of correcting excess demand?

(A) Deficit financing (B) Reduction in taxes
(C) Increase in public expenditure (D) Increase in public debt

37. Suppose in a hypothetical economy, the income rises from ₹ 5,000 crores to
₹ 6,000 crores. As a result, the consumption expenditure rises from ₹ 4,000
crores to ₹ 4,600 crores. Marginal propensity to consume in such a case
would be
(A) 0.8 (B) 0.4 (C) 0.2 (D) 0.6

38. On the basis of government law, the compulsory payment made by the public
is known as _
(A) Expenditure (B) Investment (C) Tax (D) Subsidy

39. Which among is the direct tax?

(A) Income tax (B) Gift and Corporation tax
(C) Wealth tax (D) All of these

40. The value of multiplier is:

(A) 1/MPC (B) 1/MPS (C) 1/1−MPS (D) 1/MPC−1

41. If MPC = 1, the value of the multiplier is:

(A) 0 (B) 1 (C) Between 0 and 1 (D) Infinity

42. Aggregate demand can be increased by:

(A) increasing bank rate (B) selling govt, securities by RBI
(C) increasing cash reserve ratio (D) none of these

43. If the marginal propensity to consume is greater than the marginal propensity
to save, the value of the multiplier will be
(A) greater than 2 (B) less than 2 (C) equal to 2 (D) equal to 5
44. Supply creates its own Demand. Who gave this law?
(a) J.B.Say (b) J.S.Mill (c) Keynes (d) Ricardo

45. Who is the author of the book ‘General Theory of Employment, Interest, and
Money’?
(a) A.C. Pigou (b) Malthus (c) J.M. Keynes (d) Marshall

46. Which of the following is true for the Classical Theory of Employment?
(a) State of full employment in the economy
(b) No possibility of over-or under-production in the economy
(c) Both (a) and (b) (d) None of the above

47. On which factor Keynesian Theory of Employment depends?

(a) Effective Demand (b) Supply
(c) Production Efficiency (d) None of the above

48. Which is the determining factor for investment?

(a) Marginal Efficiency of Capital (b) Interest Rate
(c) Both (a) and (b) (d) None of these

49. According to Keynes, investment implies:

(a) Financial Investment (b) Real Investment
(c) Both (a) and (b) (d) None of the above

50. With the increase in investment, MEC:

(a) Rises (b) Falls (c) Remains Constant (d) None of these

51. When government spends more than it collects by way of revenue, it incurs
(A) Budget surplus (B) Budget deficit
(C) Capital expenditure (D) Revenue expenditure

52. The fiscal deficit is the difference between the government’s total expenditure
and its total receipts excluding
(A) Interest (B) Taxes (C) Spending (D) Borrowings

53. Which of the following is the component of a budget?

(A) Fiscal budget (B) Capital budget (C) Both of these (D) None of these

54. What is the annual statement of the government’s fiscal revenue and fiscal
expenditure known?
(A) Budget (B) Fiscal Budget (C) Capital Budget (D) All of these

55. How many types of revenue receipts are there?

(A) 2 (B) 3 (C) 4 (D) 6

56. The amount collected by the government as taxes and duties is known as _
(A) Capital receipts (B) Tax revenue receipts
(C) Non-tax revenue receipts (D) All of these

57. The amount collected by the government in the form of interest, fees, and
dividends is known as
(A) Tax-revenue receipts (B) Capital receipts
(C) Non-tax revenue receipts (D) None of these

58. Borrowing in the government budget is:

(A) Revenue deficit (B) Fiscal deficit
(C) Primary deficit (D) Deficit in taxes

59. The non-tax revenue in the following is:

(A) Export duty (B) Import duty (C) Dividends (D) Excise
60. The primary deficit in a government budget will be zero, when _
(A) Revenue deficit is zero (B) Net interest payments are zero
(C) Fiscal deficit is zero (D) Fiscal deficit is equal to interest payment

61. Direct tax is called direct because it is collected directly from:

(A) The producers on goods produced (B) The sellers on goods sold
(C) The buyers of goods (D) The income earners

62. Financial Year in India is:

(a) April I to March 31 (b) January 1 to December 31
(c) December 1 to September 30 (d) None of the above

63. Which objectives government attempts to obtain by Budget?

(a) To Promote Economic Development
(b) Balanced Regional Development
(c) Redistribution of Income and Wealth (d) All the above

64. Which is a component of Budget?

(a) Budget Receipts (b) Budget Expenditure
(c) Both (a) and (b) (d) None of the above

65. Which is a component of the Budget Receipt?

(a) Revenue Receipt (b) Capital Receipt
(c) Both (a) and (b) (d) None of the above

66. Tax revenue of the Government includes:

(a) Income Tax (b) Corporate Tax (c) Excise Duty (d) All of these

67. Which is included in the Direct Tax?

(a) Income Tax (b) Gift Tax (c) Both (a) and (b) (d) Excise Duty

68. Which is included in Indirect Tax?

(a) Excise Duty (b) Sales Tax (c) Both (a) and (b) (d) Wealth Tax

69. The expenditures which do not create assets for the government is called:
(a) Revenue Expenditure (b) Capital Expenditure
(c) Both (a) and (b) (d) None of the above

70. Direct tax is:

(a) Income Tax (b) Gift Tax (c) Both (a) and (b) (d) None of these

71. In India, one rupee note is issued by:

(a) Reserve Bank of India (b) Finance Ministry of Government of India
(c) State Bank of India (d) None of these

72. Capital budget consist of:

(a) Revenue Receipts and Revenue Expenditure
(b) Capital Receipts and Capital Expenditure
(c) Direct and Indirect Tax (d) None of these

73. The operation of future delivery in the foreign exchange market is known
as
(A) Spot market (B) Current market
(C) Forward market (D) Domestic market

74. Hybrid in management of fixed and flexible exchange rate is known as

(A) Managed to float (B) Crawling Peg
(C) Wider Bands (D) None of these
75. When was the gold standard abandoned?
(A) 1930’s (B) 1920’s (C) 1940’s (D) 1950’s

76. Trade of visible items between the countries is known as

(A) Balance of Payment (B) Balance of Trade
(C) Deficit Balance (D) All of these

77. When the import and export of visible items are equal, the situation is known
as _
(A) Balance of Trade (B) Balance of Payment
(C) Trade Surplus (D) Trade Deficit

78. When there is a favourable balance of trade?

(A) X > M (B) X = M (C) X < M (D) None of these

79. When there is unfavourable balance of trade?

(A) X > M (B) X = M (C) X < M (D) None of these

80. The trade of visible and invisible items is known as _

(A) Balance of Payments (B) Balance of Trade
(C) Deficit of interest (D) Profit

81. Other things remaining unchanged, when in a country the price of foreign
currency rises, national income is:
(A) Likely to rise (B) Likely to fall
(C) Likely to rise and fall both (D) Not affected

82. Other things remaining the same, when in a country the market price of
foreign currency falls, national income is likely:
(A) To rise (B) To fall (C) To rise or to fall (D) To remain affected

83. Which one is the king of the exchange rate?

(a) Fixed Exchange Rate (b) Flexible Exchange Rate
(c) Both (a) and (b) (d) None of the above

84. Which of the following is true?

(a) Fixed exchange rate is determined by the government
(b) Flexible exchange rate is determined by market forces (demand and supply of
foreign exchange)
(c) Both (a) and (b) (d) None of the above

85. Which one is a kind of fixed exchange rate?

(a) Gold Standard System of Exchange Rate
(b) Bretton Woods System of Exchange Rate
(c) Both (a) and (b) (d) None of the above

86. Which one is a merit of the fixed exchange rate?

(a) Promotes Foreign Trade (b) Induces Foreign Capital
(c) Increases Capital Formation (d) All the above

87. Which one is a demerit of the fixed exchange rate?

(a) Ignores National Interests (b) Restricted Movement of Capital
(c) Sudden Fluctuations in Exchange Rates (d) All the above

88. Which one is a merit of the flexible exchange rate?

(a) Simple System (b) Continuous Adjustments
(c) Improves Balance of Payments (d) All the above
89. Which one is a demerit of the flexible exchange rate?
(a) Bad Results of Low Rate (b) Uncertainty
(c) Instability in Foreign Exchange (d) All the above

90. Which one is a source of the demand for foreign exchange?

(a) Imports of Goods and Services from Abroad
(b) Investment in Foreign Nations
(c) Gift Scheme to Foreign Nations (d) All the above

91. Foreign exchange is determined by:

(a) Demand for foreign currency (b) Supply of foreign currency
(c) Demand and supply in the foreign exchange market
(d) None of the above

92. The forms of foreign exchange market is/are:

(a) Spot market (b) Forward market
(c) Both (a) and (b) (d) None of these

93. The foreign exchange rate is determined by:

(a) Government (b) Bargaining (c) World Bank
(d) Demand and Supply forces

94. By exchange rate we mean:

(a) How much local currency we have to pay for a foreign currency
(b) How much of a foreign currency we have to pay for another foreign currency
(c) The rate at which foreign currency is bought and sold
(d) All of these