1. Which one of the following is the objective of fiscalpolicy?

A. achieve full employment.

B. stabilize the price level.

C. maintain equilibrium in the Balance of Payments.

D. all of the above

Answer: [Link] 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: [Link] 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: [Link] 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: [Link] 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: [Link], 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: [Link]

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 theidentity

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. tity theory of money, P and Y represent theprice 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: [Link] finished goods and services sold in an economy.

12. Which of the following is not a component of AggregateDemand?

A. Saving

B. Investment

C. Consumption

D. Net Exports
Answer: [Link]

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: [Link] 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: [Link] of a new farm tractor.

15. Which factor would shift the Aggregate Demand curve tothe 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 inincome causes a(n) in money .
A. increase; supply

B. increase; demand
C. decrease; demand

D. decrease; supply

Answer: [Link]; 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. nvestment

C. the money supply

D. taxes
Answer: [Link]

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: [Link]; 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: [Link]; 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: [Link] 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: [Link] quality of the factors available

22. The Phillips curve implied that there was a trade- offavailable 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: [Link] and unemployment

23. A belief that expectations were exogenous could lead one to the view
that judgement about the future were likelyto be based on:
A. The best available information

B. Past experience
C. all of the above

D. none of the above

Answer: [Link] experience

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

A. open market operations

B. balanced accounts

C. reserve requirements

D. discount rates

Answer: [Link] 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 inaggregate

supply) will cause inflation.
A. constant

B. higher

C. lower

D. none of the above

Answer: [Link]

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: [Link] level of government spending

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

B. land costs fall.

C. real wages rise.

D. inflation expectations decrease.

Answer: [Link] wages rise.

29. The short-run Aggregate Supply curve is upward slopingonly because

we assume that resource costs are held .
A. constant
B. flexible

C. need more information

D. none of the above

Answer: [Link]
30. If Aggregate Demand exceeds Aggregate Supply, unwanted
inventories will begin to accumulate, forcingfirms to– prices to get
rid of those inventories.
A. zero

B. none of these

C. increase

D. reduce
Answer: [Link]

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

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 betweenmoney 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 supplyand 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 andemployment 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 effect

D. Pigou effect

Answer: d

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

C. Increase in Public borrowing and decrease in taxation

D. Decrease in public borrowing and increase in taxation

Answer: b

B. Increase in Government welfare projects and decrease in taxation

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 findssolution 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 4major 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 handto 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?[Link]
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)

[Link] 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 ofthe 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 resultin

A. business firms will cut production to keep from accumulatinginventories.
B. business firms will expand production to keep from accumulatinginventories.
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 autonomousexpenditure.
D) the change in equilibrium output to a change in the autonomousexpenditure.
Answer: d

71. In the Keynesian model of income determination, consumerexpenditure

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 modelbecause

A) it explains why a large change in autonomous spending has such a

small impact on equilibrium output.

B) it explains why a small change in autonomous spending can have a

large 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 intercept
D. 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 moneyB 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 interestC
prince
C inflation

Answer: a

78) The value of MPC in Keynesian model is:

A greater than zero and less than oneB MPC=1
C MPC greater than oneD
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 multiplayerA 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 isA summation of
consumption expenditure and investment expenditKeyne
B consumption expenditure onlyC
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 relatedC 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 II

Answer: b

84) Statement 1:There exists an inverse relationship between marketrates of interest

and price of bond Statement 2:The liquidity trap is asituation when at some very low
rate of interest all asset holders become bears
A both are incorrectB
both are correct
C statement one is correct and two is not correctD 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 autonomousexpenditure.
D) the change in equilibrium output to a change in the autonomousexpenditure.
Answer: a

86)) An increase in planned investment spending causes aggregateoutput to;

A) increase by an amount equal to the change in investment spending.
B) increase by an amount less than the change in investmentspending.
C) increase by an amount greater than the change in investmentspending.
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 downwardsD
Horizontal

Answer: b

90) the slope of IS curveA

vertical
B slope upward
C slope downwardsD
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 investmentB change in
investment to change in incomeC 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, andgovernment
spending.
B) consumer expenditure, planned investment spending, andgovernment
spending.
C) consumer expenditure, actual investment spending, government
spending, and net exports.
D) consumer expenditure, planned investment spending, government

spending, 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 investmentD 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 moneyC income

and investmen
D. Money supply and nvestment

Answer: b
98) ffective demand is where ;
A aggregate demand is equal to aggregate supply B Demand for
money is equal to supply of moneyC 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 leadto istatements
A Only statement 1 is correct B only
statement 2 are correctC both are
correct
D None of the above are correct

Answer: c

100) speculative demand for money is a function ofA income

B interestC
prince
D investment

Answer: b

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

b) Wealth
c) Saving

d) Investment
Ans: 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) Saving
Ans: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 aboveAns:

Flow concept

Answer: b

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

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 these
Ans: 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) Say
Ans: Myrdal

Answer: a

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

a) Static Model

b) Dynamic model

c) Comparative static
d) None of these Ans:
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 these
Ans: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 b Ans:

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 includeda)Households

b)Firm
c)Government
d)Foreign sector Ans:
Foreign sector

Answer: d

119) which of the following constitute the reason for differencebetween

Market prices and factor cost?
a) Indirect Taxes

b) Subsidies

c) Both A and B

d) neither a nor b
Ans: 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,resalec)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 From
Abroad Minus Factor Income Paid Abroad

d) Factor income received from abroad

Ans:F Factor Income Received From Abroad Minus Factor IncomePaid 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) loss
of 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 subsidy Ans: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 these
Ans: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) fertilizers purchased by a
farmer

d) all of these
Ans: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 MP
Ans:NNP FC

Answer: c

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

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 aresubstracted

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 cost Ans:

National Income

Answer: b

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

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 FC
Ans: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) scholarship
Ans: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 consuptionand saving
A) national income

b) personal income

c) personal disposable income

d) government income
Ans: 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 InvestmentAnswer: d
139) GDP MP = Rs.1000 and subsidies = Rs.50, then GDP FC will be :a)1050
b) 950

c) 1000

d) 900
Ans: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 of
these
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 of
these.
Ans:none of these.

Answer: d

143) ‘Distributed Profits’ is also known as:

a)Corporate tax
b) Dividend

c) Retained Earnings

d) None of these
Ans:Dividend

Answer: b

144) If a farmer sells Wheat to miller for RS.500 and miller sells flourto 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 Nationalincome 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 notincluded while
estimating national income in india?
A)medical services rendered by a dispensary

b) a housewife doing household work

c) a lawyer doing his
practiced)

D.a maid working full time with a familyAns: a

housewife doing household work

Answer: b

148) National product at current prices is higher than nationalproduct at

constant prices during a period of :
a) Rising prices

b) Falling prices

c) Constant prices

d) Both a and b
Ans: Rising prices
Answer: a

149) Net Factor Income from Abroad is taken into account whenNational
Income is calculated by:
A) value added method

b) income method
c) expenditure method
d) any of the three methods Ans:any
of the three methods

Answer: d

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