MCQOPTIONS
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MCQOPTIONS
This section includes 170 Mcqs, each offering curated multiple-choice questions to sharpen your Economics (CBCS) knowledge and support exam preparation. Choose a topic below to get started.
| 1. |
The value of money in Fisher s equation is determined by |
| A. | Demand for money |
| B. | Supply of money |
| C. | Demand and supply of money |
| D. | None of the above |
| Answer» D. None of the above | |
| 2. |
According to the Quantity Theory of Money, the value of money depends upon |
| A. | Quantity theory of money in circulation |
| B. | Purchasing power of money |
| C. | Demand for money |
| D. | Price level |
| Answer» B. Purchasing power of money | |
| 3. |
According to Cambridge equation, the value of money depends upon |
| A. | Demand for money |
| B. | Supply of money |
| C. | Demand for goods and services |
| D. | All of the above |
| Answer» B. Supply of money | |
| 4. |
Which is not the function of money |
| A. | Make demand and supply equal |
| B. | Store of value |
| C. | Medium of exchange |
| D. | Measure of value |
| Answer» B. Store of value | |
| 5. |
The degree of relationship between the demand for and the supply of money in Fisher s equation will be |
| A. | > |
| B. | = |
| C. | < |
| D. | None of the above |
| Answer» C. < | |
| 6. |
High-powered money is also known as |
| A. | Base money |
| B. | Reserve money |
| C. | Narrow money |
| D. | All of the above |
| Answer» E. | |
| 7. |
Who stated, Bad money drives good money out of circulation, when both of them are full legal tender ? |
| A. | Irving Fisher |
| B. | Milton Friedman |
| C. | J.M. Keynes |
| D. | Thomas Gresham |
| Answer» E. | |
| 8. |
Value of money is |
| A. | Directly related to the price level |
| B. | Inversely related to the price level |
| C. | Proportionately related to the price level |
| D. | All the above |
| Answer» C. Proportionately related to the price level | |
| 9. |
Who stated, Money is what money does ? |
| A. | Milton Friedman |
| B. | Walker |
| C. | Irving Fisher |
| D. | Thomas Gresham |
| Answer» C. Irving Fisher | |
| 10. |
Barter system means |
| A. | Purchase of commodity with money |
| B. | Sale of commodity with money |
| C. | Purchase and sale of commodity with commodity |
| D. | None of the above |
| Answer» D. None of the above | |
| 11. |
Currency notes and coins are called as: |
| A. | flat money |
| B. | legal tenders |
| C. | Fiat money |
| D. | Both (b) and (c |
| Answer» E. | |
| 12. |
Barter system has the defect of |
| A. | Goods exchanged are of inferior quality |
| B. | Goods cannot be exchanged for services |
| C. | Lack of common measure of value |
| D. | None of the above |
| Answer» D. None of the above | |
| 13. |
An increase in aggregate is more likely to lead to demand pull inflation if: |
| A. | Aggregate supply is perfectly elastic |
| B. | Aggregate supply is perfectly inelastic |
| C. | Aggregate supply is unit inelastic |
| D. | Aggregate supply is relatively inelastic |
| Answer» C. Aggregate supply is unit inelastic | |
| 14. |
In short-run, unemployment may fall below the natural rate of unemployment if: |
| A. | Nominal wages have risen less than inflation |
| B. | Nominal wages have risen at the same rate as inflation |
| C. | Nominal wages have risen more than inflation |
| D. | Nominal wages have risen less than unemployment |
| Answer» B. Nominal wages have risen at the same rate as inflation | |
| 15. |
The effects of inflation on the price competitiveness of a country s products may be offset by |
| A. | An appreciation of the currency |
| B. | A revaluation of the currency |
| C. | A depreciation of the currency |
| D. | None of the above |
| Answer» D. None of the above | |
| 16. |
Which economist proposed that Inflation is always and everywhere a monetary phenomenon |
| A. | JM Keynes |
| B. | J.R.Hicks |
| C. | Milton Friedman |
| D. | Franco Modigliani |
| Answer» D. Franco Modigliani | |
| 17. |
Countries with the highest inflation rates are likely to have |
| A. | The highest rate of money growth |
| B. | Large budget deficits |
| C. | The lowest interest rates |
| D. | Both (a) and (b |
| Answer» E. | |
| 18. |
A one-time increase in the price level is |
| A. | rarely reported by the news media as inflation, but is nevertheless considered to be inflation by economists |
| B. | regularly reported by the news media as inflation, but is not considered to be inflation by economist. |
| C. | regularly reported by the news media as inflation because it is considered to be inflation by economists |
| D. | None of the above |
| Answer» C. regularly reported by the news media as inflation because it is considered to be inflation by economists | |
| 19. |
According to monetarists, inflation is caused by |
| A. | Supply shocks |
| B. | Expansionary fiscal policies |
| C. | Expansionary monetary policies |
| D. | Rising prices |
| Answer» D. Rising prices | |
| 20. |
The concept of economic growth is |
| A. | Identical with the concept of economic development |
| B. | Narrower than the concept of economic development |
| C. | Wider as compared to that of economic development |
| D. | Unrelated to the concept of economic development |
| Answer» C. Wider as compared to that of economic development | |
| 21. |
Economic growth is measured as a percentage change in |
| A. | Gross Domestic Product |
| B. | Gross National Product |
| C. | Both (a) and (b |
| D. | Government expenditure |
| Answer» D. Government expenditure | |
| 22. |
Which of the following is not an indicator of economic development? |
| A. | Increase in literacy level |
| B. | Low growth of population |
| C. | Low proportion of labour force in the primary section |
| D. | Decrease in inequality of income |
| Answer» D. Decrease in inequality of income | |
| 23. |
The concept of economic growth is more relevant for |
| A. | Developed countries |
| B. | Underdeveloped countries |
| C. | European countries |
| D. | All of the above |
| Answer» B. Underdeveloped countries | |
| 24. |
The rate of growth of the economy mainly depends upon |
| A. | The rate of growth of labour force |
| B. | The proportion of national income saved and invested |
| C. | The rate of technological improvements |
| D. | All of the above |
| Answer» E. | |
| 25. |
Besides increase in output, economic development is concerned with |
| A. | Inputs and their efficiency |
| B. | Equitable distribution of income |
| C. | Life sustenance, self-esteem and freedom from want, ignorance and squalor |
| D. | All of the above |
| Answer» E. | |
| 26. |
The most important factor in economic development is |
| A. | Quality of human resources |
| B. | Quality of natural resources |
| C. | Quality of governance |
| D. | Quality of banking system |
| Answer» B. Quality of natural resources | |
| 27. |
The most simple and popular method of measuring economic development is to calculate the trend of Gross National Product (GNP) at |
| A. | Current prices |
| B. | Constant prices |
| C. | Both of the above |
| D. | None of the above |
| Answer» C. Both of the above | |
| 28. |
The Solow s growth model assumes that the two factors of production labour and capital are paid according to |
| A. | their marginal physical productivities |
| B. | the skills of the labour |
| C. | the quality of the output |
| D. | None of the above |
| Answer» B. the skills of the labour | |
| 29. |
When economic development takes place |
| A. | Share of services in GDP increases |
| B. | Share of agriculture in GDP increases |
| C. | Share of industry in GDP increases |
| D. | Both (a) and (c |
| Answer» E. | |
| 30. |
Which of the following is acting as an obstacle to economic development |
| A. | Shortage of money |
| B. | Urbanization |
| C. | Political instability |
| D. | Shortage of labour |
| Answer» D. Shortage of labour | |
| 31. |
Neo-classical growth model considered two-factor production function with |
| A. | Technology and output |
| B. | Capital and labour |
| C. | Labour and technology |
| D. | Capital and technology |
| Answer» C. Labour and technology | |
| 32. |
Technological progress helps in |
| A. | Increase in overall productivity |
| B. | Economic growth |
| C. | Both of the above |
| D. | None of the above |
| Answer» D. None of the above | |
| 33. |
Economic growth can be measured in terms of changes in |
| A. | GDP per head in agricultural sector |
| B. | GDP per head of working population |
| C. | Real national income per head |
| D. | All of the above |
| Answer» D. All of the above | |
| 34. |
Inflation is a state in which the value of money is falling i.e., prices are rising .Who said this? |
| A. | Hansen |
| B. | Keynes |
| C. | Crowther |
| D. | Fisher |
| Answer» D. Fisher | |
| 35. |
If inflation is allowed to continue without any check, it is known as |
| A. | Supressed inflation |
| B. | Normal inflation |
| C. | Open inflation |
| D. | Deflation |
| Answer» D. Deflation | |
| 36. |
When both prices and money income fall, the situation is called |
| A. | Disinflation |
| B. | Recession |
| C. | Deflation |
| D. | Anti-inflation |
| Answer» D. Anti-inflation | |
| 37. |
The phenomenal rise in prices accompanied by increased real income is known as |
| A. | inflation |
| B. | deflation |
| C. | reflation |
| D. | None of the above |
| Answer» D. None of the above | |
| 38. |
During inflation, who suffers the most? |
| A. | Wage and salary earners |
| B. | Creditors |
| C. | Debtors |
| D. | Businessman |
| Answer» B. Creditors | |
| 39. |
Inflation in a developed country usually sets in |
| A. | Before the point of full employment |
| B. | After the point of full employment |
| C. | at the point full employment |
| D. | None of the above |
| Answer» C. at the point full employment | |
| 40. |
When government interrupts price rise, there is |
| A. | Suppressed inflation |
| B. | Reflation |
| C. | Open inflation |
| D. | Deflation |
| Answer» B. Reflation | |
| 41. |
Inflation leads to |
| A. | Distribution of income equal |
| B. | Distribution of income unequal |
| C. | No effect on distribution of income |
| D. | Affects only industrial sector |
| Answer» C. No effect on distribution of income | |
| 42. |
Inflation in an under-developed economy generally sets in |
| A. | Before the point of full employment |
| B. | After the point of full employment |
| C. | At the point of full employment level |
| D. | All of the above |
| Answer» B. After the point of full employment | |
| 43. |
Which of the following measure proves effective in reducing the rate of inflation? |
| A. | Decreased personal consumption |
| B. | Evaluation of currency |
| C. | Increased taxation |
| D. | All of the above |
| Answer» D. All of the above | |
| 44. |
Theoretically, one can distinguish a demand- pull inflation from a cost-push inflation by comparing |
| A. | How fast prices rise relative to wages |
| B. | The unemployment rate with its natural rate level |
| C. | When prices rise relative to wages |
| D. | None of the above |
| Answer» C. When prices rise relative to wages | |
| 45. |
Demand-pull inflation arises when |
| A. | Policymakers set a very high unemployment target |
| B. | A persistent budget deficit is financed by money creation |
| C. | The deficit is financed by selling bonds to the public |
| D. | All of the above |
| Answer» C. The deficit is financed by selling bonds to the public | |
| 46. |
Which of the following can be undertaken to control inflation? |
| A. | Control on public expenditure |
| B. | Control on hoarding and black-marketing |
| C. | Effective control on credit |
| D. | All of the above |
| Answer» E. | |
| 47. |
Governments may end up with a high money growth rate and high inflation as a result of policies designed to |
| A. | Lower unemployment |
| B. | Finance persistent government budget deficits through money creation rather than by issuing bonds |
| C. | Redistribute wealth from debtors to creditors |
| D. | Both ( a) and (b |
| Answer» E. | |
| 48. |
Government may pursue inflationary monetary policies |
| A. | To promote high employment |
| B. | To accommodate demands of workers for higher wages |
| C. | To finance a persistent budget deficit |
| D. | All of the above |
| Answer» E. | |
| 49. |
Which of the following is phenomenon that leads to Hyperinflation? |
| A. | It is a situation when aggregate demand in an economy outpaces aggregate supply |
| B. | It is a situation of persistent rise in inflation along with dip in growth and increase in unemployment |
| C. | It is a situation caused by an increase in prices of inputs like labour, raw material etc |
| D. | It is a situation when a nation experiences very high and accelerating inflation |
| Answer» E. | |
| 50. |
Inflationary gap said to exist when |
| A. | Real GDP >Potential GDP |
| B. | Real GDP <Potential GDP |
| C. | Real GDP= Potential GDP |
| D. | Unemployment rate> natural rate of unemployment |
| Answer» B. Real GDP <Potential GDP | |