MCQOPTIONS
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MCQOPTIONS
This section includes 179 Mcqs, each offering curated multiple-choice questions to sharpen your Economics (CBCS) knowledge and support exam preparation. Choose a topic below to get started.
| 51. |
Who proclaimed the doctrine of invisible hand ? |
| A. | Adam Smith |
| B. | A. C. Pigou |
| C. | Kaldor-Hicks |
| D. | V. Pareto |
| Answer» B. A. C. Pigou | |
| 52. |
Social Welfare function is a function of |
| A. | All the individuals constituting the society |
| B. | All consumers excluding producers |
| C. | Only sample of individuals in society |
| D. | None of the above |
| Answer» B. All consumers excluding producers | |
| 53. |
If any policy change benefits any one section of the society (gainers) to such an extent that it is better off even after the payment of compensation to the other sections of the society (losers) out of the benefits received, then that change leads to |
| A. | decrease in social welfare |
| B. | Neither decrease nor increase in social welfare |
| C. | increase in social welfare |
| D. | None of the above |
| Answer» D. None of the above | |
| 54. |
If inflation occurs, investment will be |
| A. | More profitable |
| B. | Less profitable |
| C. | More difficult |
| D. | None of the above |
| Answer» C. More difficult | |
| 55. |
Who among the following economist accepted growth of GNP as a criterion of Social Welfare |
| A. | Nicholas Kaldor |
| B. | Adam Smith |
| C. | Jeremy Bentham |
| D. | Ohlin |
| Answer» C. Jeremy Bentham | |
| 56. |
Air pollution can be termed as a |
| A. | Social benefit |
| B. | Social cost |
| C. | Social security measure |
| D. | All of the above |
| Answer» C. Social security measure | |
| 57. |
Internal rate of return is also identified as the |
| A. | Price and location criteria |
| B. | Physical and location criteria |
| C. | Price and physical criteria |
| D. | None of the above |
| Answer» B. Physical and location criteria | |
| 58. |
If the net present value is greater than zero, then the project is |
| A. | Accepted |
| B. | Rejected |
| C. | Neither accepted nor rejected |
| D. | Postponed |
| Answer» B. Rejected | |
| 59. |
The period of time required to recover initial cost of investment is called |
| A. | Payback period |
| B. | Annual average rate of return |
| C. | Internal rate of return |
| D. | Net present value |
| Answer» B. Annual average rate of return | |
| 60. |
The number of years required to recover initial cost of investment is called |
| A. | Recover period |
| B. | Take-back period |
| C. | Payback period |
| D. | Annual average rate of return |
| Answer» D. Annual average rate of return | |
| 61. |
In an investment project, the lower the rate of interest |
| A. | No significant change in the value of the project |
| B. | The lower the present value of the project |
| C. | The higher the present value of the project |
| D. | None of the above |
| Answer» D. None of the above | |
| 62. |
The rate of discount which equilibrates the cost of capital good s and the expected future returns from the capital good is known as |
| A. | Internal rate of return |
| B. | Net present value |
| C. | Average annual rate of return |
| D. | None of the above |
| Answer» B. Net present value | |
| 63. |
If the internal rate of return (IRR) is negative, then the investor |
| A. | Loses money |
| B. | Gains money |
| C. | Neither gains nor loses money |
| D. | None of the above |
| Answer» B. Gains money | |
| 64. |
If the net present value (NPV) is more than one, then the project may be |
| A. | Accepted |
| B. | Rejected |
| C. | Accepted or rejected |
| D. | All of the above |
| Answer» B. Rejected | |
| 65. |
If rate of interest is 10% the PV (present value) of Rs. 100 received in 1 years time is |
| A. | 90 |
| B. | 90.9 |
| C. | 95 |
| D. | 110 |
| Answer» C. 95 | |
| 66. |
The reason that finding the present value of a future sum of money requires us to discount it, is that: |
| A. | Waiting involves risk |
| B. | We don t know when we shall receive it |
| C. | Inflation will reduce its purchasing power |
| D. | Waiting deprives us of its use |
| Answer» E. | |
| 67. |
___________ on capital is called Cost of capital . |
| A. | Lower expected return |
| B. | Normally expected return |
| C. | Higher expected return |
| D. | None of the above |
| Answer» C. Higher expected return | |
| 68. |
Professor Knight is famous for his theory of: |
| A. | Rent |
| B. | Profit |
| C. | Population |
| D. | Wages |
| Answer» C. Population | |
| 69. |
Projects with __________ are preferred |
| A. | Lower payback period |
| B. | Normal payback period |
| C. | Higher payback period |
| D. | Any of the above |
| Answer» B. Normal payback period | |
| 70. |
The values of the future net incomes discounted by the cost of capital are called |
| A. | future income |
| B. | Internal rate of return |
| C. | Net present values |
| D. | Discounted capital cost |
| Answer» D. Discounted capital cost | |
| 71. |
The internal Rate of Return (IRR) criterion for project acceptance, under theoretically infinite funds is: accept all projects which have |
| A. | IRR equal to the cost of capital |
| B. | IRR greater than the cost of capital |
| C. | IRR less than the cost of capital |
| D. | None of the above |
| Answer» C. IRR less than the cost of capital | |
| 72. |
Under Net present value criterion, a project is approved if |
| A. | Its net present value is positive |
| B. | The funds are unlimited |
| C. | Both (A) and (B |
| D. | None of the above |
| Answer» D. None of the above | |
| 73. |
Which of the following criterion is often preferred |
| A. | Net present value |
| B. | Profitability index |
| C. | Internal Rate of Return |
| D. | Payback period |
| Answer» B. Profitability index | |
| 74. |
A project is accepted when |
| A. | Net present value is greater than zero |
| B. | Profitability index will be greater than unity |
| C. | Internal Rate of Return will be greater than cost of capital |
| D. | Any of the above |
| Answer» E. | |
| 75. |
Where capital availability is unlimited and the projects are not mutually exclusive, for the same cost of capital, following criterion is used |
| A. | Net present value |
| B. | Internal Rate of Return |
| C. | Profitability Index |
| D. | All of the above |
| Answer» E. | |
| 76. |
The project is accepted of |
| A. | the profitability index is equal to one |
| B. | The funds are unlimited |
| C. | the profitability index is greater than one |
| D. | Both (B) and (C |
| Answer» E. | |
| 77. |
Bergson s name is associated with |
| A. | Social welfare function |
| B. | Pareto Optimality criterion |
| C. | Compensation criterion |
| D. | Welfare maximization criterion |
| Answer» B. Pareto Optimality criterion | |
| 78. |
When the allocation of resources is Pareto efficient |
| A. | society is providing the greatest good to the greatest number. |
| B. | no consumer would prefer someone else's consumption bundle to his or her own. |
| C. | it is not feasible to make someone better off without making someone worse off. |
| D. | it is feasible to make someone better off without making someone worse off. |
| Answer» D. it is feasible to make someone better off without making someone worse off. | |
| 79. |
The statement "The unemployment rate for teens is higher than that for adults" is |
| A. | A normative statement. |
| B. | A positive statement |
| C. | A political statement. |
| D. | An ethical statement. |
| Answer» C. A political statement. | |
| 80. |
If some allocation of resources is Pareto efficient, then that allocation satisfies: |
| A. | allocative efficiency and productive efficiency. |
| B. | allocative efficiency and distributive efficiency. |
| C. | productive efficiency and distributive efficiency. |
| D. | allocative efficiency, productive efficiency, and distributive efficiency. |
| Answer» E. | |
| 81. |
When two commodities X and Y must be allocated among consumers, a necessary condition for distributive efficiency is that: |
| A. | all firms be price takers. |
| B. | all firms minimize cost. |
| C. | commodity X must be allocated to the consumers with the largest values of MRSXY |
| D. | the marginal rates of substitution MRSXY for all consumers must be equal. |
| Answer» E. | |
| 82. |
The necessary condition for allocative efficiency is that each commodity be produced in an amount that makes the marginal benefit to society of the last unit produced equal to the marginal cost to society of that last unit. The satisfaction of this condition in a market economy relies on the assumptions of: |
| A. | utility maximization, profit maximization, and perfect competition. |
| B. | utility maximization and profit maximization, but not perfect competition. |
| C. | profit maximization and perfect competition, but not utility maximization. |
| D. | utility maximization and perfect competition, but not profit maximization. |
| Answer» B. utility maximization and profit maximization, but not perfect competition. | |
| 83. |
According to Professor Knight risks are of _____ kinds: |
| A. | two |
| B. | three |
| C. | four |
| D. | many |
| Answer» B. three | |
| 84. |
If an economy operates on its production possibility curve, then the allocation of resources in that economy satisfies: |
| A. | allocative efficiency. |
| B. | distributive efficiency. |
| C. | Pareto efficiency. |
| D. | productive efficiency. |
| Answer» E. | |
| 85. |
If a brother and sister return home from trick-or-treating on Christmas and engage in a series of voluntary trades of candy, we can conclude that: |
| A. | the initial allocation of candy between them was distributively inefficient. |
| B. | the initial allocation of candy between them was distributively efficient. |
| C. | their preferences must be different. |
| D. | the candy they collected around the neighborhood must have been different. |
| Answer» B. the initial allocation of candy between them was distributively efficient. | |
| 86. |
A closed economy is one in which: |
| A. | Imports exactly equal exports, so that trade is balanced. |
| B. | Domestic firms invest in industries overseas. |
| C. | The home economy is isolated from foreign trade |
| D. | Saving exactly equals investment at full employment. |
| Answer» D. Saving exactly equals investment at full employment. | |
| 87. |
Growth of GNP as A Criterion of Welfare was advocated by |
| A. | Kaldor-Hicks |
| B. | Adam Smith |
| C. | A. C. Pigou |
| D. | Prof . Bergson |
| Answer» C. A. C. Pigou | |
| 88. |
Welfare is improved when the greatest good (is secured) for the greatest number is a statement given by |
| A. | Kaldor-Hicks |
| B. | Adam Smith |
| C. | Jeremy Bentham |
| D. | Prof . Bergson |
| Answer» D. Prof . Bergson | |
| 89. |
Risks in the business arise because of: |
| A. | Introduction of the new products |
| B. | Uncertain policy of rival firms |
| C. | Changes in tastes |
| D. | All the above |
| Answer» E. | |
| 90. |
A situation in which it is impossible to make anyone better-off without making someone worse-off is said to be |
| A. | bentham Optimal |
| B. | Pareto-optimal |
| C. | Hicks Optimal |
| D. | Bergson Optimal |
| Answer» C. Hicks Optimal | |
| 91. |
The concept of Social Welfare Function was propounded by A. Bergson in his article A Reformulation of Certain Aspects of Welfare Economics published in the year 1938 |
| A. | 1932 |
| B. | 1935 |
| C. | 1938 |
| D. | 1942 |
| Answer» D. 1942 | |
| 92. |
According to Keynes, interest is a payment for: |
| A. | Use of durable goods |
| B. | Use of capital |
| C. | Use of money |
| D. | Use of land |
| Answer» D. Use of land | |
| 93. |
The locus of the various physically attainable utility combinations of two persons when the factor endowments, state of technology and preference orders of the individuals are given. |
| A. | grand utility possibility frontier |
| B. | Maximum utility frontier |
| C. | Pareto Optimality frontier |
| D. | Hicks Utility Frontier |
| Answer» B. Maximum utility frontier | |
| 94. |
The following affect rent EXCEPT |
| A. | Better location |
| B. | Fertility of land |
| C. | Cleverness of landlords |
| D. | Scarcity of land |
| Answer» D. Scarcity of land | |
| 95. |
A famous welfare economics book called, Economics of Welfare was written by |
| A. | Kaldor-Hicks |
| B. | Adam Smith |
| C. | A. C. Pigou |
| D. | Prof . Bergson |
| Answer» D. Prof . Bergson | |
| 96. |
Profits: |
| A. | Are lower in the long run than in the short run |
| B. | Can be negative |
| C. | Are less in perfect competition than in monopoly |
| D. | All of the above |
| Answer» E. | |
| 97. |
Who defines economic welfare as that part of social (general) welfare that can be brought directly or indirectly into relation with the measuring rod of money. |
| A. | Kaldor-Hicks |
| B. | A. C. Pigou |
| C. | Pareto |
| D. | Prof . Bergson |
| Answer» C. Pareto | |
| 98. |
Kaldor-Hicks compensation principle can be explained with the help of |
| A. | Utility possibility curve |
| B. | Indifference curve |
| C. | Equal product curve |
| D. | Kuznet s curve |
| Answer» B. Indifference curve | |
| 99. |
Welfare Economics is generally accepted as |
| A. | Positive science |
| B. | Normative science |
| C. | Both of the above |
| D. | None of the ab |
| Answer» C. Both of the above | |
| 100. |
According to AC Pigou, any reorganization of the economy which increases the share of the poor without reducing the national income is also considered an |
| A. | decrease in social welfare |
| B. | reduction in social welfare |
| C. | improvement in social welfare |
| D. | None of the above |
| Answer» D. None of the above | |