Indian Economy MCQs
Indian Economy Multiple Choice Questions (MCQs) for SSC, State and all One Day Examinations of India. Objective Questions on Indian Economy for competitive examinations. These questions are part of GKToday’s 35000+ MCQs Bank Course in GKToday Android App
41. Which of the following indicates a micro approach from a national point of view?
[A] Per capita income in India
[B] Study of sales of TISCO
[C] Inflation in India
[D] Educated Unemployment in India
Show Answer
Correct Answer: B [Study of sales of TISCO]
Notes:
Microeconomics is a branch of economics that studies the behavior of individuals and firms in making decisions regarding the allocation of limited resources. Typically, it applies to markets where goods or services are bought and sold. This is in contrast to macroeconomics, which involves “the sum total of economic activity, dealing with issues of growth, inflation and unemployment”. Hence the study of TISCO sales comes under microeconomics.
42. Which of the following has elastic demand?
[A] Electricity
[B] Medicines
[C] Rice
[D] Match boxes
Show Answer
Correct Answer: A [Electricity]
Notes:
How sensitive the demand for a commodity is to changes in other economic variables is called demand elasticity. The demand for goods having more than one use is said to be elastic. Electricity can be used for many purposes like heating, lighting, cooking, cooling etc. If electricity bill rises then electricity will be used only for important essential purposes and if bill falls then electricity will be used for other unimportant uses thus the demand for electricity is elastic.
43. Which cost is related to marginal cost?
[A] Variable Cost
[B] Implicit Cost
[C] Prime Cost
[D] Fixed Cost
Show Answer
Correct Answer: A [Variable Cost]
Notes:
Marginal cost is the change in total cost that occurs when the quantity produced is increased by one unit. Marginal cost is independent of fixed cost and depends on changes in variable factors. Since fixed costs do not change with output, there is no marginal fixed cost when output increases in the short run.
44. Who among the following is called the father of economics?
[A] J.M. Keynes
[B] Malthus
[C] Ricardo
[D] Adam Smith
Show Answer
Correct Answer: D [Adam Smith]
Notes:
Adam Smith is best known for two classic works: The Theory of Moral Sentiments (1759), and An Inquiry into the Nature and Cause of the Wealth of Nations (1776). Smith is cited as the father of modern economics and is still one of the most influential thinkers in the field of economics today.
45. Autonomous investment was distinguished from induced investment by__
[A] Schumpeter
[B] Malthus
[C] Joan Robinson
[D] Adam Smith
Show Answer
Correct Answer: A [Schumpeter]
Notes:
Creative destruction: Schumpeter differentiated between two types of investment which he called motivated and autonomous. Driven investment arose from the discrepancy between supply and demand and from autonomous investment from resources and technology created by entrepreneurs.
He also introduced the concept of “saving up” which is different from saving in the neoclassical growth model.
Saving is that part of production which is withheld from investment and consumption.
46. Which statement is wrong for a country with inflationary condition?
[A] Cost of living rises
[B] Profit rise faster than wages
[C] Value of money falls
[D] Country’s exports become more competitive
Show Answer
Correct Answer: D [Country’s exports become more competitive]
Notes:
Inflation is a rise in the general level of prices of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services which results in a loss of value of money. In such a situation, the cost rises. Thus an increase in inflation decreases exports and has a negative effect on the balance of payments hence, exports become less competitive.
47. Deflation is a situation in which?
[A] The value of money is falling
[B] The price of goods is increasing
[C] The value of money is increasing
[D] The price level is stagnant
Show Answer
Correct Answer: C [The value of money is increasing]
Notes:
Deflation is a situation where the prices of goods and commodities go down in a country. That is, there is negative inflation. This is due to the short supply of money/credit. Inflation lowers the real value of money over time; Conversely, deflation raises the real value of a currency – the currency of a national or regional economy.
48. In which year the coal mines were nationalized?
[A] 1970
[B] 1971
[C] 1972
[D] 1976
Show Answer
Correct Answer: C [1972]
Notes:
The Coal Conservation and Development Act, 1974 provides for levy of excise duty on coal remittances for meeting activities like conservation of coal, development of coal mines and execution of other works for safety in coal mines and research works connected with conservation and utilization. coal, and aid in mining operations. The Coking Coal (Nationalisation) Act was enacted in 1972.
49. When the balance of payments of a country is in equilibrium?
[A] demand as well as supply of the domestic currency are the highest
[B] demand for the domestic currency is equal to its supply
[C] demand for the domestic currency is the highest
[D] demand for the domestic currency is the lowest
Show Answer
Correct Answer: B [ demand for the domestic currency is equal to its supply]
Notes:
When the balance of payments (BOP) of a country is in equilibrium, the surplus or deficit is eliminated from the BOP. When the BOP of a country is in equilibrium, the demand for domestic currency is equal to its supply. The demand and supply situation is thus neither favourable nor unfavourable.
50. In the balance of payments account, what are the unrealized receipts and payments also considered?
[A] bilateral transfers
[B] unilateral transfers
[C] capital account transfers
[D] invisible transfers
Show Answer
Correct Answer: B [unilateral transfers]
Notes:
Unrequited receipts and payments are also regarded as unilateral transfers as the flow is only in one direction with no automatic reverse flow in the other direction. There is no repayment obligation attached to these transfers because they are neither borrowings nor lending, but gifts and grants exchanged between governments and people in the world.
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