TEST BOOKLET GENERAL STUDIES Paper-I TEST-10 MACROECONOMICS 1 Time Allowed: Two Hours Maximum Marks: 200 1. This Test Booklet Contains 100 items (Questions). Each question comprises four responses. You will have to select the correct response which you want to mark. In case you feel that there is more than one correct answer, mark the answer which you consider the best. In any case, choose ONLY ONE response for each question. 2. All Questions carry equal marks. 3. All Questions are compulsory. 4. Your total marks will depend only on the number of correct responses marked by your answer sheet. 5. There will be negative marking form wrong responses. 25 per cent marks allotted to a particular question will be deducted as negative marking for every wrong response. 6. If a candidate gives more than one response, it will be treated as a wrong response even if one of the given responses happens to be correct and there will be penalty as above to that item. Q1. Types of Unemployment in which production capacity of an economy is inadequate to create a sufficient number of jobs is called: a) Structural unemployment b) Open unemployment c) Under employment d) Seasonal unemployment a) Under employment b) Structural unemployment c) Open unemployment d) Economic unemployment Q3. The unemployment generated due to change in market conditions is called: a) Open unemployment b) Disguised unemployment Q2. A country having which kind of c) Frictional unemployment unemployment fails to exploit the d) Seasonal unemployment efficiencies of its labourers?
Q4. The migration from rural to urban areas in search of work is very often found in India which is an example of: 1. Open employment 2. Seasonal unemployment Q5. When the marginal productivity of an employed person is zero, it is called: a) Structural unemployment b) Under employment c) Zero employment d) Disguised unemployment Q6. The first Bank to be established in India under the European management was: a) Bank of Hindustan b) Bank of Bengal c) Bank of Bombay d) Bank of Madras Q7. The first purely Indian Bank was: a) Oudh Commercial Bank b) Punjab National Bank c) State Bank of India d) Reserve Bank of India Q8. Oudh Commercial Bank was founded in: a) 1770 b) 1740 c) 1881 d) 1894 Q9. In which year Reserve Bank of India was nationalized? a) 1935 b) 1947 c) 1948 d) 1949 Q10. The first Indian governor of Reserve Bank of India was: a) K.G. Ambogaonkar b) P.C. Bhattacharya c) Benegal Rama Rao d) C.D. Deshmukh Q11. Who was the longest serving Governor of Reserve Bank of India? a) C.D Deshmukh b) Benegal Rama Rao c) Manmohan Singh d) Bimal Jalan Q12. With reference to the function of Reserve Bank of India, which of the following statement is not correct? a) Regulate Issue of Bank notes above 1 rupee 2
b) It manages the public debt for the Government c) It formulates and administers the fiscal policy Q13. Three Presidency Banks were amalgamated to form imperial bank of India in: a) 1909 b) 1921 c) 1931 d) 1935 Q14. In order to have more control over the Banks, 14 large commercial banks were nationalized in 1969. Which one of the following is not one of them? a) Andhra Bank b) Syndicate Bank c) Union Bank of India d) Indian Overseas Bank Q15. NABARD was established to provide credit facilities to farmers in: b) 1955 b) 1971 c) 1975 d) 1982 Q16. Coins are minted in four places of India. which is not one of them? a) Chennai b) Hyderabad c) Noida Q17. During the tenure of which of the following Finance Minister rupees was devalued for the first time? a) Dr. John Mathai b) Sachindra Chaudhury c) Dr. Manmahon Singh d) Pranab Mukherjee Q18. Inflation created and sustained by excess aggregate demand for goods and services over the aggregate supply is: a) Demand Push Inflation b) Cost Pull Inflation c) Demand Pull Inflation d) Cost Push Inflation Q19. The situation, when both the rise in the general price level and fall in the output and employment happened, is called: a) Inflation b) Negative Inflation c) Deflation d) Stagflation Q20. Galloping Inflation is also called: a) Demand Push Inflation b) Cost Pull Inflation c) Hyper Inflation 3
Q21. Which is a step for preventing inflation related to supply side? 1. To curtail fiscal deficit upto 5% of GDP 2. To put check on money supply increase Q22. With reference to the reasons of deflation, which of the following is not correct? 1. Governments withdrawal of money from circulation 2. Increase of Bank rate by Central Bank Q23. Which of the following is/are measures of checking inflation? 1. To provide economic subsidy by the Government to the Industrial sector of the economy 2. Curtailment of taxes Q24. Which of the following is generally termed as "Broad Money"? a) M1 b) M2 c) M3 d) M4 Q25. Money Policy increases the inflation rate in the economy is: a) Cheap Money Policy b) Dear Money Policy c) Strong Money Policy Q26. Macroeconomics studies: 1. Rise and fall of General Price Level 2. The employment condition of an economy Q27. Macroeconomics emerged as a separate branch of economics after the publication of book "The General Theory of Employment, Interest and Money" in 1936 authored/co-authored by: 1. John Maynard Keynes 2. Adam Smith 4
Q28. Which of the following is not a "producer goods"? 1. Land 2. Labour 3. Time a) 3 only b) 1 and 2 only c) 1, 2 and 3 Q29. With reference to financial return made out of factors of Production, which of the following is not correctly matched? a) Capital: Rent b) Labour: Wages c) Entrepreneurs: Profit Q30. Which of the following is not a sector in an economy according to macroeconomic point of view? a) Government Sector b) Household Sector c) External Sector Q31. With reference to the flows, which of the following statement is not correct? 1. Flows are defined at a particular point of time 2. Income and profits are flows Q32. Inventory are goods, which a firm carries from one year to the next, does not includes: a) Unsold finished Goods b) Raw Materials c) Semi-finished goods Q33. In the calculation of GDP in expenditure method, which one of the following is subtracted? a) Final Consumption b) Investment c) Import Expenditure Q34. If the Cash Reserve Ratio is lowered by the RBI, what will be its effect on credit creations? a) Increase Credit creation b) Decrease Credit creation c) Not affect credit creation d) Not decrease credit creation Q35. If RBI buy securities, what will be its effect on liquidity? a) Decrease in liquidity b) Increase in liquidity c) No change in liquidity position d) None of these Q36. What is "Hard currency"? a) Whose exchange rate has tendency to fluctuate b) Which is used in time of war 5
c) Which is traded in foreign exchange market and for which demand is persistently high related to supply d) Which loses its value very fast Q37. What is call money market? a) Market for Inter-Bank loans on day to day basis b) Market arrangement for going loans to people c) Market in which Black money is exchanged for white money d) Market for Hawala Q38. Broad Money (M3) measures of Money supply do not include: a) Currency with Public b) Demand deposits of Public in Banks c) Post office savings deposits d) Time deposits of the Public with Banks Q39. Which Indian Commercial bank became the first in providing mobile ATM service? a) IDBI b) SBI c) PNB d) ICICI Q40. Which one of the following instruments for quantitative control of credit is not used by RBI? a) Cash Reserve Ratio b) Bank Rate c) Open Market Operations d) Moral Suasion Q41. What is high powered Money? a) Money circulating as parallel economy b) Money consisting of foreign exchange reserves of a country c) Money issued by Central Bank of the country d) Money used to fund elections Q42. With reference to transfer payments, which one of the following statements is/are correct? 1. Transfer payments are receipts which the residents of a country receive without having to make any payments in return 2. The official remittances, gifts and grants are not part of transfer payments Q43. With reference to Trade-in-services, which one of the following statements is/are not correct? 1. Trade-in-services are also called invisibles because they are not seen to cross borders 2. Net income from software exports is a part of trade-in-services 6
Q44. What is current account deficit on Current account balance? a) negative on account of trade b) negative on account of invisibles c) negative on account of net transfer d) negative on account of trade, invisibles and net transfers Q45. What is balance of payment deficit? a) Deficit on account of trade plus invisibles b) Deficit on account of trade plus capital account c) Decrease in official reserves d) Increase in official reserves Q46. When does an economy generally adopt cheap money policy? a) Inflation b) Recession c) Deflation d) Market failure Q47. What do you understand by 'Hot money'? a) Currency whose value fluctuates frequently b) Currency whose value falls frequently c) Currency which commands high value in International market d) Currency which has tendency to fly out of the country Q48. Which of the following components is/are included in a country's foreign exchange reserve? 1. Gold stock of RBI 2. Foreign Exchange Assets of RBI 3. SDR holding of the country at IMF a) 1 and 2 b) 2 and 3 c) 1 and 3 d) All of these Q49. India's exports declined by how much per cent in July 2016? a) 6.8% b) 21.7% c) 7.8% d) 15.8% Q50. The balance of payment of a country is a systematic record of: a) All import and export transactions of a country during a given period of time, normally a year b) Goods exported from a country during a year c) Economic transactions between the governments of one country to another d) Capital movements from one country to another 7
Q51. A progressive tax is a tax: a) Whose burden on tax payers rises as income falls b) Whose burden on tax payers rises as income rises c) Whose burden on the falls as income rises d) None of these Q52. Which one of the following is not an Indirect tax? a) Excise duty b) Custom duty c) Service tax d) Wealth tax Q53. Which among the following is/are the main items of non-plan revenue expenditure? 1. Interest payments 2. Defenses services 3. Subsidies 4. Salaries and Pensions a) 1 and 2 only b) 2 and 3 only c) 2, 3, and 4 only d) All of the above Q54. What do you understand by Primary Deficit? a) Excess of total expenditure over total receipts b) Excess of revenue expenditure over revenue receipts c) Excess of total expenditure over total receipts less borrowing d) Excess of total expenditure over total receipts less borrowing and interest payments Q55. Which one of the following is not levied as well as collected by the Union, but assigned to the states within which they leviable? a) Taxes on railways fares and freights b) Taxes on lands and buildings, mineral rights c) taxes on stock exchange other than stamp duties d) terminal taxes on passengers carried by railways Q56. Which article of the Indian constitution deals with the Finance Commission? a) Art-263 b) Art-270 c) Art-280 d) Art-290 Q57. Who is the chairman of the first Finance Commission constituted in 1951? a) K.C. Neogi b) K. Santhanam c) A.C. Chanda d) P.V. Rajamannar 8
Q58. The difference between the government's total expenditure and its total receipts, excluding borrowing is termed as: a) Budget deficit b) Revenue deficit c) Fiscal deficit d) Primary deficit Q59. A kind of Indirect tax which is expressed as proportion of the price of a commodity is called: a) Indirect tax b) Multiple tax c) Direct tax c) Ad valorem tax Q60. In which year the government of India introduced the Minimum Alternate Tax? a) 1972 b) 1983 c) 1991 d) 1999 Q61.National Income in India is estimated by a) NITI Aayog b) Finance Commission c) Indian Statistical Institute d) Central Statistical Organization Q62.Which of the following is known as National Income? a) Gross Domestic Product at market Prices b) Gross National Product at Constant Prices c) Net National Product at Factor Cost d) Net National Product at Current Prices Q63.Which of the following is known as Per Capita Income? a) NNP at Factor coast divided by Total Population b) GDP divided by National Income c) NNP divided by Population d) GNP divided by NNP Q64.The difference between GNP at Market Prices and GDP at Market Prices is equal to a) Net indirect tax b) Subsidies c) Net factor income from abroad d) Depreciation Q65.Which of the following is used for measurement of distribution of Income? a) Laffer Curve b) Engel s Law c) Lorenz Curve d) Phillip Curve Q66.Gross National Product is less than Gross Domestic Product when a) Indirect taxes are more than subsidies b) Depreciation is included c) Net factor Income from Abroad is Negative d) Indirect taxes are less than subsidies 9
Q67.National Income at current Prices is higher than that of constant prices because a) Price increase is equal to increase in production b) Price increase is higher to increase in production c) Price increase is lower to increase in production d) Only decrease in production Q68.One of the problems in calculating the National Income in India correctly is a) Inflation b) Low Savings c) Under-employment d) Non-monetized consumption Q69.The difference between GNP and NNP is a) Government revenue b) Net Indirect Tax c) Consumption of Fixed Capital d) Net Capital Formation b) Public Revenue and Expenditure c) Issue of currencies d) All of the above Q72. Prime Lending Rate (PLR) is the rate at which: a) Banks lend money to other banks b) Banks lend money to their worthy customers c) RBI lend money to other Banks Q73. In a free economy inequalities of income are mainly due to: 1. Free competition 2. Private Property and Inheritance 3. Difference between marginal productivity of labour b) 1 and 3 only c) 2 only d) 1, 2 and 3 10 Q70.Which one of the following will directly increase the GNP? a) An increase in investment b) A surplus in budget c) A fall in National debt d) A rise in interest rate. Q71. Fiscal Policy of a country is concerned with: a) Export and Import Q74. National Income does not include: 1. Income from Government expenditure 2. Undistributed Profits
Q75. The difference between Gross National Product is: 1. Gross Foreign Investment 2. Net exports Q76. Devaluation of a country's currency will be more fruitful if: 1. Prices of imports do not rise 2. Prices of exports rise proportionally Q77. What is/are the measures taken by Government to unearth Black Money? a) Demonetization b) Voluntary disclosure scheme c) God Bond Scheme d) All of the above Q78. Indian Income tax is: 1. Direct 2. Indirect 3. Proportional 4. Progressive a) 1 and 3 only b) 2 and 4 only c) 1 and 4 only c) 1,3 and 4 Q79. Internal debt of India comprises: 1. Market borrowings 2. Treasury Bills 3. Special Securities issued to RBI b) 1 and 2 only c) 1 and 3 only d) 1, 2 and 3 Q80. In the theory of Income determination, Expenditure on which of the following is not considered investment? a) A computer b) Constructing a factory c) Stocks or shares in a joint stock company d) Increase in stocks of unsold goods Q81. What do you understand by the term "Fiscal Deficit", in the Union budget? a) The Sum of Budgetary deficit and net increase in internal and external borrowings b) Net increase in Union Government's borrowing from the Reserve Bank of India c) The Sum of monetized deficit and budgetary deficit 11
Q82. Inflation can be contained by: 1. Surplus Budget 2. Increase in taxation 3. Reduction in Public expenditure a) 1 and 2 only b) 2 and 3 only c) 2 only d) 1, 2 and 3 Q83. With reference to assets held by Commercial banks, which of the following is not correct? a) Current Account Deposits b) Money lent at short notice c) Credit balance with Reserve Bank Q84. The Period of high inflation and low economic growth is termed as: a) Stagnation b) Stagflation c) Both (a) and (b) Q85. The reserve Bank of India issues notes under: a) Proportional Reserve System b) Minimum Reserve System c) Maximum fiduciary System d) Both (a) and (b) b) Fiscal Policy c) Trade Policy d) All of the above Q87. Who of the following is benefitted most from the inflation? a) Government Pensioners b) Creditors c) Saving Bank Account holders d) Debtors Q88. Under which article of the Constitution Budget is laid before the Parliament? a) Article-75 b) Article-96 c) Article-112 d) Article- 268 Q89. The Open Market Operations refers to the Sale and Purchase by RBI of: a) Gold b) Foreign Exchange c) Government Securities d) All of the above Q90. Grasham's Law refers to: a) Circulation of Currency b) Supply and Demand c) Consumption and Demand 12 Q86. Interest rate policy is component of: a) Monetary Policy
Q91. The RBI determines the values of rupee in terms of the exchange rate movement of: a) Pond Sterling b) Dollar c) Golf Reserve d) A Basket of currencies Q92. In which of the following exchange rate regime a country given up its monetary autonomy completely by adopting another country's currency? a) Crawling Band b) Currency Board c) Full Dollarization Q93. What do you understand by the term "Subsidy"? a) Payment by Government for purchase of goods and services b) Payment by Government to business enterprises without buying any goods and services c) Both (a) and (b) Q94. Which of the following is not included while calculating National Income? a) Wages and Salaries b) Interest and Profits c) Rental Income Q95. What do you understand by the term Liquidity? a) Market Value of an asset b) Convertibility of an asset into money c) Moneyness of an asset d) All of the above Q96. The RBI can decrease the Bank Credit component of money supply by: a) Lowering the CRR b) Increasing Bank rate c) Lowering the Repo rate d) All of the above Q97. The most important non-profit trade barriers are: a) Labeling and Packing Regulations b) Quotas c) Health Regulations d) Transport Regulation Q98. The effect of Inflation on tax revenue results in a situation known as: a) Stagflation b) Fiscal drag c) Reflation d) Disflation Q99. Which of the foreign inflows is the most desirable? a) Gross Depository Receipts b) Gross Institutional Investment c) External Commercial Borrowings d) Foreign Direct Investment 13
Q100. The Difference between GDP and NDP equals to: a) Transfer Payments b) Indirect Payment c) Subsidies d) Depreciation Cost 14 ------------ WHACKIA ACADEMY OBJECTIVE IAS www.whackiaacademy.com www.objectiveias.in whackiaacademy@gmail.com