GLS UNIVERSITY, Faculty of Commerce B.Com Semester-II, Macro Economics Unit I National Income 1. National income includes contribution of a) Agriculture b) Industry c) Services d) All of the above 2. Which method is used in measuring national income? a) Income method b) Output method c) Expenditure method d) All of the above 3. Which of the following is a transfer payment? a) Subsidy b) Scholarship c) Pension d) All of the above 4. Other name of national income is. a) GDPMP b) GNPFC c) NDPMP d) NNPFC 5. Disposable personal income is obtained by subtracting direct taxes from a) National Income b) Private Income c) Personal Income d) None of the above
6. Which organization estimates national income in India? a) CSO b) Ministry of Finance c) Ministry of Home Affairs d) RBI 7. Which sector contributes maximum in national income in India? a) Primary Sector b) Secondary Sector c) Tertiary Sector d) Construction Sector 8. What is the difference between GDP and GNP? a) NFIA b) Depreciation c) Export Income d) Import Payment 9. Per capita income of India has.during last fifty years. a) Risen b) Fallen c) Fluctuated d) Cannot say about the change 10. Difference between GDPMP and GDPFC is due to a) Direct taxes and subsidies b) Indirect taxes and subsidies c) NFIA and depreciation d) NFIA and pension 11. Full form of CSO. Central Statistical Office 12. Which method gives highest value of national income? All methods give equal value. 13. Income method is used to measure contribution of service sector in national income. 14. GDPMP Depreciation = NDPMP 15. Which country has highest GDP in the world? USA 16. Salary is included in national income but pension is not. True or False.
17. Which sector contributes lowest in Indian GDP? Primary sector 18. Indian GDP is growing second fasted among large economies in the world after China. True or False 19. The share of primary sector in Indian GDP has declined maximum during last 50 years. 20. Contribution made by foreigners living in India is included in Indian GDP. True or False. 21. What is national income? It is an aggregate of monetary value of all goods and services produced by all citizens of a country for one financial year. 22. Why do we estimate national income? To evaluate performance of an economy in a year, compare it for various years, compare it with other countries. 23. What is a transfer payment? A payment received by someone without any work done and services provided. 24. Give examples of transfer payment. Pension, subsidies, scholarship, gift 25. State three methods of measuring national income. Income method, product method, expenditure method 26. What is Hindu Growth Rate? GDP growth rate of Indian economy below 5 per cent. 27. What is per capita income? National Income divided by population for one year. 28. Which method is used to measure national income in India? Combination of all three methods 29. What is Disposable personal income (DPI)? DPI is obtained by subtracting direct taxes from personal income. 30. What does primary sector include? Agriculture, poultry, fishery, animal husbandry
Unit II Money 31. Money is what money does who said this? a) Crowther b) Robertson c) Walker d) Marshall 32. Direct exchange of goods against goods is called? a) Charter b) Money c) Barter d) None of these 33. Which of the following is not near money? a) Paper notes b) Treasury bill c) Bond d) Bill of exchange 34. For which function, money is accepted as unit of account? a) Measure of value b) Medium of exchange c) Standard of deferred payment d) Store of value 35. What possess general acceptability? a) Bank draft b) Money c) Bill of exchange d) None of these 36. If money supply in a country decreases,then? a) Prices will rise b) Prices will fall c) Rate of interest falls
d) both (b) and (c) 37. In the equation MV = PT, V represents? a) Value of money b) Velocity of circulation of money c) Variation of nation income d) All of the above 38. In the equation MV = PT, M represents? a) Money supply b) Money demand c) Maximum output d) Minimum output 39. Accourding to Keynes, motives for holding money are? a) two b) three c) four d) five 40. Quantity Theory of Money explains that? a) Value of money depends upon quantity of money b) Rate of interest depends upon quantity of money c) Quantity of investment depends upon quantity of money d) Supply of money depends upon quantity of money 41. The equation of exchange PT = MV was given by Fisher 42. Paper money is called fiat money because it is issued with authority of government. 43. The Cambridge Cash Balance is written as M d = kpy 44. Account Payables/Promissory Notes is not the Legal Tender Money. True or False. 45. Velocity is defined as (P T)/M 46. M₁ refers to currency with public, demand deposit and other deposits with RBI. True or False 47. Narrow money means M1 48. Broad money means M₃ 49. The Monetarist s definition is given by Milton Friedman
50. Supply of money and value of money are inversely related. True or False 51. What is velocity of circulation of money? It is the number of times, a unit of money changes hands in a definite period of time. 52. Why purchasing power of currency decreases when inflation rate increases? It will decrease because there is negative relation between money supply and purchasing power of money. 53. What does equation of exchange signify? Demand for money (PT) is equal to effective supply of money (MV) 54. Give four components of money given by RBI. M1, M2, M3, M4 55. According to monetarists, money supply includes. Cash, coins, demand deposits, time deposits 56. What happens if velocity of circulation of money increases? Price level will increase and inflation rate will be higher 57. In the revised equation of exchange, MV + M 1 V 1 = PT, what do M 1 and V 1 stand for? M 1 stands for bank money and V 1 stands for velocity of circulation of bank money 58. What is Friedman s Quantity Theory of Money? Quantity theory of money given by Friedman is a Theory of Demand for Money and not a theory of output, money incomes or prices. 59. What is cash balance version or Cambridge Version of demand for money? There is a direct relationship between price level and supply of money. 60. What is money? Money is something that has general acceptability, has functions like measure of value, store of value and can be used in payment of liabilities in the future.
Unit: II Keynesian Economics 61. Of the three motives for holding money suggested by Keynes s, which did he believe to be the most sensitive to interest rates? a) The transactions motive b) The precautionary motive c) The speculative motive d) The altruistic motive 62. If aggregate demand falls short of current output, then? a) business firms will cut production to keep from accumulating inventories b) business firms will expand production to keep from accumulating inventories c) business firms will cut production to build up inventories d) business firms will expand production to build up inventories 63. The General Theory of Employment, Interest and Money was given by? a) J.M Keynes b) Ricardo c) Alfred Marshall d) Irvin Fisher 64. The relationship between MPC and MPS is? a) MPC+MPS=1 b) MPC+MPS=0 c) MPC+MPS>0 d) MPC+MPS<0 65. The formula for investment multiplier is? a) 1/MPC b) 1/MPS c) 1/1+MPC d) 1/1+MPS 66. The relation between MPS and K is? a) Direct b) Inverse
c) Proportionate d) Indirect 67. The relation between MPC and K is? a) Direct b) Inverse c) Proportionate d) Indirect 68. The relationship between consumption and income is called propensity to consume or consumption function is written as? a) C=f(r) b) C= f(y,r) c) C=f(y) d) None of the above 69. Equilibrium level of income and output is determined when? a) AD>AS b) AD=AS c) AD<AS d) All of the above 70. APC is written as? a) C-Y b) Y/C c) CY d) C/Y 71. Value of MPS lies always between 0 and 1. True or False. 72. MPC diminishes gradually as income of people rise. 73. Value of investment multiplier depends on value of MPC. 74. What is the relationship between investment and MPC? Positive 75...gave concept of investment multiplier. J M Keynes 76..gave concept of employment multiplier. R.F. Kahn 77. -----------gave Psychological Law of Consumption. Keynes 78. Total Consumption divided by Total Income gives Average Propensity to Consume.
79. JM Keynes propounded General Theory of Employment, Interest and Money. 80. Change in income is equal to change in savings plus change in consumption. True 81. What will be impact on investment multiplier if there are leakages? Its strength will decrease 82. What is Classical View on employment? There is always full employment in the economy. 83. What is Keynesian view? An economy may operate at less than full employment as well. 84. State some leakages of investment multiplier. Savings, undistributed profits, taxes, imports, repayment of old debts, hoarding of cash 85. According to Keynes, how can production in an economy be increased? Keynes suggested to adopt cheaper monetary policy to increase investment, that will increase employment and income of people that will further increase effective demand to boost production. 86. What is crowding out effect? Reduction in private expenditure on consumption and investment caused by an increase in government expenditure. 87. Give types of crowding out effects. Physical, financial and fiscal 88. What is marginal efficiency of capital? MEC is a rate of discount which would make the present value of annual returns expected from the capital asset during its life just equal to its supply price. 89. Can MPC be equal to zero? MEC cannot be zero because people do consume something even if there income is zero. 90. If interest rate rises, then what will happen to investment? It will decrease because people will borrow less funds for investment purpose. Unit IV Inflation and Business Cycle
91. Too much money chasing too few goods is called. a) Inflation b) Deflation c) Stagflation d) Negative inflation 92. When there is inflation, real income of people.. a) Increase b) Decrease c) Remain constant d) None of the above 93. Most of the time, inflation rate in India has remained between.. a) Below 5 per cent b) 5 to 10 per cent c) 10 to 15 per cent d) More than 20 per cent 94. In India, we calculate inflation rate using a) Consumer price index b) Whole sale price index c) Combination of whole sale and retail prices d) Price level in rural economy 95. Concept of inflationary gap was propounded by.. a) Keynes b) Friedman c) Kahn d) Samuelson 96. Which of the following is a type of mild inflation? a) Creeping inflation b) Walking inflation c) Running inflation d) Galloping inflation 97. In study of business cycles, phase comes after depression. a) Recovery b) Expansion c) Slow down d) Contraction 98. is negative inflation. a) Deflation b) Reflection c) Stagflation
d) hyperinflation 99. To recovery an economy from depression, the government should..its own investment. a) Increase b) Decrease c) Remain constant d) None of the above 100. Business cycles occur mostly in. countries. a) Developed b) Developing c) Poor d) African and Asian 101. Mild inflation is good and hyperinflation is bad for an economy. True or False. 102. True inflation starts only when inflation rate is more than 5 per cent. 103. Increase in oil prices in 1973 increased prices sharply. True or False 104. Out of cost push inflation, demand pull inflation and stagflation, which is most difficult to control? Stagflation. 105. Business cycle is a periodic phenomenon. True or False. 106. Inflation reduces purchasing power of money. 107. If inflation is caused by expansion of demand due to any reason then it is called demand pull inflation. 108. Business cycles according to Mitchell can be classified into four phases. 109. Life span of a normal business cycle is around ten years. 110. Business cycles are cumulative in nature and can be affected by endogenous or exogenous factors. True or False 111. What is a business cycle? Period phases of economic expansion, slow down, recession, depression and recovery is called business cycle. 112. Which phase is best and worst for any economy? Expansion is good phase and contraction/depression is worst phase for an economy. 113. What happens when economy expands? Increase in employment, production and GDP of the economy. 114. Mild inflation is good for the economy. Why? Mild inflation encourages investment that increase production and employment. 115. What happens when economy faces depression? During depression, there exists unemployment, lack of demand and decline in GDP. 116. What is cost push inflation? If inflation is caused by increase in cost of production then it is called cost push inflation. 117. What is inflation rate?
Expressed in percentage, inflation rate is the speed at which prices continuously rise in economy. 118. What is stagflation? Combination of slowing economy and rising prices is called stagflation. 119. What is Philip s curve? Curve expressing inverse relationship between rate of unemployment and rate of increase in money supply. 120. What is Hyperinflation? If prices are accelerating and inflation rate is in double digit, then it is called hyperinflation.