Question 1

Q1. Which of the following is a macroeconomic problem?

Accepted Answer

Option C: Unemployment in the economy. Macroeconomics studies economy-wide issues such as unemployment, inflation, and national income.

Question 2

Q2. Which of the following is treated as a transfer payment?

Accepted Answer

Option C: Scholarship given to students by government. Scholarships are transfer payments because they are paid without any direct productive service in return.

Question 3

Q3. Under perfect competition, the price line facing an individual firm is:

Accepted Answer

Option C: Horizontal parallel to X-axis. Since firms are price takers, they can sell any quantity at the prevailing market price, giving a horizontal price line.

Question 4

Q4. Which of the following is most likely to shift the demand curve for a commodity?

Accepted Answer

Option B: Change in consumer income. Consumer income is a determinant of demand and causes a shift in the demand curve.

Question 5

Q5. If Marginal Revenue is less than Average Revenue, then Average Revenue will:

Accepted Answer

Option B: Fall. Marginal Revenue pulls Average Revenue downward when MR is less than AR.

Question 6

Q6. A company introduces robots in production, reducing the need for manual labor. Which type of unemployment is likely to increase?

Accepted Answer

Option B: Structural unemployment. Technological changes may make workers' skills outdated, leading to structural unemployment.

Question 7

Q7. A farmer sells wheat worth Rs. 1,20,000. Out of this, Rs. 40,000 was spent on seeds, fertilizers, and fuel. Value added by the farmer is:

Accepted Answer

Option B: Rs. 80,000. Value Added = Value of Output - Intermediate Consumption = 1,20,000 - 40,000 = Rs. 80,000.

Question 8

Q8. RBI increases the repo rate to 7% from 6%. Which of the following is the most likely effect?

Accepted Answer

Option C: Reduction in credit availability. Higher repo rate increases borrowing cost for banks, reducing lending and money supply.

Question 9

Q9. A rise in the price of one good causes demand for another good to decrease. The two goods are:

Accepted Answer

Option C: Complementary goods. Complementary goods are consumed together. Rise in price of one reduces demand for the other.

Question 10

Q10. Which of the following is included in revenue receipts of the government?

Accepted Answer

Option D: Corporation tax. Corporation tax is a regular source of income for the government and is included in revenue receipts.

Question 11

Q11. Assertion (A): Under monopoly, there is no close substitute for the product. Reason (R): A monopolist faces competition from many firms.

Accepted Answer

Option C: A is true, but R is false. Monopoly exists because close substitutes are absent. The reason is false because monopoly has a single seller.

Question 12

Q12. Assertion (A): Increase in CRR reduces credit creation by banks. Reason (R): Banks are required to keep a larger portion of deposits with RBI.

Accepted Answer

Option A: Both A and R are true, and R is the correct explanation of A. Higher CRR reduces funds available for lending, lowering banks' credit creation capacity.

Question 13

Q13. Read the following case carefully: To reduce pollution, the government imposed a higher tax on diesel vehicles and provided subsidies for electric vehicles. Which objective is mainly targeted through this policy?

Accepted Answer

Option B: Environmental sustainability. Taxes discourage polluting vehicles, while subsidies encourage cleaner alternatives for sustainable development.

Question 14

Q14. Read the passage carefully: India receives large remittances from Indians working abroad. As a result, supply of foreign currency increases in India. What is the most likely impact?

Accepted Answer

Option B: Appreciation of rupee. Higher inflow of foreign currency increases supply of foreign exchange, strengthening domestic currency.

Question 15

Q15. If MPC = 0.8, then MPS will be:

Accepted Answer

Option B: 0.2. MPC + MPS = 1 MPS = 1 - 0.8 = 0.2.

Question 16

Q16. Which of the following will NOT be included in national income?

Accepted Answer

Option C: Winning a lottery prize. Lottery winnings are transfer incomes and are not earned through productive activities.

Question 17

Q17. A firm under perfect competition earns supernormal profits in the short run. In the long run, these profits are likely to:

Accepted Answer

Option C: Disappear due to entry of new firms. Free entry of firms increases supply and competition, reducing abnormal profits in the long run.

Question 18

Q18. During inflationary conditions, which fiscal measure is most appropriate?

Accepted Answer

Option C: Reduction in government spending. Reducing government expenditure lowers aggregate demand and helps control inflation.

Question 19

Q19. A commodity has perfectly elastic demand. A slight increase in price will:

Accepted Answer

Option B: Reduce demand to zero. Under perfectly elastic demand, consumers stop purchasing completely if price rises even slightly.

Question 20

Q20. Autonomous investment increases by Rs. 300 crore in an economy where MPC = 0.75. What will be the total increase in national income?

Accepted Answer

Option D: Rs. 1,200 crore. k = 1 / (1 - MPC) Multiplier = 1 / (1 - 0.75) = 4 Increase in income = 4 x 300 = Rs. 1,200 crore.

Mock Test 07 Performance Solutions

Detailed Question Analysis

Q1. Which of the following is a macroeconomic problem?

Q2. Which of the following is treated as a transfer payment?

Q3. Under perfect competition, the price line facing an individual firm is:

Q4. Which of the following is most likely to shift the demand curve for a commodity?

Q5. If Marginal Revenue is less than Average Revenue, then Average Revenue will:

Q6. A company introduces robots in production, reducing the need for manual labor. Which type of unemployment is likely to increase?

Q7. A farmer sells wheat worth \(\mathrm{Rs.\ 1,20,000}\). Out of this, \(\mathrm{Rs.\ 40,000}\) was spent on seeds, fertilizers, and fuel. Value added by the farmer is:

Q8. RBI increases the repo rate to 7\(\%\) from 6\(\%\). Which of the following is the most likely effect?

Q9. A rise in the price of one good causes demand for another good to decrease. The two goods are:

Q10. Which of the following is included in revenue receipts of the government?

Q11. Assertion (A): Under monopoly, there is no close substitute for the product. Reason (R): A monopolist faces competition from many firms.

Q12. Assertion (A): Increase in \(\mathrm{CRR}\) reduces credit creation by banks. Reason (R): Banks are required to keep a larger portion of deposits with RBI.

Q13. Read the following case carefully: To reduce pollution, the government imposed a higher tax on diesel vehicles and provided subsidies for electric vehicles. Which objective is mainly targeted through this policy?

Q14. Read the passage carefully: India receives large remittances from Indians working abroad. As a result, supply of foreign currency increases in India. What is the most likely impact?

Q15. If \(\mathrm{MPC}\) = 0.8, then \(\mathrm{MPS}\) will be:

Q16. Which of the following will NOT be included in national income?

Q17. A firm under perfect competition earns supernormal profits in the short run. In the long run, these profits are likely to:

Q18. During inflationary conditions, which fiscal measure is most appropriate?

Q19. A commodity has perfectly elastic demand. A slight increase in price will:

Q20. Autonomous investment increases by \(\mathrm{Rs.\ 300\ crore}\) in an economy where \(\mathrm{MPC}\) = 0.75. What will be the total increase in national income?

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Mock Test 07 Performance Solutions

Detailed Question Analysis

Q1. Which of the following is a macroeconomic problem?

Q2. Which of the following is treated as a transfer payment?

Q3. Under perfect competition, the price line facing an individual firm is:

Q4. Which of the following is most likely to shift the demand curve for a commodity?

Q5. If Marginal Revenue is less than Average Revenue, then Average Revenue will:

Q6. A company introduces robots in production, reducing the need for manual labor. Which type of unemployment is likely to increase?

Q7. A farmer sells wheat worth \(\mathrm{Rs.\ 1,20,000}\). Out of this, \(\mathrm{Rs.\ 40,000}\) was spent on seeds, fertilizers, and fuel. Value added by the farmer is:

Q8. RBI increases the repo rate to 7\(\%\) from 6\(\%\). Which of the following is the most likely effect?

Q9. A rise in the price of one good causes demand for another good to decrease. The two goods are:

Q10. Which of the following is included in revenue receipts of the government?

Q11. Assertion (A): Under monopoly, there is no close substitute for the product. Reason (R): A monopolist faces competition from many firms.

Q12. Assertion (A): Increase in \(\mathrm{CRR}\) reduces credit creation by banks. Reason (R): Banks are required to keep a larger portion of deposits with RBI.

Q13. Read the following case carefully: To reduce pollution, the government imposed a higher tax on diesel vehicles and provided subsidies for electric vehicles. Which objective is mainly targeted through this policy?

Q14. Read the passage carefully: India receives large remittances from Indians working abroad. As a result, supply of foreign currency increases in India. What is the most likely impact?

Q15. If \(\mathrm{MPC}\) = 0.8, then \(\mathrm{MPS}\) will be:

Q16. Which of the following will NOT be included in national income?

Q17. A firm under perfect competition earns supernormal profits in the short run. In the long run, these profits are likely to:

Q18. During inflationary conditions, which fiscal measure is most appropriate?

Q19. A commodity has perfectly elastic demand. A slight increase in price will:

Q20. Autonomous investment increases by \(\mathrm{Rs.\ 300\ crore}\) in an economy where \(\mathrm{MPC}\) = 0.75. What will be the total increase in national income?

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