Question 1

Q1. Which of the following is an example of autonomous consumption?

Accepted Answer

Option B: Consumption made even when income is zero. Autonomous consumption refers to minimum consumption expenditure incurred even when income is zero, usually financed through savings or borrowing.

Question 2

Q2. In which market structure does a firm have complete control over the supply of a product?

Accepted Answer

Option C: Monopoly. Under monopoly, there is a single seller with full control over market supply and pricing.

Question 3

Q3. Which of the following is treated as a final good?

Accepted Answer

Option C: Bread bought by a household. Bread purchased by a household is used for final consumption and is therefore a final good.

Question 4

Q4. If Average Product is rising, Marginal Product will be:

Accepted Answer

Option C: Greater than Average Product. Marginal Product pulls Average Product upward when MP is greater than AP.

Question 5

Q5. Which of the following is a direct instrument of monetary policy?

Accepted Answer

Option A: Repo rate. Repo rate is controlled by RBI and directly affects lending rates and money supply in the economy.

Question 6

Q6. A rise in income causes demand for public bus transport to decrease. Public bus transport is likely to be:

Accepted Answer

Option B: An inferior good. Inferior goods are goods whose demand falls as consumer income rises.

Question 7

Q7. A firm's Total Revenue is Rs. 4,500 when it sells 150 units. Average Revenue is:

Accepted Answer

Option C: Rs. 30. Average Revenue = Total Revenue / Quantity Sold = 4500 / 150 = Rs. 30.

Question 8

Q8. The RBI decreases CRR during a slowdown in the economy. What is the likely effect?

Accepted Answer

Option C: Increase in lending capacity of banks. Lower CRR frees more funds for commercial banks, increasing lending and economic activity.

Question 9

Q9. Which of the following is most likely to shift the supply curve leftward?

Accepted Answer

Option C: Increase in excise duty. Higher excise duty increases production cost and reduces supply, shifting the supply curve leftward.

Question 10

Q10. Which of the following is included in the capital account of Balance of Payments?

Accepted Answer

Option C: Foreign direct investment. Capital account records international capital transactions such as foreign investments and loans.

Question 11

Q11. Assertion (A): Demand for salt is generally price inelastic. Reason (R): Salt constitutes a very small proportion of consumer expenditure.

Accepted Answer

Option A: Both A and R are true, and R is the correct explanation of A. Since expenditure on salt is very small, price changes have little effect on quantity demanded.

Question 12

Q12. Assertion (A): Increase in government expenditure can raise aggregate demand. Reason (R): Government expenditure forms a component of aggregate demand.

Accepted Answer

Option A: Both A and R are true, and R is the correct explanation of A. Government expenditure directly contributes to aggregate demand in the economy.

Question 13

Q13. Read the following case carefully: A smartphone company launches a new model with advanced features and aggressive advertising. Demand for its older models declines sharply. Which concept best explains this situation?

Accepted Answer

Option B: Product differentiation. Product differentiation through innovation and branding influences consumer preferences and demand.

Question 14

Q14. Read the passage carefully: A country faces persistent inflation. To control it, the central bank increases the repo rate and CRR simultaneously. What is the likely objective of these measures?

Accepted Answer

Option C: Reduce money supply and inflation. Higher repo rate and CRR reduce lending and liquidity, helping control inflationary pressure.

Question 15

Q15. If Marginal Propensity to Consume is 0.6, the value of Marginal Propensity to Save will be:

Accepted Answer

Option B: 0.4. MPC + MPS = 1 MPS = 1 - 0.6 = 0.4.

Question 16

Q16. Which of the following is NOT included while calculating national income?

Accepted Answer

Option D: Financial assistance received after a flood. Financial assistance after a flood is a transfer payment and not payment for productive services.

Question 17

Q17. A perfectly competitive firm is in equilibrium when:

Accepted Answer

Option B: Marginal Cost equals Marginal Revenue. Profit is maximized when Marginal Cost equals Marginal Revenue under perfect competition.

Question 18

Q18. Which fiscal policy measure is most suitable during deficient demand?

Accepted Answer

Option C: Increase in government expenditure. Higher government spending boosts aggregate demand and helps reduce recessionary conditions.

Question 19

Q19. If demand for a product falls sharply after a small increase in price, the demand is:

Accepted Answer

Option C: Highly elastic. Large change in demand due to small price change indicates highly elastic demand.

Question 20

Q20. Investment in an economy rises by Rs. 400 crore and MPC is 0.75. What will be the total increase in equilibrium income?

Accepted Answer

Option D: Rs. 1,600 crore. k = 1 / (1 - MPC) Multiplier = 1 / (1 - 0.75) = 4 Increase in income = 4 x 400 = Rs. 1,600 crore.

Mock Test 08 Performance Solutions

Detailed Question Analysis

Q1. Which of the following is an example of autonomous consumption?

Q2. In which market structure does a firm have complete control over the supply of a product?

Q3. Which of the following is treated as a final good?

Q4. If Average Product is rising, Marginal Product will be:

Q5. Which of the following is a direct instrument of monetary policy?

Q6. A rise in income causes demand for public bus transport to decrease. Public bus transport is likely to be:

Q7. A firm's Total Revenue is \(\mathrm{Rs.\ 4,500}\) when it sells 150 units. Average Revenue is:

Q8. The RBI decreases \(\mathrm{CRR}\) during a slowdown in the economy. What is the likely effect?

Q9. Which of the following is most likely to shift the supply curve leftward?

Q10. Which of the following is included in the capital account of Balance of Payments?

Q11. Assertion (A): Demand for salt is generally price inelastic. Reason (R): Salt constitutes a very small proportion of consumer expenditure.

Q12. Assertion (A): Increase in government expenditure can raise aggregate demand. Reason (R): Government expenditure forms a component of aggregate demand.

Q13. Read the following case carefully: A smartphone company launches a new model with advanced features and aggressive advertising. Demand for its older models declines sharply. Which concept best explains this situation?

Q14. Read the passage carefully: A country faces persistent inflation. To control it, the central bank increases the repo rate and \(\mathrm{CRR}\) simultaneously. What is the likely objective of these measures?

Q15. If Marginal Propensity to Consume is 0.6, the value of Marginal Propensity to Save will be:

Q16. Which of the following is NOT included while calculating national income?

Q17. A perfectly competitive firm is in equilibrium when:

Q18. Which fiscal policy measure is most suitable during deficient demand?

Q19. If demand for a product falls sharply after a small increase in price, the demand is:

Q20. Investment in an economy rises by \(\mathrm{Rs.\ 400\ crore}\) and \(\mathrm{MPC}\) is 0.75. What will be the total increase in equilibrium income?

ExamSpark Quick Economics Revision Signals

Quick Links & ExamSpark Resources

Mock Test 08 Performance Solutions

Detailed Question Analysis

Q1. Which of the following is an example of autonomous consumption?

Q2. In which market structure does a firm have complete control over the supply of a product?

Q3. Which of the following is treated as a final good?

Q4. If Average Product is rising, Marginal Product will be:

Q5. Which of the following is a direct instrument of monetary policy?

Q6. A rise in income causes demand for public bus transport to decrease. Public bus transport is likely to be:

Q7. A firm's Total Revenue is \(\mathrm{Rs.\ 4,500}\) when it sells 150 units. Average Revenue is:

Q8. The RBI decreases \(\mathrm{CRR}\) during a slowdown in the economy. What is the likely effect?

Q9. Which of the following is most likely to shift the supply curve leftward?

Q10. Which of the following is included in the capital account of Balance of Payments?

Q11. Assertion (A): Demand for salt is generally price inelastic. Reason (R): Salt constitutes a very small proportion of consumer expenditure.

Q12. Assertion (A): Increase in government expenditure can raise aggregate demand. Reason (R): Government expenditure forms a component of aggregate demand.

Q13. Read the following case carefully: A smartphone company launches a new model with advanced features and aggressive advertising. Demand for its older models declines sharply. Which concept best explains this situation?

Q14. Read the passage carefully: A country faces persistent inflation. To control it, the central bank increases the repo rate and \(\mathrm{CRR}\) simultaneously. What is the likely objective of these measures?

Q15. If Marginal Propensity to Consume is 0.6, the value of Marginal Propensity to Save will be:

Q16. Which of the following is NOT included while calculating national income?

Q17. A perfectly competitive firm is in equilibrium when:

Q18. Which fiscal policy measure is most suitable during deficient demand?

Q19. If demand for a product falls sharply after a small increase in price, the demand is:

Q20. Investment in an economy rises by \(\mathrm{Rs.\ 400\ crore}\) and \(\mathrm{MPC}\) is 0.75. What will be the total increase in equilibrium income?

ExamSpark Quick Economics Revision Signals

Quick Links & ExamSpark Resources

Related Study Links