Question 1

Q1. Which of the following is a feature of a mixed economy?

Accepted Answer

Option C: Coexistence of public and private sectors. A mixed economy combines features of both capitalism and socialism where both government and private enterprises operate together.

Question 2

Q2. Which of the following is included in factor income from abroad?

Accepted Answer

Option C: Salary earned by an Indian working in the USA. Factor income from abroad includes income earned for productive services rendered abroad by normal residents.

Question 3

Q3. Under perfect competition, firms sell:

Accepted Answer

Option B: Homogeneous products. Perfect competition is characterized by homogeneous products produced by many firms.

Question 4

Q4. If Total Product increases at a decreasing rate, Marginal Product is:

Accepted Answer

Option C: Falling but positive. When TP rises at a diminishing rate, MP remains positive but starts declining.

Question 5

Q5. Which of the following is a quantitative method of credit control?

Accepted Answer

Option C: Repo rate. Repo rate directly affects the volume of credit and money supply, making it a quantitative tool.

Question 6

Q6. A rise in the price of petrol reduces the use of private cars and increases demand for public transport. Public transport and private cars are:

Accepted Answer

Option A: Substitute goods. Public transport acts as a substitute for private cars when operating costs of cars rise.

Question 7

Q7. A producer incurs a total cost of Rs. 12,000 to produce 400 units. Average cost per unit is:

Accepted Answer

Option C: Rs. 30. Average Cost = Total Cost / Output = 12,000 / 400 = Rs. 30 per unit.

Question 8

Q8. The RBI purchases government securities from commercial banks. This will most likely:

Accepted Answer

Option B: Increase banks' lending power. RBI injects money into the banking system through purchase of securities, increasing liquidity and lending capacity.

Question 9

Q9. Which of the following causes a movement along the demand curve?

Accepted Answer

Option B: Change in price of the commodity itself. Movement along the demand curve occurs only due to changes in the commodity's own price.

Question 10

Q10. Which of the following is a component of current account in Balance of Payments?

Accepted Answer

Option C: Export of services. Current account records trade in goods and services, income, and transfer payments.

Question 11

Q11. Assertion (A): Under monopolistic competition, firms spend on advertisements. Reason (R): Products are differentiated in monopolistic competition.

Accepted Answer

Option A: Both A and R are true, and R is the correct explanation of A. Advertising helps firms promote differentiated products and attract consumers.

Question 12

Q12. Assertion (A): Increase in bank rate can reduce inflationary pressure. Reason (R): Higher bank rate discourages borrowing and reduces money supply.

Accepted Answer

Option A: Both A and R are true, and R is the correct explanation of A. Higher bank rate raises cost of credit, reducing borrowing, investment, and aggregate demand.

Question 13

Q13. Read the following case carefully: The government launches a rural employment scheme during an economic slowdown to increase purchasing power in villages. Which macroeconomic objective is mainly targeted?

Accepted Answer

Option B: Employment generation and demand creation. Employment schemes increase income and consumption demand, helping revive economic activity.

Question 14

Q14. Read the passage carefully: India experiences a sharp increase in foreign portfolio investment inflows. Demand for Indian rupee rises in the foreign exchange market. What is the likely impact on the rupee?

Accepted Answer

Option B: Appreciation. Higher demand for domestic currency in foreign exchange markets causes appreciation of the rupee.

Question 15

Q15. If Marginal Propensity to Save is 0.2, then the value of MPC will be:

Accepted Answer

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

Question 16

Q16. Which of the following is an example of indirect tax?

Accepted Answer

Option D: GST. Indirect taxes are imposed on goods and services and can be shifted to consumers. GST is an indirect tax.

Question 17

Q17. A perfectly competitive firm will continue producing in the short run as long as:

Accepted Answer

Option A: Price covers Average Variable Cost. The shutdown point occurs when price falls below AVC. If price covers AVC, production continues.

Question 18

Q18. Which policy combination is most suitable during recession?

Accepted Answer

Option C: Reduction in repo rate and increase in government spending. Expansionary fiscal and monetary policies help increase aggregate demand during recession.

Question 19

Q19. If demand for a commodity remains unchanged despite a rise in price, demand is:

Accepted Answer

Option B: Perfectly inelastic. Perfectly inelastic demand means quantity demanded does not change at all with price changes.

Question 20

Q20. Investment increases by Rs. 500 crore in an economy where MPC = 0.6. The increase in national income will be:

Accepted Answer

Option D: Rs. 1,250 crore. k = 1 / (1 - MPC) Multiplier = 1 / (1 - 0.6) = 2.5 Increase in income = 2.5 x 500 = Rs. 1,250 crore.

Mock Test 09 Performance Solutions

Detailed Question Analysis

Q1. Which of the following is a feature of a mixed economy?

Q2. Which of the following is included in factor income from abroad?

Q3. Under perfect competition, firms sell:

Q4. If Total Product increases at a decreasing rate, Marginal Product is:

Q5. Which of the following is a quantitative method of credit control?

Q6. A rise in the price of petrol reduces the use of private cars and increases demand for public transport. Public transport and private cars are:

Q7. A producer incurs a total cost of \(\mathrm{Rs.\ 12,000}\) to produce 400 units. Average cost per unit is:

Q8. The RBI purchases government securities from commercial banks. This will most likely:

Q9. Which of the following causes a movement along the demand curve?

Q10. Which of the following is a component of current account in Balance of Payments?

Q11. Assertion (A): Under monopolistic competition, firms spend on advertisements. Reason (R): Products are differentiated in monopolistic competition.

Q12. Assertion (A): Increase in bank rate can reduce inflationary pressure. Reason (R): Higher bank rate discourages borrowing and reduces money supply.

Q13. Read the following case carefully: The government launches a rural employment scheme during an economic slowdown to increase purchasing power in villages. Which macroeconomic objective is mainly targeted?

Q14. Read the passage carefully: India experiences a sharp increase in foreign portfolio investment inflows. Demand for Indian rupee rises in the foreign exchange market. What is the likely impact on the rupee?

Q15. If Marginal Propensity to Save is 0.2, then the value of \(\mathrm{MPC}\) will be:

Q16. Which of the following is an example of indirect tax?

Q17. A perfectly competitive firm will continue producing in the short run as long as:

Q18. Which policy combination is most suitable during recession?

Q19. If demand for a commodity remains unchanged despite a rise in price, demand is:

Q20. Investment increases by \(\mathrm{Rs.\ 500\ crore}\) in an economy where \(\mathrm{MPC}\) = 0.6. The increase in national income will be:

ExamSpark Quick Economics Revision Signals

Quick Links & ExamSpark Resources

Mock Test 09 Performance Solutions

Detailed Question Analysis

Q1. Which of the following is a feature of a mixed economy?

Q2. Which of the following is included in factor income from abroad?

Q3. Under perfect competition, firms sell:

Q4. If Total Product increases at a decreasing rate, Marginal Product is:

Q5. Which of the following is a quantitative method of credit control?

Q6. A rise in the price of petrol reduces the use of private cars and increases demand for public transport. Public transport and private cars are:

Q7. A producer incurs a total cost of \(\mathrm{Rs.\ 12,000}\) to produce 400 units. Average cost per unit is:

Q8. The RBI purchases government securities from commercial banks. This will most likely:

Q9. Which of the following causes a movement along the demand curve?

Q10. Which of the following is a component of current account in Balance of Payments?

Q11. Assertion (A): Under monopolistic competition, firms spend on advertisements. Reason (R): Products are differentiated in monopolistic competition.

Q12. Assertion (A): Increase in bank rate can reduce inflationary pressure. Reason (R): Higher bank rate discourages borrowing and reduces money supply.

Q13. Read the following case carefully: The government launches a rural employment scheme during an economic slowdown to increase purchasing power in villages. Which macroeconomic objective is mainly targeted?

Q14. Read the passage carefully: India experiences a sharp increase in foreign portfolio investment inflows. Demand for Indian rupee rises in the foreign exchange market. What is the likely impact on the rupee?

Q15. If Marginal Propensity to Save is 0.2, then the value of \(\mathrm{MPC}\) will be:

Q16. Which of the following is an example of indirect tax?

Q17. A perfectly competitive firm will continue producing in the short run as long as:

Q18. Which policy combination is most suitable during recession?

Q19. If demand for a commodity remains unchanged despite a rise in price, demand is:

Q20. Investment increases by \(\mathrm{Rs.\ 500\ crore}\) in an economy where \(\mathrm{MPC}\) = 0.6. The increase in national income will be:

ExamSpark Quick Economics Revision Signals

Quick Links & ExamSpark Resources

Related Study Links