Question 1

Q1. Which of the following best explains the central problem of an economy?

Accepted Answer

Option B: Scarcity of resources relative to wants. The central problem arises because resources are scarce while human wants are unlimited, forcing economies to make choices.

Question 2

Q2. Which of the following is included while estimating National Income?

Accepted Answer

Option C: Commission earned by a broker. Commission earned by a broker is payment for productive services and is included in national income.

Question 3

Q3. Which market structure is characterized by free entry and exit along with product differentiation?

Accepted Answer

Option D: Monopolistic competition. Monopolistic competition has many firms selling differentiated products with free entry and exit.

Question 4

Q4. When Marginal Cost is rising and lies above Average Cost, Average Cost will:

Accepted Answer

Option B: Rise. Marginal Cost pulls Average Cost upward when MC is greater than AC.

Question 5

Q5. Which of the following is a function of the Reserve Bank of India?

Accepted Answer

Option B: Issuing currency notes. The RBI has the sole authority to issue currency notes in India, except one-rupee notes issued by the government.

Question 6

Q6. The demand for ACs increases sharply during summer season. This is mainly due to:

Accepted Answer

Option C: Seasonal factor. Seasonal changes influence consumer demand for certain products such as air conditioners and heaters.

Question 7

Q7. A producer sells 500 units at Rs. 40 each. Total Revenue earned is:

Accepted Answer

Option C: Rs. 20,000. Total Revenue = Price x Quantity = 40 x 500 = Rs. 20,000.

Question 8

Q8. During inflation, RBI increases the Cash Reserve Ratio (CRR). What is the likely impact?

Accepted Answer

Option C: Reduction in liquidity with banks. Higher CRR requires banks to keep more reserves with RBI, reducing funds available for lending.

Question 9

Q9. Which of the following is an example of complementary goods?

Accepted Answer

Option B: Pen and ink. Complementary goods are used together. Pen and ink are jointly consumed.

Question 10

Q10. Which of the following is a revenue expenditure in government budget?

Accepted Answer

Option C: Payment of pensions. Pension payments are recurring expenditures and do not create assets, so they are revenue expenditures.

Question 11

Q11. Assertion (A): Under perfect competition, firms earn only normal profits in the long run. Reason (R): There is freedom of entry and exit of firms.

Accepted Answer

Option A: Both A and R are true, and R is the correct explanation of A. Free entry and exit eliminate supernormal profits and losses, leaving firms with only normal profits.

Question 12

Q12. Assertion (A): Increase in government expenditure can help reduce recessionary conditions. Reason (R): Government expenditure raises aggregate demand in the economy.

Accepted Answer

Option A: Both A and R are true, and R is the correct explanation of A. Higher government expenditure increases income and demand, helping economic recovery during recession.

Question 13

Q13. Read the following case carefully: The government reduces GST on essential food items to reduce burden on consumers during high inflation. Which economic objective is mainly targeted?

Accepted Answer

Option B: Price stability and consumer welfare. Lower GST reduces prices of essentials, helping control inflation and improving consumer welfare.

Question 14

Q14. Read the passage carefully: India experiences large inflows of foreign direct investment in technology and manufacturing sectors. Which of the following is the most likely impact?

Accepted Answer

Option B: Increase in foreign exchange reserves. FDI brings foreign currency into the country, increasing foreign exchange reserves and investment.

Question 15

Q15. If MPC = 0.75, then MPS will be:

Accepted Answer

Option C: 0.25. MPC + MPS = 1 MPS = 1 - 0.75 = 0.25.

Question 16

Q16. Which of the following is NOT included in domestic income?

Accepted Answer

Option C: Income earned by an Indian company in Japan. Income earned abroad is not part of domestic income because it is generated outside domestic territory.

Question 17

Q17. A firm under monopoly can influence market price mainly because:

Accepted Answer

Option C: Close substitutes are absent. Lack of close substitutes gives monopolists market power to influence prices.

Question 18

Q18. Which policy is most suitable to control deficient demand?

Accepted Answer

Option D: Increase in public investment. Public investment raises aggregate demand, employment, and income during deficient demand conditions.

Question 19

Q19. If price elasticity of demand is equal to zero, demand is:

Accepted Answer

Option B: Perfectly inelastic. Perfectly inelastic demand means quantity demanded remains unchanged regardless of price changes.

Question 20

Q20. Autonomous investment rises by Rs. 200 crore in an economy where MPC = 0.8. The resulting increase in national income will be:

Accepted Answer

Option D: Rs. 1,000 crore. k = 1 / (1 - MPC) Multiplier = 1 / (1 - 0.8) = 5 Increase in income = 5 x 200 = Rs. 1,000 crore.

Mock Test 10 Performance Solutions

Detailed Question Analysis

Q1. Which of the following best explains the central problem of an economy?

Q2. Which of the following is included while estimating National Income?

Q3. Which market structure is characterized by free entry and exit along with product differentiation?

Q4. When Marginal Cost is rising and lies above Average Cost, Average Cost will:

Q5. Which of the following is a function of the Reserve Bank of India?

Q6. The demand for ACs increases sharply during summer season. This is mainly due to:

Q7. A producer sells 500 units at \(\mathrm{Rs.\ 40}\) each. Total Revenue earned is:

Q8. During inflation, RBI increases the Cash Reserve Ratio (\(\mathrm{CRR}\)). What is the likely impact?

Q9. Which of the following is an example of complementary goods?

Q10. Which of the following is a revenue expenditure in government budget?

Q11. Assertion (A): Under perfect competition, firms earn only normal profits in the long run. Reason (R): There is freedom of entry and exit of firms.

Q12. Assertion (A): Increase in government expenditure can help reduce recessionary conditions. Reason (R): Government expenditure raises aggregate demand in the economy.

Q13. Read the following case carefully: The government reduces GST on essential food items to reduce burden on consumers during high inflation. Which economic objective is mainly targeted?

Q14. Read the passage carefully: India experiences large inflows of foreign direct investment in technology and manufacturing sectors. Which of the following is the most likely impact?

Q15. If \(\mathrm{MPC}\) = 0.75, then \(\mathrm{MPS}\) will be:

Q16. Which of the following is NOT included in domestic income?

Q17. A firm under monopoly can influence market price mainly because:

Q18. Which policy is most suitable to control deficient demand?

Q19. If price elasticity of demand is equal to zero, demand is:

Q20. Autonomous investment rises by \(\mathrm{Rs.\ 200\ crore}\) in an economy where \(\mathrm{MPC}\) = 0.8. The resulting increase in national income will be:

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Mock Test 10 Performance Solutions

Detailed Question Analysis

Q1. Which of the following best explains the central problem of an economy?

Q2. Which of the following is included while estimating National Income?

Q3. Which market structure is characterized by free entry and exit along with product differentiation?

Q4. When Marginal Cost is rising and lies above Average Cost, Average Cost will:

Q5. Which of the following is a function of the Reserve Bank of India?

Q6. The demand for ACs increases sharply during summer season. This is mainly due to:

Q7. A producer sells 500 units at \(\mathrm{Rs.\ 40}\) each. Total Revenue earned is:

Q8. During inflation, RBI increases the Cash Reserve Ratio (\(\mathrm{CRR}\)). What is the likely impact?

Q9. Which of the following is an example of complementary goods?

Q10. Which of the following is a revenue expenditure in government budget?

Q11. Assertion (A): Under perfect competition, firms earn only normal profits in the long run. Reason (R): There is freedom of entry and exit of firms.

Q12. Assertion (A): Increase in government expenditure can help reduce recessionary conditions. Reason (R): Government expenditure raises aggregate demand in the economy.

Q13. Read the following case carefully: The government reduces GST on essential food items to reduce burden on consumers during high inflation. Which economic objective is mainly targeted?

Q14. Read the passage carefully: India experiences large inflows of foreign direct investment in technology and manufacturing sectors. Which of the following is the most likely impact?

Q15. If \(\mathrm{MPC}\) = 0.75, then \(\mathrm{MPS}\) will be:

Q16. Which of the following is NOT included in domestic income?

Q17. A firm under monopoly can influence market price mainly because:

Q18. Which policy is most suitable to control deficient demand?

Q19. If price elasticity of demand is equal to zero, demand is:

Q20. Autonomous investment rises by \(\mathrm{Rs.\ 200\ crore}\) in an economy where \(\mathrm{MPC}\) = 0.8. The resulting increase in national income will be:

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