GK - Economics 5

1. What happens to marginal cost when average cost increases

a) Marginal cost is below average cost
b) Marginal cost is above average cost
c) Marginal cost is equal to average variable cost
d) Marginal cost is equal to average cost

2. Development means economic growth with

a) price stability
b) social change
c) inflation
d) deflation

3. Which one of the following is more effective in controlling prices in the long run?

a) decrease in production
b) increase in production
c) decrease in the rate of interest
d) increase in the rate of employment

4. Through open market operations, the RBI purchase and sell

a) foreign exchange
b) gold
c) government securities
d) all of these

5. A firm is said to be of optimum size when

a) average total cost is at a minimum
b) marginal cost is at a minimum
c) marginal cost is equal to marginal revenue
d) the firm is maximizing its profit

6. All revenues received, loans raised and money received in repayment of loans by the Union government go into

a) Public account of India
b) Contingency fund of India
c) Consolidated fund of India
d) None of the above

7. The law of demand states that

a) demand increases with increase in income
b) when income and prices rise, the demand also rises
c) when price falls, demand increases
d) when price increases, demand increases

8. The balance of payment comprises

a) a current account of goods and services only
b) a capital account of financial assets only
c) official settlement accounts only
d) all of these

9. What is Net National Product?

a) The money value of final goods and services produced annually in the economy
b) The money value of annual service generation in the economy
c) The money value of tangible goods produced annually in the economy
d) The money value of tangible goods available in the economy

10. Other things being equal, what causes a decrease in demand?

a) rise in the price of the substitute
b) fall in the price of the commodity
c) rise in the income of the consumer
d) rise in the price of the commodity

11. Deflation is

a) deficit budget
b) reduction in taxation
c) contraction in volume of money or credit that results in a decline of price level
d) increase in public expenditure

12. Bank rate means

a) interest rate charged by moneylenders
b) interest rate charged by scheduled banks
c) rate of profit of the banking institution
d) the official rate of interest charged by the central bank of the country

13. Which agency estimates the national income of India?

a) Reserve Bank of India
b) Planning Commission
c) Ministry of Finance
d) Central Statistical Organization

14. What is Gross National Product?

a) the total output of goods and services produced by the country’s economy
b) the total domestic and foreign output claimed by residents of the country
c) the sum of gross domestic product and investment
d) national income minus national expenditure

15. The Government of India acquired the ownership and control of major banks in 1969 whose deposits were not less than

a) Rs 40 crore
b) Rs 50 crore
c) Rs 60 crore
d) Rs 80 crore

16. What are costs which vary with output called?

a) overhead costs
b) indirect costs
c) prime costs
d) all of the above

17. Which of the following is known as plastic money?

a) bearer cheques
b) credit cards
c) demand drafts
d) gift cheques

18. To get the Net National Product, we deduct what from the Gross National Product?

a) direct taxes
b) imports
c) interim payments
d) loss

19. What is the main purpose of currency?

a) standard of postponed payments
b) standard of money
c) medium of exchange
d) none of these

20. What does devaluation of a currency mean?

a) decrease in the internal value of money
b) decrease in the external value of money
c) decrease both in the external and internal values of money
d) none of these

21. Which of the following is not a direct tax?

a) estate duty
b) agricultural income tax
c) state excise
d) corporation tax

22. Which one of the following was set up during the Seventh Five Year Plan to help the low income groups?

a) NABARD
b) Regional rural bank
c) National Housing Bank
d) UTI Bank

23. The launching of five year plans in India saw the introduction of

a) mixed economy
b) socialist economy
c) capitalist economy
d) closed economy

24. Land development banks in India are owned by the

a) RBI
b) State governments
c) Commercial banks
d) Cooperative societies

25. Which of the following taxes is levied and collected by the union, but assigned to the states?

a) sales tax
b) octroi
c) excise
d) consignment tax

Answers

1. Marginal cost is above average cost
2. social change
3. increase in production
4. all of these
5. average total cost is at a minimum
6. Consolidated fund of India
7. when price falls, demand increases
8. all of these
9. The money value of final goods and services produced annually in the economy
10. rise in the price of the commodity
11. contraction in volume of money or credit that results in a decline of price level
12. the official rate of interest charged by the central bank of the country
13. Central Statistical Organization
14. the total domestic and foreign output claimed by residents of the country
15. Rs 50 crore
16. overhead costs
17. credit cards
18. loss
19. medium of exchange
20. decrease in the external value of money
21. agricultural income tax
22. NABARD
23. mixed economy
24. Cooperative societies
25. consignment tax