Economics Quiz - 20 (Economy Introduction)

1. Large government borrowings to finance its deficit will
[A]Increase the supply of loanable funds
[B]Exert downward pressure on interest rates
[C]Have no impact on interest rates
[D]Put upward pressure on interest rates



2. Which of the following is not a stock variable?
[A]Foreign exchange reserves
[B]Public debt
[C]Wealth of a country
[D]Inflation



3. GDP of a country is 8000. Value of output produced in the domestic country by foreign factors of production is 200 and value of the output produced by domestic factors of production in foreign countries is 100. GNP of the country is
[A]7700
[B]7800
[C]7900
[D]8100



4. Omar has just completed his graduation in commerce. He is looking for a suitable job, but the only job that he can find is that of a cook in a restaurant. This situation can be described as
[A]Frictional unemployment
[B]Structural unemployment
[C]Cyclical unemployment
[D]Natural unemployment



5. From the following information, compute subsidies
GDP at factor cost = Rs.2000 cr.
Net factor income from abroad = Rs.200 cr.
Indirect taxes = Rs.542 cr.
GNP at market prices = Rs.2292 cr.
[A]Rs. 50 cr
[B]Rs.342 cr
[C]Rs.450 cr
[D]Rs.292 cr



6. Subhash Pvt. Ltd., an Indian company, has a fully owned subsidiary in the USA. The profits earned by the subsidiary in the USA is recorded in
[A]GDP of India and GNP of the USA
[B]GNP of both India and the USA
[C]Neither GDP nor GNP of India
[D]GNP of India and GDP of the USA



7. Which of the following cost curves is not ‘U’ shaped?
[A]Long run average cost curve
[B]Long run marginal cost curve
[C]Short run average cost curve
[D]Average fixed cost curve



8. Among the following goods which has the highest income elasticity of demand?
[A]Tea
[B]Ice cream
[C]Milk
[D]Rice



9. The Government of India is expecting tax collections (net) to the tune of Rs.1,84,169 crore during the year 2003-04. The borrowings and other liabilities are expected to be Rs.1,53,637 crore. If the non-plan revenue expenditure of the government is Rs.2,89,384 crore (inclusive of interest payments of Rs.1,23,223 crore), the fiscal deficit for the year 2003-04 is
[A]Rs.1,53,637 crore
[B]Rs.1,35,747 crore
[C]Rs.1,05,215 crore
[D]Rs.30,414 crore



10. An implicit cost can be defined as the
[A]Payment to the non-owners of the firm for the resources they supply
[B]Money payment which the self-employed resources could have earned in their best alternative employment
[C]Costs which the firm incurs but does not disclose
[D]Costs which do not change over a period of time



11. The difference between additional revenue gained by a firm from selling a unit and the additional cost incurred for producing the unit is
[A]Average profit
[B]Average revenue
[C]Marginal profit
[D]Marginal revenue



12. Which of the following is not true?
[A]Indifference curve describes all the possible combinations of two goods which give equal satisfaction to the consumer
[B]Total utility is the sum of marginal utilities of all units of a good consumed
[C]When price of a product increases, demand for its complement increase
[D]Utility is a psychological concept and therefore cannot be precisely measured



13. Suppose that the market equilibrium monthly rent per room in a city is Rs.3,000. At this rent 8000 rooms per year are rented. If a local rent control ordinance establishes a ceiling of Rs.3,500 per room, which of the following is true?
[A]Shortage of rooms as the quantity of housing demanded increases
[B]Shortage of rooms as the quantity of housing supplied decreases
[C]The equilibrium remains unaffected
[D]Surplus of rooms as the quantity of housing demanded decreases



14. A consumer consumes three units of a product. Marginal utilities derived from the three units are Rs.200, Rs.175 and Rs.150, respectively. If the price of the good is Rs.100 per unit, the consumer surplus is
[A]Rs. 50
[B]Rs. 75
[C]Rs.100
[D]Rs.225



15. The total cost (TC) schedule of a firm is
Output TC
1 100
2 150
3 190
4 250
5 340
Marginal cost of the third unit is
[A]30
[B]40
[C]150
[D]60