CBSE Class 12 Economics National Income Accounting VBQs Set 02

Multiple Choice Questions

Question. Study of macroeconomics is concerned with:
(a) theory of demand
(b) determination of aggregate output
(c) general price level
(d) both (b) and (c)
Answer: (d) both (b) and (c)

Question. Which of the following is an example of macroeconomics?
(a) Saving of an individual
(b) Consumption of a household
(c) Price level of a firm
(d) Aggregate demand of an economy
Answer: (d) Aggregate demand of an economy

Question. Which of the following is not a macro variable?
(a) Wholesale price index
(b) Output of the firm
(c) Aggregate demand
(d) Aggregate supply
Answer: (b) Output of the firm

Question. Partial equilibrium relates to:
(a) microeconomics
(b) macroeconomics
(c) both (a) and (b)
(d) None of the options
Answer: (a) microeconomics

Fill in the Blanks

Question. _______ studies problems of scarcity and choice at the level of an economy as a whole. (Microeconomics/Macroeconomics)
Answer: Macroeconomics

Question. _______ equilibrium is the method of study in microeconomics. (Partial/General)
Answer: Partial

Question. Theory of employment is studied under _______ economics. (micro/macro)
Answer: macro

Question. Allocation of resources is the central issue in _______. (microeconomics/macroeconomics)
Answer: microeconomics

Question. In macroeconomics, micro variables _______ assumed to be constant. (are/are not)
Answer: are

True or False

Question. Microeconomics is concerned with the economy as a whole.
Answer: False

Question. Individual economic agents include consumers and producers.
Answer: True

Question. In macroeconomics, there is a limited degree of aggregation.
Answer: False

Question. In microeconomics, total employment in the economy is taken as constant.
Answer: True

Question. What is true of microeconomics is also true of macroeconomics.
Answer: False

Very Short Answer Questions

Question. What is macroeconomics?
Answer: Macroeconomics deals with economic issues (or economic problems) at the level of an economy as a whole. Example: Problem of unemployment in the economy.

Question. State the basic difference between microeconomics and macroeconomics.
Answer: Microeconomics studies economic relationships or economic problems at the level of an individual—an individual firm, an individual household or an individual consumer. It is concerned with determination of output and price for an individual firm or industry.
Macroeconomics studies economic relationships or economic problems or economic issues at the level of the economy as a whole. It is concerned with determination of aggregate output and a general price level in the economy as a whole.

Question. Give two examples of macroeconomic studies.
Answer: (i) Problem of inflation in India, and (ii) Problem of unemployment in India.

Question. Define macroeconomic variables.
Answer: Macroeconomic variables are those economic variables which are studied at the level of economy as a whole. Example: Aggregate demand.

Question. Define economic agents.
Answer: Economic agents are the individuals or institutions who take economic decisions.

Question. What is meant by partial equilibrium?
Answer: Partial equilibrium refers to equilibrium in one market (say, commodity market) on the assumption that there is no change in other markets (like labour market or capital market).

Question. What is meant by general equilibrium?
Answer: General equilibrium refers to simultaneous equilibrium in all the markets in the economy.

Reason-based Questions

Question. Problem of unemployment in India is a macroeconomic study.
Answer: True. Problem of unemployment in India is an economic issue related to the economy as a whole. Hence, it is a macroeconomic study.

Question. Aggregation is involved only in macroeconomics.
Answer: False. Both micro and macro economics involve aggregation. The difference lies in the degree of aggregation. While in microeconomics, aggregation is at the level of an individual industry (which is the aggregate of all firms producing a particular commodity), in macroeconomics, aggregation is done at the level of an economy as a whole.

Question. Study of cotton textile industry is related to macroeconomics.
Answer: False. Cotton textile industry is an individual industry. Its study is related to microeconomics.

Read the following statements carefully. Write 'True' or 'False' with a reason.

Question. Intermediate goods are included in the estimation of GDP.
Answer: False. Because value of intermediate goods is only a part of the value of final goods and their inclusion leads to double counting. Therefore, only final goods are included in the estimation of GDP.

Question. LED TV is an example of semi-durable consumer goods.
Answer: False. LED TV is an example of durable consumer goods. Because LED TV can be repeatedly used for several years and is of relatively high value.

Question. Value of intermediate goods is equal to the value of intermediate consumption.
Answer: True. Value of intermediate goods is equal to the value of intermediate consumption. Because intermediate consumption refers to expenditure by the producers on the purchase of intermediate goods during an accounting year.

Question. All producer goods are capital goods.
Answer: False. Producer goods are those goods which are used in the production of other goods. Capital goods only refer to fixed assets of the producers. Therefore, all producer goods are not capital goods.

Question. Private final consumption expenditure refers to consumption expenditure by the households.
Answer: False. Private final consumption expenditure includes consumption expenditure by the households as well as non-profit private institutions.

Question. High fixed investment is a sign of growth and development.
Answer: True. Because fixed investment indicates production capacity of a nation. Greater the addition to production capacity (fixed investment) higher the growth and development.

Question. Unexpected obsolescence is an element of depreciation.
Answer: False. Only expected obsolescence is considered as an element of depreciation, not the unexpected obsolescence. Loss of value of fixed assets owing to unexpected obsolescence is called capital loss.

Question. A car purchased by a household is a final good.
Answer: True. A car purchased by a household is a final good because the household is the final user of the car and no value is to be added to the car.

Question. Air conditioners purchased by a dealer are final goods.
Answer: False. Air conditioners purchased by a dealer are intermediate goods because these are meant for resale.

Question. Chairs, fans, etc., purchased by a school are final goods.
Answer: True. Chairs, fans, etc., purchased by a school are final goods because school is the final user of these goods and no value is to be added to these goods.

Question. Expenditure on maintenance of a machinery is an intermediate expenditure.
Answer: True. Expenditure on maintenance of a machinery is an intermediate expenditure, as all expenditure on repair and maintenance (incurred by a firm) is treated as a part of intermediate consumption.

Question. Expenditure on improvement of a factory building is an intermediate expenditure.
Answer: False. Expenditure on improvement of a factory building is a final investment expenditure. Improvement of factory building implies improvement of asset value (through investment expenditure).