CBSE Class 12 Economics Macroeconomics MCQs Set B

Question. “Rest of the world” is the major element in
a) Two sector model
b) Three sector model
c) Four sector model
d) All of the options

Answer : C

Question. Cotton yarns purchased by handloom worker is
a) An intermediate good
b) A consumer good
c) A capital good
d) None of the options

Answer : A

Question. Which of the following is not an assumption of classical theory
a) Neutrality of money
b) Wage price flexibility
c) Involuntary unemployment
d) Long run

Answer : C

Question. National income is equal to:
a) Domestic product plus factor income earned from abroad
b) domestic product plus net factor income earned from abroad
c) Domestic product mins factor income earned from abroad
d) Domestic product plus export minus imports

Answer : B

Question. Which of the following is an example of Transfer Income?
a) Bonus
b) Unemployment Allowance
c) Compensation from the employer
d) All of the options

Answer : D

Question. if facor income received from abroad is equal to factor income paid abroad, then which of the following is not a valid statement?
a) national income = domestic income
b) ndp fc + depreciation = gnp fc
c) ndp fc + depreciation = gnp mp
d) all are valid

Answer : C

Question. Under Keynesian framework income is measured along
a) 450 line
b) Vertical line
c) Horizontal line
d) None of the options

Answer : C

Question. Factor income of household sector is equal to
a) Factor payments by firms
b) Factor income of firms
c) Expenditure of households
d) Income of households

Answer : A

Question. In equation C= a+by, the value of b lies between
a) 0<b<1
b) 0>b<1
c) 0=b<1
d) 0>b<1

Answer : A

Question. Cash balance approach in Quantity theory emphasis on
a) Money as a medium of exchange
b) Money as a store of value
c) Money as a measure of value
d) Money as a transfer of value

Answer : B

Question. In the classical theory, output and employment are determined by
a) Production function
b) Demand for labor and supply of labour
c) Effective demand
d) Both A & B

Answer : D

Question. Keynesian economics came to be widely accepted because it finds solution to
a) Stagflation of 1970s
b) Recession in 2008
c) Low growth rates in 1950s
d) Great depression of 1930s

Answer : D

Question. “Income method” is also known as:
a) distributive share method
b) income disposal method
c) industrial origin method
d) None of the options

Answer : A

Question. According to Keynes what causes changes in inducement to invest by entrepreneurs?
a) MPC and MEI
b) MEC and MPS
c) MEC and rate of interest
d) MPC and rate of interest

Answer : C

Question. Early Keynesian economists’ view is
a) Money alone matters
b) Money does not matters
c) Money partly matters
d) None of the options

Answer : B

Question. In a closed economy, ————– is not included
a) Households
b) Firm
c) Government
d) Foreign sector

Answer : D

Question. Final goods refer to those goods which are used either for …………. or for ……….
a) Consumption, Investment
b) Consumption,resale
c) Resale,investment
d) Resale,further production.

Answer : A

Question. speculative demand for money is a function of
a) income
b) interest
c) prince
d) investment

Answer : B

Question. The formula for calculating simple multiplier is
a) 1/1-MPC
b) 1/MPC=MPS
c) 1/1-MPS
d) 1/MPC+MPS

Answer : A

Question. The formula for calculating investment multiplier is
a) Δ Y/ ΔI
b) ΔY+Δ I
c) ΔI/ΔY
d) Δ C+ ΔI

Answer : A

Question. In Keynes consumption theory the chief factor that determines consumption expenditure is
a) Personal income
b) Relative income
c) Permanent income
d) Disposable income

Answer : D

Question. Domestic factor income is another name for:
a) NDP FC FF
b) NNP MP
c) GDP FC
d) NNP FC

Answer : A

Question. Which of the following is NOT considered a factor income?
a) Rent
b) Wage
c) Profit
d) Gifts from Abroad

Answer : D

Question. Which of the following is the consumption sector?
a) Household
b) Firm
c) Government
d) Foreign

Answer : A

Question. According to Keynesian multiplayer model the value of MPC is 0.75 what would be the value of multiplayer
a) 4.0
b) 1.33
c) 2.00
d) None of the options

Answer : A

Question. Interest rates and bond prices are;
a) positively related
b) negatively related
c) not related
d) Either A or B

Answer : B

Question. The relation between APC and MPC in Keynes Psychological consumption function is
a) MPC<APC
b) MPC=APC
c) MPC>APC
d) None of the options

Answer : C

Question. Macroeconomics is a study of economics that deals with which 4 major factors:
a) households, firms, government, and demand-supply
b) households, firms, government and external sector
c) profits, price level, cost and expenditure
d) None of the options

Answer : B

Question. The expenditure multiplier is the ratio of
a) the change in equilibrium output to a change in the monetary base.
b) the change in the money supply to a change in the monetary base.
c) the change in the money supply to a change in the autonomous expenditure.
d) the change in equilibrium output to a change in the autonomous expenditure.

Answer : D

Question. In the Keynesian model of income determination, consumer expenditure includes spending by
a) consumers on personal computers.
b) businesses on personal computers.
c) governments on personal computers.
d) All of the options since computers are consumer durables.

Answer : A

Question. Which among the following is not a feature of Keynesian theory?
a) Short run
b) Wage price flexibility
c) Fiscal policy
d) Underemployment equilibrium

Answer : B

Question. Money on wings indicates
a) Store value function of money
b) Medium of exchange function of money
c) Measure of value function of money
d) All of the options

Answer : B

Question. National Disposable income is equal to:
a) Private Final Consumption Expenditure + Government Final Consumption Expenditure + National Saving
b) National Consumption Expenditure + National Saving
c) National Income + Net Indirect Taxes + Net Current Transfers from rest of the world)
d) All of the options.

Answer : D

Question. Defects in SNA include
a) Neglects depletion of natural capital
b) Neglects environmental pollution
c) Expenditure to defend the effects of pollution
d) All of the options

Answer : D

Question. Under Keynes Psychological law of consumption the relationship between consumption and income is
a) Linear and proportional
b) Non-linear and proportional
c) Linear and non-proportional
d) Nonlinear and non-proportional Both C &D

Answer : B

Question. Expenditure method focuses on measurement of National income at:
a) phases of production of goods and services
b) phase of income distribution
c) phase of income disposition
d) All of the options

Answer : C

Question. Supply creates its own demand” is the idea of
a) JB Say
b) Samuelson
c) JM Keynes
d) Milton Friedman

Answer : A

Question. Green accounting accounts for
a) Depletion of natural resources
b) Costs of environmental degradation
c) Pollution
d) All of the options

Answer : D

Question. The tendency of the people to believe the currency of nominal value at present to be equal to purchasing power at a previous point is called
a) Legal tender money
b) Demonetisation
c) Money illusion
d) Remonetisation

Answer : C

Question. GDP MP = Rs.1000 and subsidies = Rs.50, then GDP FC will be :
a) 1050
b) 950
c) 1000
d) 900

Answer : A

Question. Accelartor theory of investment is the ratio of:
a) change in income to change investment
b) change in investment to change in income
c) change in income to change in interest
d) None of the options

Answer : B

Question. The relationship between money supply and price level under Quantity theory of money is :
a) Direct non proportionate relationship
b) Inverse proportionate relationship
c) Direct proportionate relationship
d) Inverse non proportionate relationship

Answer : C

Question. Which of the following Fisher’s equation of exchange is not correct
a) MV=PT
b) MV=PQ
c) MV=PY
d) MV=PR

Answer : D

Question. Equation M=KPT is propounded by which of the following Cambridge economists
a) Keynes
b) Marshall
c) Robertson
d) Pigou

Answer : C

Question. which of the following is not an economic activity and hence not included while estimating national income in india?
a) medical services rendered by a dispensary
b) a housewife doing household work
c) a lawyer doing his practice
d) a maid working full time with a family

Answer : C

Question. Keynes assumed that the price level was fixed because
a) inflation was not a serious problem during the Great Depression.
b) his primary focus was on output and employment.
c) his primary focus was on interest rates and investment spending.
d) of both (a) and (b) of the above.

Answer : D

Question. In a closed economy, aggregate demand is the sum of
a) consumer expenditure, actual investment spending, and government spending.
b) consumer expenditure, planned investment spending, and government spending.
c) consumer expenditure, actual investment spending, government spending, and net exports.
d) consumer expenditure, planned investment spending, government spending, and net exports.

Answer : B

Question. IS curve represent the combination of:
a) combination of income and interest
b) Combination of price and out put
c) combination of interest and investment
d) None of the options

Answer : A

Question. If economic subsidies are added to and Indirect taxes are substracted from the national income at market prices, then it will be equal to :
a) Domestic Income
b) National Income
c) GNP at Market Price
d) GDP at factor cost

Answer : B

Question. Which of the following is NOT a stock variable?
a) Capital
b) Wealth
c) Interest
d) Saving

Answer : D