Wednesday, March 14, 2012

Economics Quiz - 19(Managerial Economics)

1. In an economy, if marginal propensity to save (MPS) is 0.20, multiplier for the economy is

2. An increase in the supply of money in the economy will result in
[A]An increase in unemployment
[B]An increase in interest rate
[C]An increase in the price level
[D]A decrease in output

3. According to the classical economists, the Aggregate Supply curve is
[C]First horizontal and then vertical
[D]First vertical and then horizontal

4. Which of the following variables will be at low levels during boom phase of a business cycle?
[A]Bank reserves
[B]Wage rates
[C]Bank credit

5. The slope of the savings function represents
[A]Average Propensity to Save
[B]Marginal Propensity to Consume
[C]Marginal Propensity to Save
[D]Average Propensity to Consume

6. Imperfect information about the labor market leads to
[A]Structural unemployment
[B]Cyclical unemployment
[C]Frictional unemployment
[D]Disguised unemployment

7. Which of the following is true, if Mr. Somesh transfers Rs.1000 from his current account in a bank to a fixed deposit scheme in the same bank?
[A]M1 falls, but M2 rises
[B]Both M1 and M2 rises
[C]M1 falls, but M3 rises
[D]M2 falls, but M3 remains constant

8. Cartel agreements tend to be unstable because
[A]Cartel agreements tend to lower profits
[B]A firm can increase its profits by cheating on the agreement
[C]Agreements become unnecessary as the number of firms in the cartel increases
[D]Cutting output and raising prices will benefit each firm in the cartel

9. When the Central Bank of a country resorts to contractionary or expansionary monetary policies to neutralize the change in money supply caused by changes in foreign exchange reserves, it is referred to as
[A]Transmission mechanism
[D]Monetary mechanism

10. Which of the following is considered to be the most appropriate measure for the standard of living of a country, like India?
[A]GDP at market prices
[B]GNP at factor cost
[C]Per capita GDP
[D]National income

11. In a two-sector economy the consumption function (C) is equal to 8 + 0.7Y and autonomous investment is equal to 22. The equilibrium level of income in the economy is

12. Which of the following is an example of a government transfer payment?
[A]Salary paid to a soldier
[B]Purchase of a new car for the Ministry of Finance
[C]Funding of a clinic to provide free vaccinations
[D]Free food coupons issued to persons in an anti-poverty program

13. All entries in the balance of payments statement should collectively sum to
[A]GDP of the country
[B]GNP of the country
[C]Foreign exchange reserves of the country

14. If the Average Propensity to Save (APS) is negative, then the Average Propensity to Consume (APC) is
[C]Positive but less than one
[D]Greater than one

15. Which of the following would you suggest to counter a recession?
[A]Decrease in government expenditure
[B]Decrease in transfer payments
[C]Decrease in the bank rate
[D]Decrease in the money supply

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