Economics Quiz - 19(Managerial Economics)

1. In an economy, if marginal propensity to save (MPS) is 0.20, multiplier for the economy is
[A]0.2
[B]0.8
[C]1
[D]5



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
[A]Vertical
[B]Horizontal
[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
[D]Inventory



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
[B]Sterilization
[C]Stabilization
[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
[A]21
[B]30
[C]43
[D]100



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
[D]Zero



14. If the Average Propensity to Save (APS) is negative, then the Average Propensity to Consume (APC) is
[A]Negative
[B]Zero
[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