Internal Test in Economics

1. If marginal utility of a commodity say X to a consumer is observed more than the price then what sill the consumer do to optimise his behaviour?

• Increase consumption of X

• Decrease his level of consumption

• he will neither increase nor decrease the consumption

If two indifference curves intersect then which of the following is incorrect statement?

• Consumer's preference is inconsistent

• It will reflect that two different indifference curves provide the consumer same level of satisfaction

• Different indifference curves should represent two different set of utilities

• violates the property of monotonicity of preference and it will make the graph more ambiguous

Which of the following is an incorrect statement concerning cardinal utility theory?

• Utility can be computed by assigning numbers

• marginal utility of money is constant

• total utility is additive

• marginal utility and quantity consumption of any good is directly related

Why does an indifference curve slope downward?

• Because of increasing marginal rate of substitution

• Consumer's preference is consistent

• Consumer's preference is monotonic

• Because the consumer's utility increases when he continues substituting one good for another along an indifference curve.

Suppose there are two goods A and B, price of A and B are P1 and P2 respectively. Then which of the following is the condition of consumer's equilibrium?

• MU_A =P1

• MU_A = MU_B

• MRS_{A, B} = P1/P2

• MU_A/P2 = MU_B/P1

Which of the following is not a postulate of classical economics?

• Full-employment equilibrium is the normal situation of an economy

• wages and prices are flexible enough to restore equilibrium

• demand creates its own supply

• A market economy is efficient and possessed with self-corrective mechanism

Mr. Dutta has sold his car which he bought just two years ago. He got Rs 1 lakh as the value of the sale, but he had to pay Rs 5000 to a dealer to assist him in selling the car. Then which of the following is true in connection with the computation of GDP?

• Only selling price of the car should be included in GDP

• Only dealer fees should be included in GDP

• Both the selling price and dealer fees should be included

• Neither the selling price nor the dealer's fees are to be included.

If marginal propensity to save is equal to 0.25 then what will be the value of investment multiplier?

• 0.75

• 4/3

• 3

• 4

Mention which of the following is not a leakage in the circular flow of national income?

• Tax

• import

• saving

• public expenditure

Which of the following relations is not true?

• NDP_FC = NDP_MP - NIT

• If nominal GDP = Real GDP, then the GDP deflator equals to 100

• If GNP > GDP, then NFIA must be positive

• If NIT is negative, then national income computed at market price should be more than national income at factor cost.