Macro and IED Practice 1

Which of the following best explains how open market operations help reduce a deflationary gap?

• By increasing money supply and lending capacity

• By decreasing interest rates and government borrowing

• By reducing money supply and increasing saving

• By increasing government spending only

If an economy has MPC = 0.75 and autonomous investment increases by ₹1000 crores, the total increase in national income will be:

• ₹3000 crores

• ₹4000 crores

• ₹2500 crores

• ₹1500 crores

Which of the following best characterizes jobless growth in an economy?

• High GDP growth with proportionate employment generation

• High GDP growth without corresponding employment creation

• Low GDP growth with high employment generation

• Negative GDP growth with falling employment

In calculating GVA at market prices from GVA at basic prices, which of these must be added?

• Only product taxes

• Product taxes minus product subsidies

• All indirect taxes

• Production taxes only

Under a flexible exchange rate system, if a country faces balance of payments deficit:

• The central bank must intervene

• The exchange rate will depreciate automatically

• Foreign reserves must be used

• Trade restrictions become necessary

The value of Marginal Propensity to Consume (MPC):

• Can exceed 1 during economic booms

• Must always be less than the Average Propensity to Consume

• Must be between 0 and 1

• Is always equal to 1 minus MPS

Which economic reform in China had the most significant impact on its demographic structure?

• Special Economic Zones

• One Child Policy

• Great Leap Forward

• Agricultural reforms

The primary reason for India adopting mixed economy after independence was to:

• Promote only public sector enterprises

• Allow complete private sector autonomy

• Combine advantages of both public and private sectors

• Follow socialist pattern strictly

During the colonial period, India's handicraft industries declined mainly because:

• Of technological backwardness

• Of discriminatory colonial policies

• Indian artisans lost skills

• Of natural market forces

Environmental resources can be classified as:

• Only renewable resources

• Only non-renewable resources

• Both renewable and non-renewable resources

• Neither renewable nor non-renewable resources