Font size
WorksheetsMock Test Paper - Business Economics
Total questions: 100
Worksheet time: 50mins
Bank Rate is the rate:
At which RBI lends to the commercial banks
At which RBI rediscounts the bills of the commercial banks
Both (a) and (b)
Neither (a) nor (b)
Which of the following is NOT an instrument of monetary policy?
Cash Reserve Ratio
Statutory Liquidity Ratio
Public Expenditure Management
Repo Rate
Reverse Repo Rate is:
Rate at which RBI borrows from commercial banks
Rate at which RBI lends to the commercial banks
Both (a) and (b)
Neither (a) nor (b)
Fiscal deficit can be remedied by:
Borrowing money
Printing Currency
Both (a) and (b)
Neither (a) nor (b)
Which of the following Budget documents is mandated by Fiscal Responsibility and Budget Management Act, 2003?
Annual Financial Statement (AFS)
Demand for Grants
Finance Bill
Macro-Economic Framework Statement
Non‐Plan Grants are determined by:
Planning Commission
Finance Commission
Central Government
State Government
Public Debt Management refers to:
Terms of new bonds
Proportion of different components of public debt
Maturity
All the above
Public Expenditure increases:
Interest rate
Employment
Exports
Imports
Which of the following are the instruments of money market?
Call money
Certificate of deposits
Trade bills
All of the above
Who issues a treasury bill?
Any nationalised bank
Any private sector bank
Reserve Bank of India
All of the above
It is a method by which banks borrow from each other to be able to maintain the cash reserve ratio.
Commercial bill
Commercial papers
Call money
None of the above
The Dumping word refers to:
Tariffs should be cut to make more money.
A lower-priced sale of goods abroad is below the cost and price of their home market.
Buying goods at low prices in another country and selling them at a higher price here.
Expensive goods are being sold at low prices.
The margin for a currency long term must be retained with the repository by:
The buyer
The seller
Both the buyer and the seller
None
Money cost is considered by:
Modern theory of trade
Comparative cost advantage
New Trade theory
Factor equalization theorem
Factor abundance is considered to be part of international trade:
Heckscher Ohlin theory of international trade
Comparative cost advantage theory
New Trade theory
Factor Equalization theorem
The most controversial topic in the Doha Agenda?
Agriculture
Industry
Service
None of these
Hedging is indicated by:
Transaction in odd amounts
Presentation in documentary support
Frequency of such transactions
None of these
In the long run____ affect the exchange rate:
Transaction in odd amount
Presentation of documentary support
Frequency of such transaction
None of these
India’s foreign exchange rate system is:
Free Float
Managed Float
Fixed
Fixed target of bank
Which of the following measures of money supply is known as Broad Money?
M1
M2
M3
M4
Which one is not true regarding the Market Stabilization Scheme (MSS)?
It absorbs surplus liquidity of enduring nature arising out of large capital flows
It absorbs surplus liquidity through sale of short, dated government securities and treasury bills
Mobilised surplus liquidity is held in the MSS accounts with the RBI
MSS account liquidity can be used for normal government expenditure of capital nature
Business Economics is:
A normative science
Interdisciplinary
Pragmatic
All the above
In the free market economy the allocation of resources is determined by ______
voting done by consumers
A Central Planning Authority
Consumer Preferences
The level of profits of firms
Unlimited ends and limited means together present the problem of _______
Scarcity of Resources
Distribution
Choice
None of these
When two goods are complementary to each other the cross elasticity between them is:
Negative
Positive
Constant
None of these
The Indifference curve analysis is superior to utility analysis:
It dispenses with the assumption of measurability of Utility
It studies more than one commodity at a time
It segregate income effect from substitution effect
All the above
Comfort lie between:
Inferior goods and necessities
Luxuries and Inferior good
necessities and Luxuries
None of the above
How would that budget line be affected if the price of both goods fell?
The budget line could not shift
The new budget line must be parallel to the old budget line
The new budget line will have the same slope as the original so long as the prices of both goods change in the same proportion
None of these
Exception to the law of demand includes ___________
Giffen goods
Speculative goods
Conspicuous necessities
All the above
What are the Characteristics of labour?
Labour is perishable
Labour is an active
Labour is mobile
All the above
A consumer buys 80 units of a good at a price of Rs. 4 per unit. Suppose the price elasticity of demand is -4. At what prices will he buys 60 units.
4.2 per unit
3.8 per unit
4 per unit
None of these
A vertical supply curve parallel to Y axis implies that the elasticity of supply is:
Zero
Infinity
Equal to One
None of these
In the third of three stages of Production:
The marginal Product curve had a positive slope
The marginal product curve lies completely below the average product curve
The Total Product Increases
None of these
Time element was conceived by:
Adam Smith
Alfred Marshall
Pigou
None of these
The Firm and the Industry are one and the same in:
Perfect Competition
Monopolistic Competition
Monopoly
Oligopoly
A rational person does not act unless:
The action is ethical
The action produces marginal costs that exceed marginal benefit
The action makes money for the person
The marginal benefits that exceed marginal cost
The Structure of the Cold drink Industry in India is best described as:
Perfectly Competitive
Monopolistic
Oligopolistic
Monopolistically Competitive
In the long run equilibrium, the pure monopolist can make pure profits because of:
Blocked entry
The high price he charges
The Low LAC Costs
Advertising
Full capacity is utilized only when there is:
Monopoly
Perfect Competition
Price discrimination
Oligopoly
The Kinked demand hypothesis is designed to explain in the context of oligopoly:
Price and output determination
Price rigidity
Collusion among rivals
None of these
Which of the following is not a variable in the Index of leading indicators:
New consumer good orders
Prime rate
New building permits
None of these
The main thrust of New Industrial Policy is to invite greater participation of:
Public sector
Private sector
Stock Holders
Bank
Pump Priming should be resorted to at the time of:
Inflation
Deflation
Reflation
Stagflation
The expansion of the government debt could result in:
A decline in savings
An increase in interest
A decline in Investment
All the above
Psychological law of consumption is given by:
Milton Friedman
Pigou
Tobin
Keynes
One of the most important factors in trade reforms is to:
Increase export duties
Reduce import duties
Keep export duties constant
Keep import duties constant
Fiscal Policy relates to government decision in respect of:
Taxation
Government spending
Government borrowing
Public debt
An agreement between two countries to maintain a free trade area, a common external tariff free mobility of capital and labour and degree of unification in government policies and monetary policy is called:
Common market
Free Trade Area
Economic Union
Custom Union
Margin requirement specified under instrument of monetary policy:
Variable reserve requirement
Statutory liquidity requirement
Selective credit control
Open market operation
High growth of which Industry provide a positive signal for Industrial Growth in Future?
Capital good industries
Basic good industries
Durable consumer good industries
Intermediate good Industries
Even as fixed average cost continues to fall the average variable cost begins to rise because:
return to factor start diminishing
return to factor start rising
input price start rising
producer budget starts shrinking
Adverse Selection arises because of:
Lack of information
Wrong Information
Asymmetrical Information
Uncertainty of future
Which of the following is not used to measure inflation?
Wholesale Price Index Number
Consumer Price Index number
Purchasing Power Parity Prices
GDP deflator
Public goods are characterized by:
(1) Collective Consumption (2) Divisibility (3) Non-Exclusion (4) Rival Consumption
1 & 2 are correct
1 & 3 are correct
1 & 4 are correct
2 & 4 are correct
Giffen Paradox occurs when income effect is:
Greater than the substitution effect
Equal to the substitution effect
Less than substitution effect
Negative and is greater than substitution effect
In case of deficit budget when the deficit are covered through taxes that budget is called:
Unbalanced budget
Surplus budget
Balanced budget
None of these
Which of the following is credited with Introduction of LPG Model of economic development in India?
Dr. C Rangarajan
Dr. Montek Singh Ahluwalia
Dr. Manmohan Singh
None of these
In which of the following market situations/forms, firms are able to maximise profits?
Price Leadership
Cartel
At the Kink Point
Monopolistic Competition
The slope of aggregate demand becomes flatter?
The more sensitive investment spending is to the rate of interest
The more sensitive the demand for money is to the rate of interest
The larger the nominal money supply
None of these
When exchange rate is flexible a decrease in country B’s taxes:
Has no effect upon output in country B
Causes output in country B to increase
Results in an increase in country B’s export
None of these
Crowding Out occurs when _________
A decrease in the money supply raises the rate of interest which crowds out interest sensitive private sector spending
An increase in taxes for the private sector reduces private sector disposable income and spending
A reduction in income taxes results in a higher interest rate which crowds out interest sensitive private sector spending
None of these
A change in autonomous spending is represented by:
A movement along (C+I+G) spending line
A shift of a (C+I+G) spending line
A change in the behavioural coefficient
None of these
In mixed economy the feature include existence of:
Private Sector
Public Sector
Combined Sector
All of these
Which of the following is demerit of capitalism:
There is precedence of property rights over human right
It functions in a domestic framework
High degree of operative efficiency
None of these
Which of the following is included in study of Micro Economics:
Product Pricing
Factor Pricing
Both (a) and (b)
None of these
Scarcity definition of economics is given by:
Lipsey
Adam Smith
J B Say
Robinson
Snob effect is explained as:
It is a function of consumption of others
It is a function of price
Both (a) and (b)
None of these
Which of the following are the determinant of price elasticity of demand:
Availability of substitutes
Time period
Tied demand
All of these
If the cross elasticity is only- slightly below zero which of the following is correct?
They are weak complements
Negative and very high they are strong complements
Both (a) and (b)
None of these
Indifference Curve Analysis was proposed by _________
J. R Hicks and R.G.D Allen
Alfred Marshall
Jeremy Bentham
None of these
The rate at which the consumer is prepared to exchange-good x and y is:
Marginal rate of Substitution
Elasticity of Substitution
Diminishing Marginal Utility
None of these
Contraction of demand is the result of:
Decrease in the number of consumers
Increase in the price of the good concerned
Price of related products
None of these
Economic indicator required to predict the turning point of business cycle is:
Leading Indicator
Lagging Indicator
Coincident Indicator
All the above
Empirical evidence of liquidity trap is found during:
COVID – 19
Great Recession
Global Financial Crisis
None of the above
New Trade Theory was developed in:
1919
1970
2008
1991
Which one is included in National Income?
Transfer Earnings
Sale proceeds of Shares and Bonds
Black Money
None of the Above
The major reasons for market failure is:
Market Power
Externalities
Incomplete Information
All the above
Which of the following instrument is not FDI Compliant Instrument:
Equity Shares
Compulsorily Convertible Debentures
Redeemable Preference Share
None of the above
An expansionary fiscal policy is used for:
Reduction in Inflation
Increase in Exports.
Appreciation of Currency
Close recessionary gap
What is GDP Deflector?
It is GDP of Base Year
It is ratio of nominal GDP in a given year to real GDP of that year
It is GDP at current price
It is GDP of current year at base year price
An increase in the price of a commodity when demand is inelastic causes the total expenditures of consumers of the commodity to:
Increase,
Decrease,
Remain unchanged,
any of the above.
At the point of producer equilibrium:
The isoquant is tangent to the isocost,
The MRTSLK equals PL/PK,
MPL/PL / MPK/PK,
All of the above.
Price varies by attributes such as location or by customer segment is _______degree of price discrimination:
First
Second
Third
None of these
The Idea of ________in economics is that we have unlimited wants but limited resources:
Opportunity Costs.
Scarcity
Marginal Analysis
Specialization
Which of the following is a key assumption of the monopoly model?
Barriers to entry
A product with several substitutes
Price-taking behavior
Many identical producers
What is the full form of LIFE?
Lifestyle for Economy
Life for Everyone
Lifestyle for Environment
Living in Financial Equality
Which program was launched to promote organic farming?
MIDH
PMFBY
PKVY
None of these
Which of the following is a non-tariff barrier?
Ad valorem duty
Quotas
Countervailing duty
None of these
Most-Favoured Nation (MFN) principle under WTO means:
Preferential tariffs for allies
Equal treatment to all members
Protection to domestic producers
All of these
Which agreement replaced GATT and created WTO?
Doha Round
Tokyo Round
Uruguay Round
Marrakesh Protocol
What is a liquidity trap?
Money becomes illiquid due to inflation
Money supply becomes ineffective at zero interest rate
Interest rate becomes infinite
All of the above
According to Friedman, the key determinant of money demand is:
Current Income
Future expectations only
Permanent Income
Government Spending
According to Baumol, cash balances are kept to:
Invest in stock
Earn capital gains
Minimize total transaction cost
Hedge inflation
When demand increases and supply remains constant, what happens to equilibrium price?
Falls
Rises
Remains same
Cannot say
Mixed income of self-employed includes:
Rent and Interest only
Wages only
Capital and Labour income that cannot be separated
Only profit
The LAC curve is also known as:
Shut down curve
Expansion path
Planning curve
None of these
Fiscal federalism refers to:
Sharing of political power
Sharing of fiscal functions and resources
Decentralization of planning
None of these
The percentage of Central tax share for 2021–26 is:
38%
41%
46%
Not decided
Liquidity Adjustment Facility (LAF) includes:
Only Repo
Repo and Reverse Repo
Only Reverse Repo
None of these
The Monetary Policy Committee Sets:
SLR
CRR
Repo rate
Bank rate
