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WorksheetsEconomic Analysis MBA III
Total questions: 35
Worksheet time: 53mins
Inflation refers to:
Decrease in general price level
Sustained rise in general price leve
Increase in production of goods
Increase in employment
“Too much money chasing too few goods” explains:
Cost-push inflation
Demand-pull inflation
Stagflation
Deflation
Cost-push inflation occurs due to:
Fall in demand
Increase in cost of production
Increase in exports
Decrease in money supply
When both inflation and unemployment rise together, it is called:
Hyperinflation
Deflation
Stagflation
Disinflation
Which of the following is not a cause of demand-pull inflation?
Population growth
Government expenditure
Lower interest rates
Sudden rise in oil prices
Cost-push inflation is also called supply-side inflation.
True
False
In stagflation, output rises but prices remain constant.
True
False
Inflation reduces the purchasing power of money.
True
False
Demand-pull inflation originates from the supply side.
True
False
A rise in crude oil prices leading to inflation is an example of (a) inflation.
During festive seasons like Diwali, excess demand creates (a) inflation.
The negative impact of inflation is reduction in (a) power of money.
Assertion (A): Inflation beyond a certain level is harmful to the economy.
Reason (R): Very high inflation reduces purchasing power and discourages investment.
Options:
Both A and R are true, and R explains A.
Both A and R are true, but R does not explain A.
A is true but R is false.
A is false but R is true.
Assertion (A): Demand-pull inflation is caused by excessive aggregate demand.
Reason (R): It happens when supply is limited but people have more money to spend.
Both A and R are true, and R explains A
Both A and R are true, but R does not explain A
A is true but R is false
A is false but R is true
Assertion (A): Cost-push inflation leads to higher prices and higher output.
Reason (R): When costs rise, producers expand production.
Both A and R are true, and R explains A
Both A and R are true, but R does not explain A
A is true but R is false
A is false but R is true
Assertion (A): Stagflation is a very difficult problem for policymakers.
Reason (R): It combines inflation with unemployment, making demand and supply policies less effective.
Both A and R are true, and R explains A
Both A and R are true, but R does not explain A
A is true but R is false
A is false but R is true
Assertion (A): Lower interest rates can cause demand-pull inflation.
Reason (R): Cheaper loans increase consumer spending and business investment.
Both A and R are true, but R does not explain A
Both A and R are true, and R explains A
A is true but R is false
A is false but R is true
National Income at Factor Cost (NI) is equal to:
GDP at MP – Depreciation
NDP at FC + NFIA
NNP at FC – NFIA
GDP at MP + NIT
Double counting occurs when:
Only final goods are counted
Both intermediate and final goods are included
Services are excluded
Exports are deducted from imports
Value added =
Value of Output – Subsidies
Value of Output – Intermediate Consumption
Value of Output – Taxes
Value of Output – Profits
Factor incomes include all except:
Rent
Interest
Profit
Scholarships
National Income = _________ at Factor Cost.
GDP
NDP
NNP
GNP
Which is excluded in income method?
Wages
Rent
Lottery winnings
Interest
Gross Domestic Capital Formation =
GDCF + Depreciation
GDCF – Change in stock
GFCF + Change in stock
Net Investment + Exports
Compensation of employees is a component of factor income.
True
False
GDP at MP = GVA at MP.
True
False
National Income excludes illegal activities and transfer payments.
True
False
NFIA = Income received from abroad – Income (a) abroad
Assertion (A): Transfer payments like pensions and scholarships are included in national income.
Reason (R): They are factor payments for productive services.
Both A and R are true, and R explains A
Both A and R are true, but R does not explain A
A is true but R is false
A is false but R is true
Assertion (A): National Income at Factor Cost (NNP FC) is considered the most accurate measure of national income.
Reason (R): It measures income earned by all factors of production within the domestic territory plus net factor income from abroad.
Both A and R are true, and R explains A
Both A and R are true, but R does not explain A
A is true but R is false
A is false but R is true
Assertion (A): Black economy activities make the measurement of national income inaccurate.
Reason (R): These transactions are not reported officially.
Both A and R are true, and R explains A
Both A and R are true, but R does not explain A
A is true but R is false
A is false but R is true
Which of the following is included in the calculation of Gross National Product (GNP)?
Transfer payments
Only domestic production
Income earned by foreigners within the country
Income earned by residents abroad
What is the primary cause of cost-push inflation?
Technological advancements
Increased consumer demand
Government subsidies
Higher production costs
Which of the following statements about National Income is false?
It includes all legal economic activities
It measures the total income earned by a country's residents
It accounts for illegal activities
It excludes transfer payments
Double counting understates the national income.
True
False
