Economics Mock Quiz - 4

This quiz contains questions from the following topics of Macroeconomics NCERT book.

C1: An Introduction to Economics
C2: National Income Accounting
C3: Money and Banking
C4: Income Determination
C5: Govt Budget and the Economy
C6: Open Economy Macroeconomics

Economics

External trade in an economy is comprised of:

A. Only imports.

B. Only exports.

C. Both imports and exports.

D. Neither imports nor exports, but only international financial transactions.

None

Economics

What does the household sector primarily do in an economy?

A. It only consumes goods and services.

B. It is responsible for governing the country.

C. It engages in production, consumption, saving, and paying taxes.

D. It primarily focuses on exporting goods.

None

Economics

The Consumer Price Index (CPI) measures what?

A) The average prices paid by consumers for a basket of market goods and services

B) The profitability of consumer goods companies

C) The export prices of consumer goods

D) The investment value of consumer goods

None

Economics

Which of the following is an example of an intermediate good?

A) A car sold to a consumer

B) Wheat sold to a bakery

C) A computer sold to a school

D) Clothes sold in a retail store

None

Economics

What determines the Money Multiplier in an economy?

A) The central bank’s interest rates.

B) The currency deposit ratio and reserve deposit ratio.

C) The GDP growth rate.

D) The level of government spending.

None

Economics

What is the impact of a high Cash Reserve Ratio (CRR) on the economy?

A) It increases the availability of credit.

B) It stimulates economic growth.

C) It reduces the money supply.

D) It decreases the value of the currency.

None

Economics

What triggers the multiplier effect in macroeconomics?

A) A decrease in national income

B) A decrease in aggregate demand

C) An amplified change in output and income due to an initial change in spending

D) An increase in interest rates

None

Economics

What is indicated by a rightward shift of the aggregate demand curve?

A) Decrease in general price level

B) Decrease in total output

C) Increase in total output

D) Increase in interest rates

None

Economics

What does the term 'effective demand' refer to in macroeconomics?

A) Total demand for labor in the economy

B) Aggregate demand at the equilibrium output

C) Government’s demand for goods and services

D) Consumer demand for essential goods

None

10.

Economics

What is the major component of non-plan revenue expenditure of the government?

a) Education and health services

b) Defense expenditure

c) Subsidies

d) Interest payments

None

11.

Economics

The primary deficit is calculated by:

a) Subtracting total expenditure from total receipts

b) Subtracting interest payments from the fiscal deficit

c) Adding revenue deficit to capital expenditure

d) Subtracting capital receipts from capital expenditure

None

12.

Economics

What is the impact of a revenue deficit on government savings?

a) Increases government savings

b) Has no impact on government savings

c) Leads to government dissaving

d) Converts government savings into investments

None

13.

Economics

Which of the following best describes the concept of 'Purchasing Power Parity' (PPP)?

A) It is the ability of a country to buy goods with its currency at the international level.

B) It refers to the long-run equilibrium where the exchange rate equals the ratio of domestic to foreign price levels.

C) It is the parity between interest rates of two different countries.

D) PPP is the balance between a country's exports and imports.

None

14.

Economics

Which factor is crucial in determining short-term exchange rate movements?

A) Trade balances

B) Political stability

C) Interest rate differentials between countries

D) Gross Domestic Product (GDP) growth rates

None

15.

Economics

What does the 'Gold Standard' system in the context of international monetary systems refer to?

A) A system where gold is used as the primary means of international payment.

B) A system where currencies are defined and valued in terms of gold.

C) A system where gold reserves solely determine a country's wealth.

D) A system where gold production levels dictate international trade balances.

None

Time’s up

Economics Mock Quiz – 4