MACRO Economics 100 MCQs

1. Keynesian economics is also known as:

A. Supply side economics

B. Monetary economics

C. Rational expectations

D. Depression economics✔

2. Which of the following can cause shifts in consumption function:

A. Psychological attitude

B. Social practices

C. Business motives

D. Changes in price level✔

3. APC is determined by the following equation:

A. C/Y✔

B. S/Y

C. ΔC/ΔY

D. ΔS/ΔY

4. In the Keynesian two sector model, when AD = AS, then:

A. S<I

B. S>I

C. S=I✔

D. I=0

5. Which of the following is not correct:

A. MPC declines as income increases

B. MPC is positive but less than one

C. MPS is always positive✔

D. All the above

6. According to Keynes, saving is:

A. Private virtue but not social virtue✔

B. Private and social virtue

C. Is neither private virtue nor social virtue

D. Is either social virtue or private virtue

7. MEC is inversely related to:

A. Prospective yield✔

B. Supply price

C. Investment

D. Rate of interest

8. Keynes considered subjective and objective factors:

A. Important determinants of consumption

B. Unimportant determinants of consumption✔

C. Determinants of investment

D. Determinants of business’s willingness to pay

9. The sum of marginal propensity to consume plus marginal propensity to save must

equal to:

A. 0

B. 1✔

C. 100

D. 1000

10. Keynesian economics is:

A. Macro✔

B. Micro

C. Both

D. None

11. The MEC increases when:

A. Capital stock increases

B. Capital stock decreases✔

C. Capital remains constant

D. None of the above

12. Which of the following is correct?

A. 1+MPS = MPC

B. 1- MPC = MPS✔

C. MPC + MPS >1

D. MPC+ MPS<1

13. Starting point of Keynesian economics is:

A. Effective demand✔

B. Individual demand

C. Aggregate demand

D. Market demand

14. Keynesian three sector model consist of:

A. Business sector, service sector, external sector

B. Households, business, government✔

C. Government sector, open sector, service sector

D. Government sector, private sector, open sector

15. A substantial increase in the rate of interest can cause:

A. Increase in savings

B. Reduce propensity to consume

C. All the above✔

D. None of the above

16. Functional relationship between saving and disposable income is:

A. Saving function✔

B. Income function

C. Consumption function

D. Investment function

17. As the value of MPC increases, the value of multiplier:

A. Decreases

B. Increases✔

C. Constant

D. Cannot say

18. Who among the following pioneered the first real estimate of national income?

A. Adam Smith

B. David Ricardo

C. William Petty✔

D. None of the above

19. Who argued that national income is simply equal to “net product of agriculture”?

a.Mercantilists

b.Physiocrats✔

C. Classical Economists

D. Neo Classical Economists

20. Who argued that “Everything that is produced in the course of a year, every service

rendered, every fresh utility brought about is a part of the national wealth.”?

A. JS Mill

B. Stanley Jevons

C. Alfred Marshall✔

D. Robert Malthus

21. Who made the first major attempt to estimate national income in a somewhat

comprehensive manner?

A. Robert Fisher

B. John Maynard Keynes

C. Simon Kuznets✔

D. Arthur Pigou

22. Consumption of capital good in the process of production is called as

A. Capital Consumption

B. Depreciation✔

C. Decay of Capital

D. None of the above

23. Which one of the following is roughly equal to national income?

A. GDP

B. NNP✔

C. GNP

D. SDP

24. Which one of the following includes ‘income of residents’?

A. GDP

B. NNP✔

C. SDP

D. None of the above

25. Remittances made by NRIs to India in the context of national income accounting is

called as

A. Remittance Income

B. NRI Income

C. Factor Payments✔

D. All of the above

26. Who first introduced the concept of circular flow of income?

A. William Petty

B. Adam Smith

C. David Ricardo

D. Fancois Quesnay✔

27. Which one in the following is a stock variable?

A. Income

B. Investment

C. Capital✔

D. Fiscal Deficit

28. Which one in the following is a flow variable?

A. Debt

B. Wealth

C. Unemployment

D. GDP✔

29. Why do not the sale or purchase of used goods are not included in the GDP?

A. Used goods have only limited life

B. Used goods are not fresh production

C. Used goods are included in the previous GDP calculations✔

D. All the above

30. Inventories are unsold goods produced by a firm, then why do they are included in GDP?

A. Inventories represent value

B. Inventories add to the stock of the firm

C. They are purchases by the firm itself✔

D. All the above

31. The value of ‘intermediate goods’ are excluded from GDP calculation because:

A. It will increase the GDP unduly

B. It results in multiple counting of same value✔

C. Intermediate goods are not important

D. All the above

32. Value added at each stage of production means:

A. Value of output minus value of input✔

B. Total value added by that stage

C. Total value produced at that stage

D. All of the above

33. Imputed value of good is added to the GDP because:

A. They indeed represent value

B. There is no market price for that✔

C. They increase consumption

D. None of the above

34. GDP Deflator is also called as:

A. Implicit Cost Deflator

B. GDP at Factor Cost

C. Implicit Wage Deflator

D. Implicit Price Deflator✔

35. Personal Income includes:

A. Dividend distributed✔

B. Social insurance contributions

C. Corporate profit

D. None of the above

36. Disposable Income does not include:

A. Excise duty paid

B. Income tax✔

C. Customs duty paid

D. None of the above

37. Investment is reckoned by which method for computing GDP:

A. Income Method

B. Product method

C. Expenditure Method✔

D. Value added Method

38. Adam Smith, the father of modern economic theory, defined economics as a subject,

which is mainly concerned with the study of nature and causes of generation of ______

A. Wealth✔

B. Welfare

C. Hipness

D. Scarcity

39. _________ introduced the concept of welfare in the study of economics:

A. Fischer

B. Alfred Marshall✔

C. J S Mill

D. Adam Smith

40. Who defined economics as: a science which studies human behavior as a relationship

between ends and scarce means which have alternative uses:

A. J B Say

B. Alfred Marshall

C. David Ricardo

D. Robbins✔

41. “Economics is both a science and an art”.

A. True✔ B. False C. None

42. The problem of scarcity and choice making can be depicted using the tool of ___ curve.

A. Demand B. Isoquant

C. Indifference D. Production possibility✔

43. Macroeconomics is primarily concerned with aggregates. Which of the following is not

a macroeconomic aggregate?

A. Decision making by a household✔

B. The unemployment rate, and inflation levels

C. National income

D. The supply of money

44. Scientific attempts to describe economic relationships are :

A. Factual and can never be wrong

B. Accurate ways to predict political viewpoints

C. Known as positive economics✔

D. Directed at the fairness of social programs

45. The ________ method consists in deriving conclusions from general truths, takes few

general principles and applies them draw conclusions.

A. Inductive

B. Deductive✔

C. Empirical

D. Scientific

46. ________is a term referring to an intellectual controversy over epistemology, research

methodology between Carl Menger, and Gustav von Schmoller.

A. Methodenstreit✔

B. Laissez-faire

C. Cetris Paribus

D. Quid Proquo

47. Inductive method which also called empirical method was adopted by the:

A. Marginalist school

B. Mercantilists

C. Physiocrats

D. Historical School of Economists✔

48. Decisions made in households, firms, and government are the focus of:

A. Positive economic

B. Microeconomics

C. Normative economics✔

D. Macroeconomics

49. Which of the following statements is normative?

A. Higher oil prices will increase the inflation rate

B. Tax rates on the working poor should be reduced✔

C. Other things equal, if the price of an item is reduced, consumers will tend to

buy more of it

D. If interest rates remain high this quarter, business investment will continue

to be weak

50. Knowledge used to combine resources productively is called:

A. Comparative advantage

B. Capitalism

C. Entrepreneurship

D. Technology✔

51. Economic efficiency for the entire economy requires that :

A. Potential gains to anyone necessitate losses to another

B. All goods be produced at their lowest possible opportunity costs

C. Maximum-valued output is obtained from given resource

D. All of the above✔

52. Theories are:

A. Much more complicated than common sense

B. Scientific only if based on normative value judgments

C. Proven if only a few unimportant exceptions exist

D. Developed when we collect data, try to explain how things work, and then
test for Validity✔

53. Division of Labour is limited by the extent of:

A. Supply

B. Demand

C. Price

D. Market✔

54. Milton Friedman restated the :

A. Labour Theory

B. Profit Theory

C. Quantity Theory of Money✔

D. Wage theory

55. If the value of a variable varies as a consequence of the variation in the value of some

other variable, it is called:

A. Exogenous variable✔

B. Endogenours v ariable

C. Stock

D. Flow

56. Saving is a function of:

A. Export

B. Investment

C. Improvement in productivity

D. Income✔

57. In the classical theory the equlity between saving and investment is brought about by:

A. Income

B. Rate Interest✔

C. Consumption

D. None of these

58. Economic Laws are:

A. Statement of tendencies✔

B. Exact and predictable

C. Definite

D. None

59. Which of the following concepts are most closely associated with J.M. Keynes?

A. Control of the money supply

B. Marginal utility theory

C. Indifference curve analysis

D. Marginal efficiency of capital✔

60. Which of the following is an example of economic overhead?

A. Schools

B. Roads and Railwlays✔

C. Sanitary facilities

D. Hospitals

61. Three methods of computing the national income are:

A. Savings, investment and income methods

B. Outlay, depreciation and production methods,

C. Production, outlay and income methods,✔

D. Revenue, consumption and production methods

62. The difference between GNP at Factor Cost and NNP at Factor Cost is:

A. Imports

B. Depreciation

C. Taxes on Agriculture

D. Net income from abroad✔

63. An equilibrium which holds a particular position over-time is:

A. General Equilibrium

B. Unstable equilibrium

C. Stable equilibrium✔

D. Partial equilibrium

64. National income is a:

A. Cross section analysis

B. Flow concept✔

C. Stock concept

D. None

65. The services of a house wife are:

A. Not part of Production✔

B. A part of production

C. A part of consumption

D. Not a part of consumption

66. Inflation can not be caused by:

A. Cost push factor

B. Excessive money supply

C. Excessive production✔

D. Demand pull factors

67. By representing amounts of proceeds by all entrepreneurs along the Y axis and volumes

of employment along the X-axis, we can draw--------curves.

A. Employment✔

B. Consumption and Savings

C. Revenue and employment

D. Aggregate supply and demand

68. “Effective demand is different from aggregate demand”. This statement is:

A. True ✔B. False

C. Baseless D. None of these

69. If MPC = 4/5, then value of the multiplier is:

A. 20 B. 5✔

C. 0.80 D. 1.25

70. In the Cambridge equation of M =KPR, the value of “K” is:

A. “V” in the Fisher’s Equation B. 1/V✔

C. M/V D. None of these

71. Who had a different macro theory than the rest?

A. Adam Smith ✔B. David Ricardo

C. Malthus D. J.B.Say

72. ”Mr. Keynes and the Classics” is the title of the famous paper by :

A. Hansen B. Hicks✔

C. Harrod D. Haberler

73. Which of the following is not a flow variable:

A. Income B. Wealth✔

C. Saving D. Investment

74. The quantity theory of money is primarily a theory of demand for money is stated by:

A. Marshall B. Fisher

C. Keynes D. Friedman✔

75. When MPC is 0.5, the value of multiplier is:

A. 5 B. 0.5

C. 2 ✔D. 4

76. In Classical theory, the equality between saving and investment is brought about by:

A. Income B. Rate of interest✔

C. Consumption D. Multiplier.

77. Which one of the following is not correct:

A. MPC declines as income increases

B. MPC is positive but less than one

C. MPS is always positive✔

D. MPS declines as income increases

78. Marginal propensity to consume means:

A. Inclination to conspicuous consumption

B. Low income group spending more

C. Rate of income spend on consumption

D. The rate of extra income that will be spent on consumption✔

79. Human capital formation refers to:

A. The process of increasing the number of people

B. The process of physical growth of capital

C. The process of increasing knowledge, skills and capacities of all people✔

D. The process of providing more facilities to the people

80. According to Keynesian analysis, consumption is a function of:

A. Permanent income

B. Current income✔

C. Estimated lifetime income

D. Previous income.

81. If in an economy, out of every additional Rs.100 of national income, Rs.20 is taxed,

Rs.20 is saved, and Rs.10 is spent on imports, then the value of multiplier is:

A. 2 ✔B. 2.5 C. 3.3 D. 5

82. Which of the following equation is wrong?

A. National Income = Effective demand✔

B. National Income = GNP

C. National Income = C + I

D. National Income = C + S

83. The essential condition to act as money is:

A. It is homogeneous B. It is legal tender

C. It is backed by gold D. It is generally acceptable✔

84. Which of the following is not a component of Income method to GNP?

A. Wages and salaries B. Interest

C. Depreciation ✔D. Net foreign investment

85. The marginal propensity to save is defined as:

A. 1-ΔC/ΔY✔ B. S/Y

C. Y/S D. Y/ΔS

86. -------------is associated with the theory of multiplier:

A. Adam Smith B. Malthus

C. Malthus D. Keynes✔

87. The MPC has a value:

A. Greater than one but less than two

B. Less than one but greater than zero✔

C. Greater than two

D. None of these

88. Which of the following is not a stock variable:

A. Vapital B. Wealth

C. Money supply D. Saving✔

89. An official reduction in the value of home currency in terms of foreign currency is

known as:

A. Revaluation B. Devaluation✔

C. Depreciation D. Appreciation

90. The value of investment multiplier depends on:

A. APC B. APS

C. MPC ✔D. MPS

91. Wage cut as a solution of unemployment in classical theory is suggested by:

A. J.B. Say B. A.C. Pigou✔

C. Keynes D. Marshall

92. The word macro was first used in Economics by:

A. Keynes B. Ragner Frisch✔

C. J.R. Hicks D. J.B. Say

93. Personal Disposable income is:

A. Always equal to personal income

B. Always more than personal income

C. Equal to personal income minus direct taxes✔

D. Equal to personal income minus indirect taxes

94. When the method of Statics is called upon to study a changing process, it is referred to

as the method of:

A. Statics B. Dynamics✔

C. Comparative statics D. None of these

95. In Classical theory of employment, there is the possibility of:

A. No unemployment B. Voluntary unemployment✔

C. Disguised unemployment D. Involuntary unemployment

96. Leakages are the factors which:

A. Keep the power of multiplier stable

B. Increase the power of multiplier

C. Reduce the power of multiplier✔

D. Reduce the power multiplier to zero.

97. The phenomenon of increase in money wages that leads to increases in unemployment

is shown by:

A. Speculative demand curve B. Phillip’s curve✔

C. Aggregate supply D. Income consumption curve

98. Which of the following is Keynesian saving function?

A. S = f(i) B. S = f(P)

C. S = f (Y) D. S = f (W)

99. Usually an IS curve is a -------line.

A. Vertical B. Downward Slopping

C. Horizontal D. Upward slopping

100. When consumption and income are equal, saving is ------------

A. Negative B. Positive

C. Zero D. Increasing