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The assumption of all industries and factor markets being competitive implies that The economy produces maximum output The economy produces

Q1. The assumption of all industries and factor markets being competitive implies that:

a. The economy produces maximum output

b. The economy produces maximum output with given resources and technology

c. The economy produces maximum output with the given resources

d. All of the above

Q2. The assumption of prices being fixed implies:

a. There is no inflation in the Indian economy

b. The nominal and real interest rate are equal

c. The analysis of the model is for the short run

d. All of the above

e. Both b and c

Q3. If there is technological improvement in an economy, then

a. Production of good A increases

b. Production of good B increases

c. Production of both the goods increase

d. Production of only one good increases

e. It is ambiguous

f. There is an increase in total output

Q4. National Income can be calculated by subtracting ________ from GNP.

a. Depreciation

b. Indirect Taxes

c. Net Indirect Taxes

d. NFIA

e. Intermediate Consumption

f. All of the above

g. Both a and b

h. Both a and c

Q5. Where does investment figure in the product method of national income accounting?

a. Depreciation

b. Sales

c. Intermediate Consumption

d. Change in stocks

Q6. When all industries and factor markets are competitive then the money values method of measuring total output is:

a. Always True

b. Always False

c. True if it is calculated at fixed prices

d. True if it is calculated at fixed quantities

Q7. Suppose in economy A the prevailing interest rate is 11% along with an inflation of 5%. Whereas economy B offers 9% interest rate and has controlled an inflation rate of 2%. If you are a rational investor, in which economy would you like to invest? Why?

a. Economy B because it has lower inflation rate

b. Economy A, because it has higher interest rate

c. Economy B because it offers more real returns

d. Ambiguous

Q8. There is an economy with two individuals X and Y. X produces wheat and Y produces bread. X produced 250 kg wheat priced at $2/kg. Y purchased 150 kg wheat from X and produced 1000 loaves of bread to be sold at $3/loaf. X exports 70 kg wheat and consumes the rest. What is the national income of this economy?

a. $2900

b. $3340

c. $3200

d. $3140

Q9. Which of the following should not be included in national income?

a. Retirement pension

b. Gifts to government servants

c. Old age pension

d. All of the above

Q10. Economy A produces cotton and economy B has textile industry. Economy A produces 1,300 tons of cotton of which 1,000 tons are exported to economy B at a price of $12/ton cotton. Economy B produces cotton textile worth $25,000. What is the national income of economy B?

a. $25,000

b. $13,000

c. $28,600

d. $40,600

Apr 29 2020 View more View Less

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