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Economics Questions and Answers for Competitive Exams | Indian Economy Quiz Set 33

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(1) In a multiple regression the regression coefficients are to be tested. Which test would be used ?
(1) F test
(2) χ 2 (Chi-square)test
(3) d test
(4) t test
Answer: t test
(2) Which is called Gossen’s second law ?
(1) Law of Equi-marginal Utility
(2) Law of Diminishing Marginal Utility
(3) Revealed Preference Theory
(4) Indifference Curve Approach
Answer: Law of Equi-marginal Utility

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(3) When a consumer is in equilibrium, MRSXY is 2.5. If the price of commodity Y is 16, then what will be the price of commodity X ?
(1) 40
(2) 6.4
(3) 23.2
(4) 24
Answer: 40
(4) Which of the conditions support long run equilibrium in monopolistic competition ?
(1) MR = MC, AR = AC
(2) P = MC, AR = AC
(3) MR = MC = AR = AC
(4) AR = MC = AC
Answer: MR = MC, AR = AC
(5) Who explained importance of time element in price determination, for the first time ?
(1) Chamberlin
(2) Stigler
(3) Mrs. Joan Robinson
(4) Marshall
Answer: Marshall
(6) Law of diminishing returns begins to operate when :
(1) Total product begins to rise.
(2) Total product begins to fall.
(3) Marginal product begins to rise.
(4) Marginal product begins to fall.
Answer: Marginal product begins to fall.
(7) Assuming wage-price flexibility, the classical economists asserted that a decline in money wages and price would lead to
(1) Unemployment
(2) Deflation
(3) High level of employment and output
(4) Unemployment and decline in output
Answer: High level of employment and output
(8) The classical theory of interest postulates that both savings and investments are a function of
(1) the level of National income
(2) the level of employment and output
(3) monetary and fiscal policy
(4) rate of interest
Answer: rate of interest
(9) The relative income hypothesis of Duesenberry suggests that as income increases, consumption function curve shifts above and therefore,
(1) Average propensity to consume rises.
(2) Average propensity to consume falls.
(3) Average propensity to consume remains constant.
(4) Average propensity to consume is equal to 1.
Answer: Average propensity to consume remains constant.
(10) Who among the following said, “Inflation is everywhere and always a monetary phenomenon” ?
(1) James Tobin
(2) John M. Keynes
(3) Milton Friedman
(4) Anna J. Schwartz
Answer: Milton Friedman
(11) Accelerator is most closely related to
(1) interest rate
(2) inventories
(3) idle capacity
(4) induced investment
Answer: induced investment
(12) Which one of the following would be inconsistent with the Keynesian view about the effectiveness of monetary policy ?
(1) Velocity of money is relatively stable.
(2) The demand for money is unstable
(3) The demand for money is interest sensitive.
(4) Investment demand is unstable.
Answer: The demand for money is interest sensitive.
(13) Which of the following statement is true ?
(1) Sporadic dumping is selling of goods at a low price in the foreign market to get rid of the inventory stocks.
(2) Predatory dumping is destroying of competitors even at a loss initially and then, after eliminating of competitors, selling product at a high price.
(3) Persistent dumping is selling a product at a lower price in foreign markets due to differences in elasticity of demand at home and in the foreign market.
(4) All the above.
Answer: All the above.
(14) According to Comparative Advantage Theory, International Trade will not take place if
(1) one country is efficient in the production of both the products.
(2) one country is inefficient in the production of both the products.
(3) opportunity costs of the two products are same in both the countries.
(4) None of the above.
Answer: opportunity costs of the two products are same in both the countries.
(15) Imposition of tariff will lead to
(1) Deterioration in terms of trade
(2) Improvement in terms of trade
(3) No effect on terms of trade
(4) None of the above
Answer: Improvement in terms of trade

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