Economics Nios Plus Two Welcome to your Economics Nios Plus Two Total Questions: 214 Name Mobile No: 1. Which of the following is not a component of aggregate demand? Net exports Household consumption Savings by households Government expenditure None Hint 2. Contraction of demand occurs due to: Rise in price Rise in income Fall in price Fall in population None Hint 3. What is the effect of higher taxes on disposable income and consumption? Disposable income increases and consumption increases Disposable income increases and consumption decreases Disposable income decreases and consumption decreases Disposable income decreases and consumption increases None Hint 4. Investment in economics refers to: Expenditure on daily needs Use of goods for immediate consumption Receiving income without providing services Creation of physical assets for future production None Hint 5. According to Prof. Marshall, the interaction of demand and supply is like: The two blades of a pair of scissors A blade cutting through high prices A tug of war between buyers and sellers A race between demand and supply None Hint 6. If a person earns ₹10,000 and spends ₹8,000 on consumption, what is the APC? 0.8 0.2 1.25 2 None Hint 7. Why are intermediate goods not included in the calculation of national income? They are not produced within the country They are not used by consumers They are used only by government departments Their value is already included in final goods None Hint 8. What is the most likely outcome of excess demand in an economy? Inflation Deflation Decrease in investment None Hint 9. In microeconomics, the total cost of production includes: Explicit costs and profits Only implicit and explicit costs Explicit costs, implicit costs, and normal profits Only explicit costs None Hint 10. According to Keynes, why may the rate of interest not strongly influence consumption in the short run? Because present needs are more urgent than future gains Because taxes are more important Because interest rates remain constant Because people always invest their income None Hint 11. The term “collusive oligopoly” refers to a market situation where: Firms ignore each other’s decisions Firms fight aggressively to cut prices Government regulates all firms strictly Firms secretly cooperate to fix prices and output None Hint 12. Why is normal profit considered a part of the cost of production? It is an imputed cost of capital It is the minimum return needed to keep an entrepreneur in business It is the extra profit earned above total cost It is a reward for land None Hint 13. In the consumption function equation C = a + bY, what does ‘b’ represent? Disposable income Average income Marginal Propensity to Consume (MPC) Autonomous consumption None Hint 14. Which of the following is an example of an intermediate good? Television purchased for family entertainment Sugar used by a bakery to make cakes Furniture bought for home use Car purchased by a household None Hint 15. What does the consumption function show? The relationship between income and saving The relationship between government spending and taxes The relationship between income and consumption The relationship between investment and interest rate None Hint 16. Which of the following is not a reason for the growth of resources in an economy? Increase in the quantity of resources Improvement in technology Rise in productivity Inefficient utilization of current resources None Hint 17. What is the economic consequence of a deficiency in demand? Increase in interest rates Deflation Inflation Trade surplus None Hint 18. Which of the following is included in the domestic territory of a country? Residential houses of citizens living abroad Foreign embassies located in the country Offices of the United Nations located in the country Country’s own embassies located abroad None Hint 19. Which of the following is an exception to the Law of Demand? Goods with many substitutes Normal goods Giffen goods Perishable goods None Hint 20. If the price of tea rises, and as a result the demand for coffee increases, then tea and coffee are: Substitute goods Complementary goods Independent goods Unrelated goods None Hint 21. What is the likely result of increasing the variable reserve ratio by the central bank? Rise in employment Increase in credit supply Increase in public expenditure Fall in money supply None Hint 22. In an oligopoly, once the price of a product is set, it usually remains fixed. This situation is known as: Price rigidity Price discrimination Price flexibility Price elasticity None Hint 23. In economics, the term ‘market’ refers to: A mechanism through which buyers and sellers interact A specific place where goods are bought and sold Only physical locations like shops or malls A wholesale trade centre None Hint 24. When the cost of producing additional units rises sharply, the supply becomes: Elastic Inelastic Perfectly elastic Unitary elastic None Hint 25. Fiscal Deficit is equal to: Total Expenditure – Total Receipts including borrowings Revenue Receipts – Revenue Expenditure Total Expenditure – Total Receipts excluding borrowings Total Revenue – Total Capital None Hint 26. What is meant by market supply? Total supply of all firms in the market at a given price and time Supply based on market price of inputs Quantity demanded by all buyers in the market Supply of goods by a single producer None Hint 27. In the short-run model of a simple economy, why are prices considered fixed? Because prices are regulated by the government Because prices do not change in the short run Because producers set prices based on demand Because inflation is high None Hint 28. The market demand schedule is obtained by: Subtracting individual demands from total supply Adding individual demand schedules of all buyers Adding up supply from all sellers Multiplying individual demand by the price None Hint 29. Purchase of durable goods like washing machines by households is classified as: Inventory investment Private final consumption expenditure Government expenditure Intermediate consumption None Hint 30. What made it difficult to trade indivisible goods like a buffalo in barter system? They were sacred animals They were expensive They couldn’t be divided into smaller parts They were not accepted by people None Hint 31. When the supply decreases at the same price due to higher input cost, it is called: Contraction of supply Expansion of supply Decrease in supply Increase in demand None Hint 32. In the Income Method of measuring national income, which of the following is included? Intermediate goods Compensation of employees Transfer payments Sale of second-hand goods None Hint 33. The Law of Demand states that: Demand decreases as price decreases Demand increases as price increases Demand increases when price decreases Demand remains constant at all price levels None Hint 34. Which of the following is correct? ATC = AFC – AVC ATC = AFC + AVC ATC = AFC × AVC ATC = AVC – AFC None Hint 35. Which of the following is an example of autonomous investment? Purchasing a sewing machine to start production Spending on luxury items by consumers Buying a car for personal use Spending on extra raw materials when income rises None Hint 36. What does an upward movement along the same supply curve indicate? Decrease in demand Contraction of supply Increase in supply due to other factors Expansion of supply None Hint 37. The income of a small shopkeeper using his own labour, building, and capital is known as: Compensation of employees Mixed income Rent Profit None Hint 38. The income received by an entrepreneur is known as: Interest Rent Profit Wages None Hint 39. What does the multiplier represent in the context of national income? The total consumption in the economy The ratio of investment to savings The difference between government spending and taxes The number of times income increases due to a rise in investment None Hint 40. Primary Deficit is defined as: Capital deficit – Interest receipts Fiscal deficit + Borrowings Fiscal deficit – Interest payments Revenue deficit + Fiscal deficit None Hint 41. Which of the following is assumed while drawing a PPC? Technology is constantly changing Only two goods are produced Production is inefficient Resources are unlimited None Hint 42. Which of the following explains the problem of storage in barter system? Costly transportation Difficulty in preserving perishable goods and storing bulky goods Inability to use paper money Lack of banks None Hint 43. Which of the following correctly represents national income as aggregate of factor incomes? GNP at FC – Net Exports NNP at MP – Net Indirect Taxes GDP at MP – Depreciation NDP at FC + Net Factor Income from ROW None Hint 44. Under perfect competition, the price of a commodity is determined by: Government price control A single firm Interaction of market demand and supply Buyers only None Hint 45. Which of the following is not an assumption of the law of supply? No change in government tax policy Consumer’s income remains constant No change in production technology Price of related goods remains unchanged None Hint 46. What does the term “mixed income of self-employed” refer to in the Income Method? Income that includes rent, interest, and profit together Income received as subsidies from the government Income earned only from agriculture Income earned by individuals who supply multiple factor services None Hint 47. In the circular flow of income, the real flow includes: Flow of goods and services between firms and households Flow of taxes and subsidies Flow of investment by government Flow of money from banks to consumers None Hint 48. In the long run, supply tends to be more elastic because: Supply is independent of price All factors of production can be changed Supply cannot be increased Only variable factors are changed None Hint 49. In an open economy, which sector represents the rest of the world in aggregate demand? Foreign countries trading with the domestic country Local consumers purchasing foreign goods Domestic firms operating abroad Only international organizations None Hint 50. Which of the following will lead to a contraction of supply? Increase in number of producers Reduction in taxes Use of advanced technology Fall in price of the commodity None Hint 51. What is meant by excess demand in an economy? When actual output is less than potential output When supply increases faster than demand When prices fall due to low demand When aggregate demand exceeds potential output None Hint 52. An open economy is one that: Has no foreign trade or investment Maintains economic relations with other countries Does not allow foreign visitors Produces only for domestic consumption None Hint 53. Budgetary or fiscal policy deals primarily with: Only income redistribution Export and import control Government expenditure and revenue Printing of currency None Hint 54. In the context of cost function, cost of production varies with: The type of labour used The government policy The amount of capital employed The level of output produced None Hint 55. Which of the following is included in the calculation of Gross Domestic Product at Market Price (GDPMP) in the Expenditure Method? Transfer payments Intermediate goods Depreciation Private final consumption expenditure None Hint 56. When more labour is used compared to capital in production, it is called: Capital intensive technique Machine-based production Labour intensive technique Automatic production method None Hint 57. If LRR is increased by the central bank, what happens to the credit creation capacity of commercial banks? It increases It remains constant It decreases It becomes zero None Hint 58. Which of the following is an example of social cost? Rent paid for the factory building Payment of electricity bill Smoke released from the factory affecting nearby residents’ health Wages paid to workers None Hint 59. A rightward shift in the demand curve indicates: Decrease in demand No change in demand Decrease in supply Increase in demand None Hint 60. What term is used for the purchase of goods by firms for further production? Final consumption Subsidy Export Investment None Hint 61. A shift of the demand curve to the right indicates: Fall in price Decrease in quantity demanded No change in demand Increase in demand None Hint 62. Which of the following is included in M1 measure of money supply? Only currency with the public Time deposits of commercial banks Total deposits in Post Office Currency with the public + Demand deposits + Other deposits with RBI None Hint 63. When demand increases and supply remains constant, what happens to the equilibrium price and quantity? Both price and quantity fall Price falls and quantity rises Price rises and quantity remains constant Both price and quantity rise None Hint 64. What happens in a situation of excess demand? Price falls to reach equilibrium Demand is more than supply Supply is more than demand Demand equals supply None Hint 65. Why is money considered liquid and uniform? It is accepted only by banks It is made of metal It can be easily carried and divided It is not affected by inflation None Hint 66. When government receipts are equal to government expenditure, it is known as: Deficit Budget Balanced Budget Capital Budget Surplus Budget None Hint 67. In which case do firms enjoy higher control over pricing? When product differentiation is high When many firms sell identical goods When there is free entry and exit When firms sell perishable goods None Hint 68. The money received by households for providing factor services is known as: Transfer payments Consumption expenditure Factor income Government revenue None Hint 69. Which of the following is not a component of final expenditure in national income? Intermediate Goods Expenditure Investment Expenditure Government Final Consumption Expenditure Private Final Consumption Expenditure None Hint 70. If the total fixed cost (TFC) is ₹60 and the total variable cost (TVC) is ₹150, then the total cost (TC) will be: ₹60 ₹150 ₹210 ₹90 None Hint 71. What does the number of firms in a market determine? Degree of price control by a firm Level of government regulation Type of products sold Amount of taxes imposed None Hint 72. Which of the following is not an essential element of demand? Brand name of the commodity Time period Price of the commodity Quantity of the commodity None Hint 73. The problem of ‘for whom to produce’ is related to: Choosing the production technique Deciding what goods to export Reducing labour costs Distribution of output among people None Hint 74. In perfect competition, individual firms are considered: Price makers Price fixers Price takers Monopoly players None Hint 75. How does the government attempt to reduce income inequalities? By spending more on the rich By cutting taxes for the rich By increasing indirect taxes By taxing the rich more and helping the poor None Hint 76. Which of the following is NOT a problem of the barter system? Storage problem Division of goods Search cost Common unit of value None Hint 77. What is deducted from Private Income to calculate Personal Income? Net exports and corporate tax Transfer payments and indirect tax Undistributed profit and corporate tax Direct taxes and subsidies None Hint 78. What is the main reason barter system failed to satisfy economic needs? Use of paper currency Lack of double coincidence of wants Introduction of coins Increase in population None Hint 79. What is induced investment? Investment that depends on changes in income and profits Investment made only by the government Investment that leads to depreciation Fixed investment necessary to begin production None Hint 80. Which of the following statements is true about Average Fixed Cost (AFC)? It is equal to Total Fixed Cost divided by Total Cost It decreases with increase in output It remains constant at all levels of output It increases as output increases None Hint 81. High Powered Money (H) includes: Currency held by public, cash reserves of banks, and other deposits with RBI Only demand deposits with commercial banks Only the currency held by public Time deposits of banks None Hint 82. Which of the following correctly defines Revenue Deficit? Total Expenditure – Total Receipts Total Receipts – Revenue Expenditure Capital Expenditure – Capital Receipts Revenue Expenditure – Revenue Receipts None Hint 83. What does the central bank do during inflation to control money supply? Lowers margin requirement Reduces bank rate Reduces CRR Sells government securities None Hint 84. What is the main objective of the Central Bank’s function as the ‘Issuer of Currency’? Promote foreign trade Ensure uniformity and public trust in currency Increase inflation Control gold reserves None Hint 85. Why could goods not be used for lending and borrowing under the barter system? There was no interest rate Goods were easily perishable Government restricted it People didn’t need loans None Hint 86. Income method is used to measure national income at which of the following levels? Production level Distribution level Expenditure level Consumption level None Hint 87. Average Variable Cost (AVC) is calculated as: TVC × Output TFC ÷ Output TVC ÷ Output TC ÷ Output None Hint 88. What is the Marginal Rate of Transformation (MRT)? Units of one good sacrificed to produce an extra unit of another good Cost of producing one unit of any good Income earned by factors of production Increase in output of one good per input unit None Hint 89. Which of the following causes a rightward shift in the supply curve? Use of inferior technology Increase in excise duty Increase in price of inputs Use of better technology None Hint 90. Which of the following is NOT one of the central problems of an economy? For whom to produce? How to produce? What to produce and in what quantities? How to distribute goods freely? None Hint 91. Which of the following market structures has the maximum degree of competition? Perfect competition Monopolistic competition Oligopoly Monopoly None Hint 92. What is the key feature that distinguishes an oligopoly from other market forms? Few firms competing in the market Single seller controlling the market Complete absence of competition Large number of sellers None Hint 93. Which one of the following economic activities is not directly involved in generating income flows? Investment Consumption Transfer payments Production None Hint 94. A floor price is fixed: When there is excess demand At the equilibrium price to balance the market Above the equilibrium price to help sellers Below the equilibrium price to help consumers None Hint 95. What is added to Net Domestic Product at Factor Cost to obtain National Income using the Value Added Method? Capital consumption Net factor income from the rest of the world Depreciation Net indirect taxes None Hint 96. Which feature allows a firm to earn only normal profits in the long run? Easy entry and exit of firms Monopoly power High entry barriers Homogeneous goods None Hint 97. Which one of the following is not treated as factor income? Interest on loan taken for buying a car Interest on loan given for production Wages paid to workers Profit of a business firm None Hint 98. Which of the following best describes production? Addition of value to existing commodities Distribution of income among people Creation of physical assets Use of goods to satisfy wants None Hint 99. What is meant by ‘Equilibrium Price’? The price at which quantity demanded equals quantity supplied The price at which producers make maximum profit The price at which government intervenes in the market The price set by monopoly firms None Hint 100. If the price of a commodity increases by 20% and its quantity supplied increases by 40%, what will be the price elasticity of supply? 4 2 1 0.5 None Hint 101. How does the price mechanism correct excess demand in a market? Price rises, demand contracts and supply expands Government sets a new price Buyers stop purchasing Sellers reduce production None Hint 102. The law of supply states that: Supply remains constant regardless of price There is an inverse relationship between price and quantity supplied Quantity supplied decreases as price increases Quantity supplied increases as price increases, all other factors constant None Hint 103. Which of the following is not a determinant of supply of a commodity? Price of the commodity Price of inputs Technology of production Consumer’s income None Hint 104. Why is consumption initially greater than income when income is zero or low? Due to autonomous consumption Because people pay taxes Because MPC is zero Due to induced investment None Hint 105. What does net export refer to in the aggregate demand formula? Exports plus imports Imports minus exports Exports minus imports Total trade volume None Hint 106. What is meant by ‘double coincidence of wants’? Two persons want to sell the same good Both parties want what the other has Two goods are of equal price One person wants two goods at the same time None Hint 107. Why is the Production Possibility Curve typically concave to the origin? Increasing opportunity cost Resources are not fully utilized MRT remains constant Resources are equally efficient in all uses None Hint 108. Which of the following can cause an outward shift of the Production Possibility Curve? Fall in demand Growth in resources Fall in technology Increase in unemployment None Hint 109. What does a point inside the Production Possibility Curve (PPC) indicate? Efficient use of resources Underutilization of resources Economic growth Full employment of resources None Hint 110. According to Keynes, why is there consumption even when income is zero? Because people still need to meet basic needs through borrowing or support Because the government provides subsidies to all Because income is not required for consumption Because people earn interest on savings None Hint 111. Marginal Cost (MC) refers to: Fixed cost of producing one unit Additional cost incurred by producing one more unit of output Average cost of total output Cost of producing one unit of output None Hint 112. Which of the following is considered an explicit cost in the cost of production? Imputed rent of self-owned land Use of self-owned tools and equipment Wages paid to hired labour Interest on entrepreneur’s own capital None Hint 113. What does the circular flow of income primarily represent? The movement of people between cities The continuous movement of income and expenditure between sectors The rise and fall of stock market prices Government spending on defense None Hint 114. What distinguishes demand from want in economics? Demand is the desire backed by ability and willingness to pay Demand exists only when the commodity is free Demand does not require a desire Demand refers to unlimited wants None Hint 115. Which of the following is one of the objectives of government expenditure mentioned in the budget? Increasing foreign exchange Promoting imports Supporting only private companies Reducing unemployment and poverty None Hint 116. Income received for lending buildings and subsoil assets for production is called: Profit Mixed income Rent Interest None Hint 117. Which of the following is not one of the three methods of measuring national income? Income Method Expenditure Method Taxation Method Output or Value Added Method None Hint 118. Which of the following statements is true about a closed economy? It allows free flow of money and goods with other countries It exports goods to other countries It has no economic relations with the rest of the world It depends heavily on foreign trade None Hint 119. Which of the following is the broadest measure of money supply in India? M2 M1 M3 M4 None Hint 120. Which of the following is not included as a component of factor income in the Income Method? Rent Profit Interest Imports None Hint 121. The income received for providing the service of land is called: Interest Wages Rent Profit None Hint 122. A supply curve generally slopes upwards from left to right. This indicates: Direct relationship between price and supply Constant relationship between price and supply No relationship between price and supply Inverse relationship between price and supply None Hint 123. What is Cash Reserve Ratio (CRR)? Total money created in economy Total deposits made by public Percentage of deposits to be kept as cash with RBI Cash given to borrowers None Hint 124. What is meant by excess supply? Demand equals supply Goods are sold at zero price Demand is greater than supply Supply is greater than demand None Hint 125. When both demand and supply increase, the effect on equilibrium price depends on: The original price Government policy The relative magnitude of changes in demand and supply Consumer preference only None Hint 126. How is excess supply corrected in the market? By raising the price By increasing production By increasing taxes on suppliers By lowering the price until demand equals supply None Hint 127. Which of the following is not a fiscal measure used by the government? Public Borrowing Taxation Public Expenditure Monetary Supply Control None Hint 128. When a small change in price causes the quantity supplied to become infinite, the supply is: Unitary elastic supply Perfectly inelastic supply Inelastic supply Perfectly elastic supply None Hint 129. What is the function of commercial banks that directly affects the money supply in an economy? Selling gold Selling insurance Buying foreign exchange Creation of credit None Hint 130. In national income accounting, net exports are calculated as: Imports – Exports Total consumption – Total investment Exports + Imports Exports – Imports None Hint 131. What will the central bank do to control deflation? Increase the variable reserve ratio Buy government securities Sell government securities Increase the bank rate None Hint 132. What is the formula for Personal Disposable Income? NDPfc − net factor income from abroad GDPmp − depreciation − net indirect taxes Personal income − direct taxes − government receipts Private income − depreciation − exports None Hint 133. Duopoly is best described as: A market with exactly two sellers A type of monopolistic competition A market where no competition exists A sub-category of perfect competition None Hint 134. What does a point on the Production Possibility Curve (PPC) represent? Unemployment in the economy Overutilization of resources Inefficient allocation of resources Efficient use of available resources None Hint 135. What is subtracted from the Gross Value of Output to calculate Net Value Added at Factor Cost (FC)? Intermediate consumption, depreciation, and net indirect taxes Value of capital goods Imports and exports Net factor income from abroad None Hint 136. The supply of perishable goods like fruits and vegetables is: Perfectly elastic Inelastic More elastic Unitary elastic None Hint 137. Which of the following deposits offers the highest rate of interest? Demand deposit Current account deposit Fixed deposit or time deposit Savings account deposit None Hint 138. What is the term used for the part of consumption that occurs even when income is zero? Autonomous consumption Average consumption Induced consumption Disposable consumption None Hint 139. Which of the following sectors is part of the Primary Sector in the Value Added Method? Manufacturing Banking Electricity supply Mining None Hint 140. Which of the following is not a component of fiscal policy? Public borrowing Public expenditure Taxation Credit supply None Hint 141. Which of the following is an implicit cost for a producer? Payment of electricity bill Imputed salary of entrepreneur for managing the firm Rent paid for rented building Salary to hired manager None Hint 142. Which of the following is not included in compensation of employees? Employer’s contribution to provident fund Rent received from tenants Bonus Wages and salaries None Hint 143. Which of the following is a secondary function of money? Measure of value Medium of exchange Store of value Liquidity None Hint 144. A shift of the PPC to the right indicates: Economic growth Constant returns Unemployment Economic decline None Hint 145. Which of the following components represent net exports in the expenditure method? Imports − Exports Exports − Imports Consumption + Exports Imports + Exports None Hint 146. When income of the consumer increases and demand for a good decreases, that good is called: Inferior good Normal good Superior good Luxury good None Hint 147. The value of the next best alternative foregone is known as: Implicit cost Opportunity cost Marginal cost Explicit cost None Hint 148. Which of the following best describes money flow in an economy? Movement of natural resources within a country Movement of money for imports and exports only Movement of income and expenditure between households and firms Movement of physical goods and services None Hint 149. What does the concept of alternative uses of resources mean? Resources can be put to different uses Resources are unlimited in nature Resources can be used only for one purpose Resources can be created whenever needed None Hint 150. What happens to the equilibrium price when demand increases and supply remains constant? Price remains the same Price rises Price falls Supply decreases None Hint 151. What does the saving function show? Relationship between income and taxes Relationship between saving and consumption Relationship between saving and investment Relationship between saving and income None Hint 152. Which of the following is a complementary good to a car? Petrol Bus fare Air conditioner Bike None Hint 153. Which of the following is not a factor income? Interest Wages Rent Donation None Hint 154. What is the correct formula for Gross Investment? Gross Investment = Autonomous Investment + Induced Investment Gross Investment = Net Investment – Depreciation Gross Investment = Total Output – Consumption Gross Investment = Net Investment + Depreciation None Hint 155. Which of the following is not a characteristic of a market in economics? Specific geographical location Presence of buyers and sellers Existence of a commodity or service Transactions involving money None Hint 156. A market structure where only one seller exists and controls the entire market is called: Monopolistic competition Oligopoly Monopoly Duopoly None Hint 157. Which of the following is not a component of Private Income? Corporation tax Net factor income from abroad National debt interest Current transfers from government None Hint 158. How does wealth affect a person’s propensity to consume? Wealth generates income, increasing consumption Wealth has no relation to consumption Wealthy people tend to save all of their income Wealthy people prefer only luxury imports None Hint 159. What is autonomous investment? Investment dependent on tax rates Investment that increases with income Investment that is independent of income level Investment used for buying stocks and bonds None Hint 160. What is disposable income? Income left after compulsory payments like taxes and fines Total income earned before any deductions Income used for investment only Income received in the form of gifts None Hint 161. Which of the following affects market demand but not individual demand directly? Price of related goods Taste and preference Population size Income of the buyer None Hint 162. What is the primary function of a commercial bank? Collecting taxes Printing money Issuing currency Accepting deposits and lending money None Hint 163. What is a government budget? A plan of state-wise population growth A report on government schemes only A list of government employees A summary of the expected revenue and expenditure for a fiscal year None Hint 164. Which of the following is the most accepted definition of money? Anything that can be exchanged with gold Anything made of metal or paper Anything generally accepted as a medium of exchange and store of value Anything issued by the government None Hint 165. What does the Average Propensity to Consume (APC) measure? The ratio of income to taxes The ratio of saving to income The ratio of investment to consumption The ratio of consumption to income None Hint 166. What enables money to transfer value across places and people? Store of value function Gold backing Government regulation Durability of goods None Hint 167. If a bank receives a deposit of ₹1000 and LRR is 20%, what is the total money that can be created? 5000 8000 2000 10000 None Hint 168. Which of the following is an example of variable cost? Monthly salary of a permanent employee Payment for electricity used in additional production Rent of the factory building Interest on long-term capital None Hint 169. Which of the following is not a feature of a government budget? It is a summary of expected expenditure and revenue It makes government accountable to the people It covers an entire financial year It is planned without considering government policy None Hint 170. What is meant by ‘economizing of resources’? Avoiding the use of resources Saving all income in banks Using resources for only one activity Using resources wisely to get maximum benefit None Hint 171. What causes the demand curve to shift leftward? Increase in supply Rise in consumer income Fall in consumer income Increase in population None Hint 172. If the price elasticity of supply is equal to zero, it indicates: Perfectly elastic supply Elastic supply Perfectly inelastic supply Unitary elastic supply None Hint 173. Why do economic problems arise in every economy? People have unlimited income Wants are limited and resources are abundant People do not like to save money Wants are unlimited, resources are limited, and they have alternative uses None Hint 174. What is the key factor in identifying a normal resident of a country? Possession of a passport of that country Birthplace of the person Citizenship of the person Duration and location of the person’s economic interest None Hint 175. What is the “break even” point in the context of the consumption function? The point where consumption equals income The point where income equals investment The point where income equals taxes The point where saving becomes zero None Hint 176. If the cost of raw materials increases, what is most likely to happen to the supply of the commodity (assuming price remains constant)? Supply will remain unchanged Supply will decrease Supply will become zero Supply will increase None Hint 177. What is a ceiling price? A price fixed above equilibrium to protect producers A price set by sellers for profit maximization A price at which supply is zero A price fixed below equilibrium to protect consumers None Hint 178. What is meant by real cost in economics? Money paid for factors of production Sacrifice and disutility involved in supplying factors of production Interest paid on loans Cost of raw materials used in production None Hint 179. The substitution effect refers to: Consumers replacing expensive goods with cheaper ones Demand increasing due to income rise Increase in demand due to advertisement Consumers preferring imported goods None Hint 180. In the expenditure method, which of the following is subtracted from GDP at market price to calculate Net Domestic Product at Factor Cost (NDPFC)? Government final consumption expenditure Net indirect taxes and depreciation Private investment Net exports None Hint 181. One of the key objectives of fiscal policy is to: Decrease literacy rate Ensure economic growth through infrastructure and industry Encourage foreign travel Increase only defence expenditure None Hint 182. What is the meaning of ‘Bank Rate’? Interest rate charged by banks to customers Rate at which central bank lends to commercial banks Interest on government bonds Rate of interest on fixed deposits None Hint 183. The financial year in India starts on: 1st July 1st January 1st April 31st March None Hint 184. Which of the following correctly represents the cost equation? TVC = TC – TFC TFC = TC + TVC TC = TVC – TFC TFC = TC – TVC None Hint 185. In the short run, fixed cost is defined as: Cost paid for raw materials Cost of variable factors only Cost that changes with level of output Cost that remains constant regardless of output None Hint 186. The Expenditure Method of calculating national income includes which of the following components? Purchase of shares and bonds Government final consumption expenditure Intermediate consumption Depreciation None Hint 187. In the PPC diagram, if the economy is operating at point G inside the curve, it means: The economy can increase production of one or both goods The economy is on the efficient frontier The economy is overusing its resources The economy is producing the maximum possible output None Hint 188. The reason why the demand curve slopes downward is due to: Rise in price of substitute goods Increasing marginal utility Law of diminishing marginal utility Giffen paradox None Hint 189. To correct balance of payments deficit, the government can: Increase taxes on imports and provide export incentives Encourage imports and discourage exports Ban all imports Increase subsidies on imports None Hint 190. Which of the following is an example of government final consumption expenditure? Purchase of shares by individuals Expenditure on private hospitals Investment by private firms Government spending on police services None Hint 191. Which of the following is not an assumption of the Law of Demand? Price of complementary goods changes Income of the buyer remains constant Price of substitute goods remains constant Tastes and preferences remain constant None Hint 192. The function of money that removes the need for double coincidence of wants is: Store of value Measure of value Standard of deferred payments Medium of exchange None Hint 193. What ultimately led to the invention of money? Industrial revolution Increase in population Failure of barter system due to various limitations Development of technology None Hint 194. Which of the following is added to Net Domestic Product at Factor Cost to calculate National Income in the Income Method? Gross fixed capital formation Net factor income from abroad Net exports Net indirect taxes None Hint 195. Who among the following is considered a normal resident of India? An Indian citizen working in the USA for 2 years A Nepali citizen living and working in India for more than 1 year An Indian tourist visiting the USA for 3 weeks An American tourist visiting India for a vacation None Hint 196. Which method of credit control does not affect total volume of credit but controls specific uses? Open market operations Qualitative methods Legal reserve ratio Bank rate policy None Hint 197. Which of the following does NOT increase the money supply in the economy? Borrowing from foreign governments Borrowing from the Reserve Bank of India Withdrawing cash from RBI reserves Borrowing from the public None Hint 198. What does an individual demand schedule show? Quantity demanded by an individual at different prices Prices of different goods over time Supply provided by a single producer Total market demand at various prices None Hint 199. During inflation, what fiscal measure can the government take to reduce excess demand? Increase public expenditure Reduce public borrowing Increase income tax exemption limits for the rich Reduce tax on luxury goods None Hint 200. What does deficiency in demand refer to? When aggregate demand falls below potential output When consumption increases rapidly When output increases due to more investment When aggregate demand exceeds potential output None Hint 201. Which of the following is not a determinant of propensity to consume besides income? Quantity of exports Distribution of income Rate of interest Wealth None Hint 202. Why is the demand curve indeterminate in an oligopoly market? Firms do not produce goods Prices are set by the government Demand is constant at all price levels Rivals’ reactions to price changes are unpredictable None Hint 203. The ‘Standard of Deferred Payments’ function of money means: Money can be stored for future use Money is used to settle future payments Money is used only for immediate purchases Money helps measure the value of goods None Hint 204. If Akshay buys 2 kg, Rohit 3 kg, Ritik 2.5 kg and Ajai 1.5 kg of apples at ₹60/kg in a week, what is the market demand? 7.5 kg 9 kg 10 kg 6 kg None Hint 205. Government raises financial resources for expenditure through: International aid only Donations from citizens Taxes and public debt Selling of goods only None Hint 206. Which of the following is a non-factor income? Compensation of employees Profit from a business Rent received from a house Gift from a friend None Hint 207. A downward movement along the same demand curve indicates: Expansion of demand Contraction of demand Increase in price Decrease in demand None Hint 208. What type of change is shown by a shift in the supply curve to the left? Decrease in supply Increase in supply Contraction of supply Expansion of supply None Hint 209. Which of the following is the central bank of India? State Bank of India Reserve Bank of India ICICI Bank Punjab National Bank None Hint 210. Which of the following can cause a shift in the demand curve? Change in quantity demanded only Movement along the demand curve Change in consumer income Change in price of the commodity itself None Hint 211. What is a “cartel” in the context of oligopoly? A group of competing consumers A type of government subsidy A group of firms that collude to act like a monopolist A firm that dominates the entire market None Hint 212. Which of the following is a quantitative method of credit control used by the central bank? Moral suasion Margin requirement Open Market Operations Credit rationing None Hint 213. If investment increases by ₹50 crores and income increases by ₹100 crores, what is the value of the multiplier? 1.5 1 0.5 2 None Hint 214. Which of the following is an instrument of monetary policy? Bank rate Sales tax Public welfare scheme Public debt management None Hint Time's up Share: admin Previous post Malayalam Nios Plus Two PQ June 18, 2025 Next post Data Entry Nios plus two June 19, 2025
