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