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