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