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MCQOPTIONS
This section includes 657 Mcqs, each offering curated multiple-choice questions to sharpen your Testing Subject knowledge and support exam preparation. Choose a topic below to get started.
| 1. |
Which of the following statements does not hold true in case of the Keynesian economics? |
| A. | velocity of money is an unstable function of its determinant |
| B. | labor is subject to money illusion |
| C. | as function tends to become flat at levels of output well below full employment and to become steeper ad full capacity is reached |
| D. | as schedule is vertical, and output, and employment are completely supply determined. |
| Answer» E. | |
| 2. |
The equation of exchange is |
| A. | m*p=v*y |
| B. | m+v=p+y |
| C. | m+y=v+p |
| D. | m*v=p*t |
| Answer» E. | |
| 3. |
Identify the correct chronological order of the following classical economists. |
| A. | adam smith, malthus, ricardo, mill |
| B. | adam smith, ricardo, malthus, mill |
| C. | adam smith, mill, ricardo, malthus |
| D. | adam smith, malthus, mill, ricardo |
| Answer» C. adam smith, mill, ricardo, malthus | |
| 4. |
The classical economists focused on the role of money as, |
| A. | medium of exchange |
| B. | medium of distribution |
| C. | wealth |
| D. | link between present and future |
| Answer» B. medium of distribution | |
| 5. |
In the Keynesian system speculative demand for money arises because of, 1 : uncertainty of future interest rate. 2 : unexpected expenditures. 3 : To bridge the gap between income and eventual expenditures. 4 : Relationship between changes in the interest rates and bond price. Codes : |
| A. | 1 & 3 are correct |
| B. | 1 & 4 are correct |
| C. | 2 & 3 are correct |
| D. | 3 & 4 are correct |
| Answer» C. 2 & 3 are correct | |
| 6. |
Which of the following is not specifically mentioned as a determinant of the demand formoney ? |
| A. | wealth |
| B. | nominal yield on alternative assets |
| C. | inflation rate |
| D. | real rate of interest |
| Answer» E. | |
| 7. |
Assertion (A) : In liquidity trap, the demand for money is perfectly interest elastic. Reason (R) : Because in this situation, all the investors expect the market rate of interest to rise towards the natural rate of interest. Codes : |
| A. | (a) & (r) both are correct and (r) is the correct explanation of (a) |
| B. | (a) & (r) both are correct, but (r) is not the correct explanation of (a) |
| C. | (a) is correct, but (r) is incorrect. |
| D. | both (a) and (r) are incorrect. |
| Answer» B. (a) & (r) both are correct, but (r) is not the correct explanation of (a) | |
| 8. |
Cambridge K is related to – |
| A. | restatement theory of money |
| B. | cash balance approach |
| C. | liquidity preference theory |
| D. | transaction version of quantity theory of money |
| Answer» C. liquidity preference theory | |
| 9. |
Classical dichotomy is based on – |
| A. | neutrality of money |
| B. | velocity of money |
| C. | medium of exchange of money |
| D. | both a and b |
| Answer» B. velocity of money | |
| 10. |
Under perfect competition firm hire labour until- |
| A. | money wage rate > general price level |
| B. | money wage rate < general price level |
| C. | money wage rate = general price level |
| D. | both a and c |
| Answer» D. both a and c | |
| 11. |
Real balance effect is equal to – |
| A. | pigou effect divided by keynes effect |
| B. | pigou effect into keynes effect |
| C. | pigou effect + keynes effect |
| D. | pigou effect - keynes effect |
| Answer» D. pigou effect - keynes effect | |
| 12. |
In which of the following market Pigou effect operates? |
| A. | goods market |
| B. | labour market |
| C. | money market |
| D. | all of the above markets |
| Answer» B. labour market | |
| 13. |
In which of the following market Keynes effect operates? |
| A. | goods market |
| B. | labour market |
| C. | money market |
| D. | all of the above markets |
| Answer» D. all of the above markets | |
| 14. |
What is the effect of monetary policy in a situation of “Liquidity trap� |
| A. | expansionary monetary policy |
| B. | contractionary monetary policy |
| C. | both expansionary and contractionary monetary policy effective |
| D. | monetary policy ineffective |
| Answer» E. | |
| 15. |
In Classical system how to correct an overproduction or glut in the market? |
| A. | by increasing price o f input |
| B. | by wage cut policy |
| C. | by price cut policy |
| D. | by decreasing production |
| Answer» C. by price cut policy | |
| 16. |
According to Classical what bring full employment in an economy? |
| A. | flexible wage and rigid price |
| B. | a rigid wage and flexible price |
| C. | wage price flexibility |
| D. | wage price rigidity |
| Answer» D. wage price rigidity | |
| 17. |
Assertion (A) : There exits inverse relationship between interest rates and bond prices. Reason (R) : A bond price represents the present discounted value of the payments agreed upon at the time when the bond was issued. Codes : |
| A. | both (a) and (r) are correct, and (r) is the correct explanation of (a). |
| B. | (a) is correct, but (r) is not the correct explanation of (a). |
| C. | (a) is correct, but (r) is incorrect. |
| D. | (a) is incorrect, but (r) is correct. |
| Answer» B. (a) is correct, but (r) is not the correct explanation of (a). | |
| 18. |
According to Says law of market what is the main cause of overproduction? |
| A. | unemployment |
| B. | fall in demand |
| C. | rise in price |
| D. | fall in wage rate |
| Answer» B. fall in demand | |
| 19. |
Speculative demand for money is zero when market rate of interest is |
| A. | more than the ‘critical rate’. |
| B. | more than the market rate of interest but less than the critical rate (i.e. capital gains occur). |
| C. | less than the market rate of interest. |
| D. | lowest (i.e. in liquidity trap). |
| Answer» B. more than the market rate of interest but less than the critical rate (i.e. capital gains occur). | |
| 20. |
Assertion (A): According to Keynes, individuals hold either cash or all bonds. Reasoning (R): Because, according to him, the speculative demand for money is associated with uncertainty. Codes: |
| A. | both (a) and (r) are correct and (r) is the correct explanation of (a). |
| B. | both (a) and (r) are correct, but (r) is not the correct explanation of (a). |
| C. | (a) is correct, but (r) is incorrect. |
| D. | both (a) and (r) are incorrect. |
| Answer» D. both (a) and (r) are incorrect. | |
| 21. |
The classical model of economic development emphasises |
| A. | laissez-faire policy |
| B. | capital accumulation |
| C. | both (a) and (b) |
| D. | none of these |
| Answer» D. none of these | |
| 22. |
The classical economists focussed on the role of money as |
| A. | medium of exchange |
| B. | medium of distribution |
| C. | wealth |
| D. | link between present and future |
| Answer» B. medium of distribution | |
| 23. |
According to New classical Economics |
| A. | anticipated policy change will not affect output |
| B. | unanticipated policy change will affect output |
| C. | both a and b |
| D. | none of these |
| Answer» D. none of these | |
| 24. |
According to New Classical Economics Philips curve is |
| A. | always vertical |
| B. | always horizontal |
| C. | always downward slopping |
| D. | downward slopping in short run and vertical in the long run |
| Answer» B. always horizontal | |
| 25. |
According to Milton Friedman Theory of permanent component of consumption-expenditure depends on i. Transitory income alone ii. Transitory and permanent income iii. Permanent income alone iv. Windfall gains Codes : |
| A. | i and ii are correct |
| B. | i and iii are correct |
| C. | ii and iv are correct |
| D. | only iii is correct |
| Answer» E. | |
| 26. |
Liquidity trap is a situation when, |
| A. | all potential investors expect the rate of interest to rise in future |
| B. | all potential investors expect the rate of interest to fall in future |
| C. | natural rate of interest is above the critical rate of interest |
| D. | demand for money for speculative purpose is interest inelastic |
| Answer» B. all potential investors expect the rate of interest to fall in future | |
| 27. |
The shape of Laffer curve is |
| A. | inverted u shape |
| B. | u shape |
| C. | inverse l shape |
| D. | none of these |
| Answer» B. u shape | |
| 28. |
According to New Classical Economist, Business cycle is due to |
| A. | anticipated policy change |
| B. | unanticipated policy change |
| C. | both a and b |
| D. | none of these |
| Answer» C. both a and b | |
| 29. |
The curve which explains relationship between tax rate and tax revenue is called |
| A. | laffer curve |
| B. | kuznets curve |
| C. | lorenz curve |
| D. | none of these |
| Answer» B. kuznets curve | |
| 30. |
Which of the following economist is not related to New Classical Economics |
| A. | artherlaffer |
| B. | thomas surgent |
| C. | robert lucas |
| D. | neil walace |
| Answer» B. thomas surgent | |
| 31. |
Which of the following are main postulates of Supply side Economics |
| A. | cut in tax rate |
| B. | increasing public expenditure |
| C. | both a and b |
| D. | none of these |
| Answer» B. increasing public expenditure | |
| 32. |
According to Hawtrey, the business cycle is caused by |
| A. | variation in the interest of banking system |
| B. | variation in the price level of the economy |
| C. | variation in the money supply by bank |
| D. | all the above |
| Answer» E. | |
| 33. |
Gregory Mankiw belongs to |
| A. | new keynesian economics |
| B. | new classical economics |
| C. | supply side economics |
| D. | none of these |
| Answer» B. new classical economics | |
| 34. |
Inflation can be contained by |
| A. | surplus budget |
| B. | increase in taxation |
| C. | reduction in public expenditure |
| D. | all these three measures |
| Answer» E. | |
| 35. |
Ratex hypothesis is related to |
| A. | new classical economics |
| B. | supply side economics |
| C. | new keynesian economics |
| D. | none of these |
| Answer» B. supply side economics | |
| 36. |
Reagonomics is related to |
| A. | supply side economics’ |
| B. | new classical economics |
| C. | new keynesian economics |
| D. | natural unemployment hypothesis |
| Answer» B. new classical economics | |
| 37. |
The New Classical economics was developed against the back ground of |
| A. | 1930‘s depression |
| B. | 1970’ stagflation |
| C. | 2008 subprime crisis |
| D. | none of these |
| Answer» C. 2008 subprime crisis | |
| 38. |
The Menu cost model is associated with |
| A. | new classical economics |
| B. | new keynesian economics |
| C. | supply side economics |
| D. | none of these |
| Answer» C. supply side economics | |
| 39. |
The insider outsider model is associated with |
| A. | new keynesian economics |
| B. | new classical economics |
| C. | supply side economics |
| D. | none of these |
| Answer» B. new classical economics | |
| 40. |
The efficiency wage model is associated with |
| A. | new keynesian economics |
| B. | new classical economics |
| C. | supply side economics |
| D. | keynesian economics |
| Answer» B. new classical economics | |
| 41. |
The Neo Keynesian quantity constrained model is associated with the work of |
| A. | robert j barro |
| B. | robert m clower |
| C. | leonwalrs |
| D. | none of these |
| Answer» C. leonwalrs | |
| 42. |
The book Elements of Pure Economics was authored by |
| A. | walras |
| B. | clower |
| C. | robert lucas |
| D. | kaldor |
| Answer» B. clower | |
| 43. |
The dual decision hypothesis was given by |
| A. | clower |
| B. | crowther |
| C. | robert lucas |
| D. | wallras |
| Answer» B. crowther | |
| 44. |
New Classical Economics is based on |
| A. | rational expectation |
| B. | adaptive expectation |
| C. | backward looking expectation |
| D. | all the above |
| Answer» B. adaptive expectation | |
| 45. |
Supply side Economics was emerged against the background of |
| A. | 1930’s great depression |
| B. | 2008 global financial crisis |
| C. | 1970’s stagflation |
| D. | none of these |
| Answer» D. none of these | |
| 46. |
New classical Economics is consistent with |
| A. | policy ineffectiveness postulate |
| B. | policy effectiveness postulate |
| C. | both a and b |
| D. | none of these |
| Answer» B. policy effectiveness postulate | |
| 47. |
Laffer curve links |
| A. | inflation and unemployment |
| B. | tax revenue and tax rate |
| C. | output and unemployment |
| D. | inflation and interest rate |
| Answer» C. output and unemployment | |
| 48. |
The idea of rational expectation first given by |
| A. | john muth |
| B. | robert lucas |
| C. | neil wallace |
| D. | thomas surgent |
| Answer» B. robert lucas | |
| 49. |
The idea of Adaptive expectation is associated with |
| A. | natural unemployment rate hypothesis |
| B. | new classical economics |
| C. | both a and b |
| D. | none of these |
| Answer» B. new classical economics | |
| 50. |
According to Keynes Investment is a function of |
| A. | dumping |
| B. | income |
| C. | saving |
| D. | interest |
| Answer» E. | |