Economics · Banking Financial Awareness

Macroeconomics and Policy

2,833 Questions

Macroeconomics and policy questions assess the understanding of broad economic indicators, government fiscal strategies, and banking regulations. Topics include inflation causes, currency exchange rates, monetary policy tools, and historical economic systems. These are highly tested in banking and civil services examinations.

Inflation FactorsMonetary PolicyExchange RatesFiscal PolicyEconomic IndicatorsBretton Woods System

Macroeconomics and Policy Questions

Multiple choice

How did the Marshall Plan benefit the United States economically?

  1. Unemployment rates increased in urban areas

  2. America was forced to borrow money to pay debts

  3. The inflation rate increased and spending decreased

  4. European nations could buy from American farms and factories
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The Marshall Plan provided billions of dollars in aid to rebuild European economies after WWII. This aid was largely used to purchase goods from American manufacturers and farmers, thereby stimulating the U.S. economy.

Multiple choice

One reason the Depression of 1929 was so severe in the United States was

  1. US industry had failed to modernize and expand following WWI

  2. FDR said the government shouldn't interfere in the economy.

  3. American economy was based on industry, & people lost jobs

  4. Depression did not impact Europe
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The US economy in 1929 was heavily industrialized. When the stock market crashed and demand plummeted, factories closed and mass unemployment followed, which exacerbated the economic downturn.

Multiple choice

Which did NOT lead to the Great Depression?

  1. Bank Closures

  2. Stock Speculation

  3. Buying on Credit

  4. Cash Purchases
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Bank failures, stock speculation, and buying on credit were all major contributors to the Great Depression. Cash purchases were not a cause of the economic collapse.

Multiple choice

Which is NOT a cause of the Great Depression?

  1. Stock market speculation

  2. Stock market crash

  3. High tariffs

  4. Unemployment
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Unemployment is a result or symptom of the Great Depression, not a cause. Speculation, the crash, and high tariffs were factors that contributed to the economic collapse.

Multiple choice commerce sources of business finance - 2 gdrs, adrs and idrs depository receipts international sources

GDRs are usually denominated in U.S. dollars.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

GDRs are usually denominated in U.S. dollars- this is a true statement.GDR is a foreign currency denominated derivative instrument in the form of depository receipt created outside India and issued to non-resident investors. GDR stands for Global Depository Receipt. It is a bank certificate issued in more than one country for shares in a foreign company.

Multiple choice economics fundamental concepts and terminologies savings, investment, wealth, welfare and business cycle fundamental duties and directive principles fundamental duties and directive principles of state policy

Recession is generally associated with the phenomena of __________.

  1. falling prices

  2. falling sensex

  3. falling population

  4. falling public spending
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Recession is also known as business contraction cycle ,where a decrease in general price level in an economy is observed.

Multiple choice economics fundamental concepts and terminologies savings, investment, wealth, welfare and business cycle fundamental duties and directive principles fundamental duties and directive principles of state policy

A business cycle contraction will tend to cause: ______.

  1. decrease in foreign capital

  2. increase in unemployment

  3. fall in inflation

  4. all the three
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation
A business contraction cycle or recession cycle will cause:
1) Capital accumulated from foreign countries gets depleted
2) Unemployment level in an economy increase because wage level falls as the profit of the business decreases due to low investment..
3) Decrease in general price level is also observed  ,that is, fall in inflation.
Multiple choice social science the government budget and taxation family budget prices and cost of living economic sources

Which of these is a financial economy of scale _______________.

  1. reduction in the cost of borrowing with the increase in capital outlay for expansion.

  2. reduction in tariff rates due to expansion in production base.

  3. reduction in business risk due to diversification.

  4. reduction in cost of labour due to availability of cheap labour.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Financial economies of scale occur when larger firms can borrow capital at lower interest rates due to their size, stability, and lower risk profile compared to smaller firms.

Multiple choice organisation of commerce and management sources of business finance - 1 finance and accounts meaning and functions of finance and accounts department nature, need and significance of business finance

Other things remaining the same, an increase in the tax rate on corporate profits will __________________.

  1. Make debt relatively cheaper

  2. Make debt relatively less cheap home

  3. No impact on the cost of debt

  4. We can't say
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Where there is an increase in the tax on corporate profit, the debt becomes relatively cheaper. This is because interest rate is to be paid to the debtors is deducted from the total income before calculating the value of tax. Thus, as the valueof tax increases, the debt becomes relatively cheaper.

Multiple choice national income identity for open economy open economy macroeconomics determination of income and employment economics

The aggregate demand in an economy will ____________, if the government expenditure rises.

  1. increase

  2. decrease

  3. remain unchanged

  4. either B or C
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Aggregate demand is the total demand for goods and services in an economy. Since government expenditure is a component of aggregate demand (AD = C + I + G + NX), an increase in government spending directly increases the total aggregate demand.

Multiple choice business economics and quantitative methods public economics components of budget and budgetary procedure government budget and taxation government budget and economy

Trade liberalization and a shift to market determined exchange rate regime had _______ impact on BOP.

  1. positive

  2. negative

  3. unfavourable

  4. no
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Trade liberalization and market-determined exchange rates are generally intended to increase efficiency and competitiveness, which typically has a positive impact on the Balance of Payments (BOP) over time.

Multiple choice business economics and quantitative methods public economics components of budget and budgetary procedure government budget and taxation government budget and economy

The improvement in current account deficit in 2000-01 was due to ______.

  1. dynamism in export performance

  2. sustained buoyancy in invisible receipts

  3. subdued non-oil import demand

  4. all of above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The improvement in the current account deficit during that period was driven by a combination of export growth, strong invisible receipts (like remittances and services), and controlled import demand.

Multiple choice commerce goods and services tax goods and service tax study of gst goods and services tax (gst)

GST minimizes the the tax impact on inflation.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation
India implemented GST in July 2017. The inflation cycle turned from July 2017 and annual growth in CPI reached a 17-month high of 5.21% in December 2017. It has continued to hover above the 4% mark in the subsequent period. Purely based on numbers, GST seems to have had an inflationary impact on India.

There are two ways in which GST could have caused a spike in inflation: by raising the rate of tax on goods and services, and bringing within its coverage business activities outside the tax net earlier. The latter would push up inflation as any tax incidence on such businesses is bound to be passed on to consumers in terms of higher prices. In a country like India, with a huge informal sector, successful implementation of GST may have brought a lot of non-tax paying firms and transactions under the tax net.
Multiple choice commerce nature and scope of foreign trade characteristics, necessity, importance, advantages and disadvantages of foreign trade importance, scope and benefits of international trade trading and economic organisations

Initial Investment leads to a large increase in income and expenditure, due to ___________.

  1. fiscal deficit

  2. multiplier effect

  3. giffen effect

  4. veblen effect
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The multiplier effect in economics describes how an initial injection of investment leads to a larger final increase in national income.

Multiple choice economics tax and its importance taxation : need, principles and importance main feature of tax public revenue and taxation

Gross capital formation will increase if which of the following takes place?
1- Gross domestic saving increases
2- Gross domestic consumption increases
3- GDP increases

  1. only 1

  2. only 1 and 2

  3. only 1 and 3

  4. none of above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Gross capital formation, in simple terms is equivalent to investment made. It was earlier called gross domestic investment. The part of GDP that is used is called gross domestic consumption, while the part that is saved is gross domestic savings (GDS). Some part of this GDS will be re-invested back, and that is called gross capital formation. Now, an increase in GDP or GDS will not necessarily lead to an increase in capital formation. Because how much in invested back will depend on many other factors.