Economics · Banking Financial Awareness

Macroeconomics and Policy

2,878 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 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 meaning and importance of taxes government and taxes tax civics economics

$NDP _{MP}$ - Indirect Taxes+ Subsides =

  1. $NNP _{MP}$
  2. $NDP _{FC}$
  3. $NNP _{FC}$

  4. None of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

NDPMP is defined as the market value of final goods and services produced in the domestic territory of a country by its residents and non residents in an accounting year less depreciation. NDPMP= GDPMP-Depreciation

NNPFC= NDPMP-Indirect taxes+Subsidies
NNPFC is defined by total factor incomes earned by the factors of production.

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 social science index number value and price important index numbers price rise/inflation

_________ shows the most accurate impact of price rise on the cost of living of common people.

  1. CPI

  2. Cost of living index

  3. WPI

  4. Both A and B
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The Consumer Price Index (CPI) measures the cost of a basket of goods bought by consumers, while the Cost of Living Index reflects changes in living costs. Both are used to gauge the impact of price rises on common people, making both indices relevant.

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.

Multiple choice economics consumption and investment functions determinants of consumption function and savings function production, consumption, saving and economic units ex ante and ex post

The value of _____ can never be negative, while can have a value equal to one. 

  1. APS, APC

  2. MPG, APS

  3. APC, APS

  4. MPS, APC
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

APC refers to Average Propensity to Consume which defines the amount of consumption in every 1 rupee of income for all level of income which can never be negative because consumption is never negative owing to the very existence of life and basic needs to satisfy it while it can be more than one as long as consumption is more national income, i.e. before the break-even point, APC > 1. 

Marginal Propensity to save refers to the percentage change in savings for every one rupee of change in the income. It is the ratio between the change in income and its corresponding change in savings. It can never be negative as it is a change in the value when the value of income changes while it can be equal to one if the overall change in the value of income is used in savings. 

Multiple choice economics consumption and investment functions determinants of consumption function and savings function production, consumption, saving and economic units ex ante and ex post

When the savings curve lies below the x-axis, the consumption is higher than the income leading to dissaving.

  1. True

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

Average Propensity to save defines the amount of savings in every 1 rupee of income for all level of income which can be less than zero at income levels which are lower than the break-even point where savings lies below the x-axis indicating that consumption is greater than income that leads to dissavings in the economy. 

Multiple choice business mathematics and statistics moving averages introduction to time series introduction to time series and forecasting time series and forecasting uses of average in day-to-day life

A complete cycle consists of a period of:

  1. Prosperity and depression

  2. Prosperity and recovery

  3. Prosperity and recession

  4. Recession and recovery
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

$\Rightarrow$  A complete cycle consist of period of : $Prosperity\, and\, recession$.

$\Rightarrow$  $Prosperity\,phase$ : When there is an expansion of output, income, employment, prices and profits, there is also a rise in the standard of living. This period is termed as Prosperity phase.
$\Rightarrow$  $Recession Phase$ : The turning point from prosperity to depression is termed as Recession Phase.
During a recession period, the economic activities slow down. When demand starts falling, the overproduction and future investment plans are also given up. There is a steady decline in the output, income, employment, prices and profits. 

Multiple choice economics public expenditure public expenditure public finance and budget public finance, taxes and budget

Causes of rise in public debt is ___________________.

  1. rise in defence expenditure

  2. fall in development expenditure

  3. fall in debt servicing

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

Public debt rises when government expenditure exceeds revenue. Increased defense spending is a major component of government expenditure that often necessitates borrowing.