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 economics concept of excess demand and deficient demand unemployment and employment generation the short run fixed price analysis of the product market liquidity preference and profit

Deficiency in demand has no effect on the country's output and prices.

  1. True

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

Deficiency in demand causes deflation. Deflation refers to the reduction of the general level of prices in an economy. Thus, deficient demand has effect on the country's output and prices.

Multiple choice economics concept of excess demand and deficient demand unemployment and employment generation the short run fixed price analysis of the product market liquidity preference and profit

Increase in margin requirements helps to control the situation of deficient demand.

  1. True

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

Margin requirements needs to be reduced to enhance the credit creating power of commercial banks and to correct the deficient demand.

Multiple choice economics concept of excess demand and deficient demand unemployment and employment generation the short run fixed price analysis of the product market liquidity preference and profit

When aggregate demand is greater than aggregate supply, inventories: 

  1. Fall

  2. Rise

  3. Do not change

  4. First fag, then rise
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

When Aggregate demand  is more than Aggregate supply, then the planned inventory would fall below the desired level as the demand is more than the supply in the market. To bring back the Inventory at the desired level, the producers expand the output More output means more income. Rise in output means rise in AS and rise in income means rise in AD. 

Multiple choice economics concept of excess demand and deficient demand unemployment and employment generation the short run fixed price analysis of the product market liquidity preference and profit

Aggregate demand function represents a ________ relationship between the level of output and employment and the aggregate demand price.

  1. positive

  2. negative

  3. constant

  4. non-linear
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Aggregate demand function represents the relation between the level of out produced in an economy to the level of employment in the economy and aggregate demand price where the level of output and level of employment has a direct relationship due to which if one increases then the other one also increases and vice versa as employees directly contribute in the production of output and level of output and demand price have an inverse relationship as level of output increases in the economy then the aggregate demand price decreases due to demand deficiency and vice versa.

Multiple choice economics concept of excess demand and deficient demand unemployment and employment generation the short run fixed price analysis of the product market liquidity preference and profit

Aggregate demand function is represented by a downward sloping curve.

  1. True

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

False.

AD curve is upward sloping owing to increasing income in the economy. As the income increases, the expenditure by the people also increases which leads to rising AD and vice versa. Therefore, income and AD has a positive relationship between them due to which AD curve is upward sloping. 

Multiple choice economics concept of excess demand and deficient demand unemployment and employment generation the short run fixed price analysis of the product market liquidity preference and profit

Aggregate supply curve becomes a ____________, after the full employment level has been achieved in the economy.

  1. vertical line

  2. downward sloping curve

  3. horizontal line

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

Aggregate supply refers to the desired level of output in the economy during an accounting year. It is through this output only that the producer sector generates income. Aggregate supply function is a upward sloping curve which denotes the direct relation between the level of output produced in the economy and income generates. The curve become vertical after full employment level of output indicating the maximum amount of output which can be produced in the economy generating the respective national income. 

Multiple choice economics concept of excess demand and deficient demand unemployment and employment generation the short run fixed price analysis of the product market liquidity preference and profit

The aggregate demand curve intercepts on the _________.

  1. Y-axis

  2. X-axis

  3. point of origin

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

Aggregate Demand refers to the desired level of expenditure in the economy during an accounting year. It is what people wish to spend on the purchase of goods and services during an accounting year.

Aggregate demand= C+I+G+ (X-M) where

C= Consumption expenditure

I= Investment expenditure

G= Government expenditure

(X-M)= Net export

Aggregate demand curve is upward sloping showing a positive relation between level of income and overall expenditure in the economy. The curve intercepts on Y-axis because even at zero level of income, there is some consumption which is required for the very existence of life. 

Multiple choice economics concept of excess demand and deficient demand unemployment and employment generation the short run fixed price analysis of the product market liquidity preference and profit

The aggregate supply function starts from the origin.

  1. True

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

Aggregate supply refers to the desired level of output in the economy during an accounting year. It is through this output only that the producer sector generates income. Aggregate supply function is a upward sloping curve which denotes the direct relation between the level of output produced in the economy and income generates. The curve starts from the origin indicating the income at zero level of output in the economy. 

Multiple choice economics concept of excess demand and deficient demand unemployment and employment generation the short run fixed price analysis of the product market liquidity preference and profit

Aggregate supply function is a ___________ curve.

  1. upward sloping

  2. horizontal curve, followed by a upward sloping

  3. downward sloping

  4. upward sloping curve at first, followed by a vertical
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Aggregate supply refers to the desired level of output in the economy during an accounting year. It is through this output only that the producer sector generates income. Aggregate supply function is a upward sloping curve which denotes the direct relation between the level of output produced in the economy and income generates. The curve become vertical after full employment level of output indicating the maximum amount of output which can be produced in the economy generating the respective national income. 

Multiple choice economics concept of excess demand and deficient demand unemployment and employment generation the short run fixed price analysis of the product market liquidity preference and profit

Aggregate supply function becomes parallel to the Y-axis, after the full employment level has been achieved in the economy.

  1. True

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

Aggregate supply refers to the desired level of output in the economy during an accounting year. It is through this output only that the producer sector generates income. Aggregate supply function is a upward sloping curve which denotes the direct relation between the level of output produced in the economy and income generates. The curve become vertical i.e. parallel to Y-axis after full employment level of output indicating the maximum amount of output which can be produced in the economy generating the respective national income. 

Multiple choice economics income determination unemployment and employment generation the short run fixed price analysis of the product market liquidity preference and profit

Saving increases with increase in income.

  1. True

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

According to the consumption function, as income rises, saving typically increases because the marginal propensity to save is positive. Households save a portion of additional income. While the relationship may not be strictly linear at very high income levels (the savings rate can plateau), the general principle that higher income leads to higher savings is well-established in economics.

Multiple choice economics economics of development and planning economics of planning objectives of economic planning in india major economic problems

As we read these days, many world economies are passing through the recession at present. When can an economy be "in a recession"?
A) When a decline occurs in almost all major economic activities.
B) When the inflation reaches a very high rate or becomes double-digit inflation.
C) When big financial scams and Frauds start taking place.

  1. Only A

  2. Only B

  3. Only C

  4. All the three
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

As we read these days, many world economies are passing through the recession at present. An economy is said to be in a recession when a decline occurs in almost all major economic activities.  Also, it is generally identified by a fall in GDP in two successive quarters.

Thus, the correct answer is A.

Multiple choice geography economic growth and development development and growth need for sustainable development economics of development

Which of these is an indicator of economic growth?

  1. Sensex

  2. Hardening of currency

  3. GDP growth

  4. Population growth
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

GDP growth is an indicator of economic growth. GDP growth can be defined as the net increase in the market value of all goods and services produced in an economy. GDP growth helps to analyze the economic growth and economic development of a nation.

Multiple choice economics meaning and scope of public finance public finance, budget and fiscal policy government budget and economy public finance and budget

Which of the following is/are the adverse effects of deficit financing ______.

  1. reduction in prices

  2. inflation

  3. inequality

  4. both B and C
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Deficit financing, when excessive, increases the money supply, which leads to inflation. It can also exacerbate economic inequality by disproportionately affecting those with fixed incomes while benefiting asset holders.

Multiple choice economics meaning and scope of public finance public finance, budget and fiscal policy government budget and economy public finance and budget

Balance of payment on current account covers all receipts on account of earnings, borrowings and all payments on account of spending and lending. (true/false)

  1. True

  2. False

  3. Cant say

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

The current account specifically covers trade in goods, services, and unilateral transfers. Borrowings and lending are recorded in the capital account, not the current account.