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 organisation of commerce and management the nature of the indian economy part 2 industrial revolution in india subsidies, industrial policy and trade policy cottage and small scale industries

A recession is a __________.

  1. period of declining prices

  2. period of very rapidly declining prices

  3. period of declining unemployment

  4. period during which aggregate output declines
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A recession is a period during which aggregate output declines. Recession can be defined as a part of the business cycle contraction. In this phase, overall economy experiences downfall. Other indicators such as GDP, investment spending, capital utilization, etc also tend to decline.

Multiple choice history economic system and economic policies american dominance, neo-imperialism and new economic policy insights on lpg changing economic policies

What is a feature of 'Reaganomics'?

  1. Increase in federal spending

  2. Expanding money supply

  3. Reduction in tax rates

  4. Cutting back on foreign trade
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Reaganomics is a popular term referring to the economic policies of Ronald Reagan, the 40th U.S. president (1981–1989). His policies called for widespread tax cuts, decreased social spending, increased military spending, and the deregulation of domestic markets. 

Hence, the correct option is C.

Multiple choice history economic system and economic policies american dominance, neo-imperialism and new economic policy insights on lpg changing economic policies

What were the primary reasons for the economic crisis in the 1980s?

  1. Spending on development programmes which didn't generate additional revenue

  2. Internal sources like taxation weren't generating enough revenue

  3. Income from public sector was not very high

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation
The origin of the financial crisis can be traced from the inefficient management of the Indian economy in the 1980s. Development policies required that even though the revenues were very low, the government had to overshoot its revenue to meet problems like  unemployment, poverty and population explosion. The continued spending on development programmes of the government did not generate additional revenue.
Moreover, the government was not able to generate sufficiently from internal sources such as taxation. The income from public sector undertakings was also not very high to meet the growing expenditure.
Multiple choice history economic system and economic policies american dominance, neo-imperialism and new economic policy insights on lpg changing economic policies

Stabilisation measures were intended to __________.

  1. correct balance of payments

  2. improving efficiency of the economy

  3. control inflation

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

India agreed to the conditionalities of World Bank and IMF and announced the New Economic Policy (NEP). The NEP consisted of wide ranging economic reforms. This set of policies can broadly be classified into two groups: the  stabilisation measures and the structural reform measures. Stabilisation measures are short term measures, intended to correct some of the weaknesses that have developed in the balance of payments and to bring inflation under control. In simple words, this means that there was a need to maintain sufficient foreign exchange reserves and keep the rising prices under control.

Multiple choice business organisation and correspondence meaning and factors of business environment dimensions of business environment business environment and its dimensions business environment

Inflation is defined as __________.

  1. persistent rise in general price level

  2. fall in general price level

  3. fall in the value of money

  4. purchasing power of consumer
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Inflation is defined as a sustained or persistent increase in the general price level of goods and services in an economy over a period of time.

Multiple choice business organisation and correspondence meaning and factors of business environment dimensions of business environment business environment and its dimensions business environment

Which of the following is an economic factor -

  1. Exchange rates

  2. Licensing regulations

  3. Labour courts

  4. Employment needs
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Licensing regulations is an economic factor as it includes with providing sufficient business license to the corporate units in order to survive in competition that prevails in the market. After, liberalization, many of such license where removed so that many business can flourish in the country. 

Multiple choice business economics and quantitative methods measurement of national income methods of national income methods of measuring national income national income analysis

If Willingness to Save is less, the level of ________ will be higher.

  1. Government regulated Savings

  2. Compulsory Savings

  3. Forced Savings

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

When voluntary savings are insufficient, governments may resort to forced savings through measures like taxation, inflation, or mandatory provident funds to increase the total savings in the economy.

Multiple choice civics foreign trade in india the government and economic development indian economy on the eve of independence impact of technology on livelihoods

Economic reform is required to overcome the problem of:
(i)  Excess consumption and expenditure over revenue
(ii) Over protection to industry and heavy losses in public sector
(iii) Mismanagement of firm, economy and poor technological development
(iv) Mismanagement of foreign exchange reserve and shortage of foreign exchange

  1. (i) and (ii)

  2. (i) and (iii)

  3. (i) (ii) and (iii)

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

Economic reform is required to overcome the problem of:
(i)  Excess consumption and expenditure over revenue
(ii) Over protection to industry and heavy losses in public sector
(iii) Mismanagement of firm, economy and poor technological development

(iv) Mismanagement of foreign exchange reserve and shortage of foreign exchange
Economic reforms aims to create a more freer economy and uphold the process of liberalization, privatization and globalization. It helps to achieve a higher economic growth and development.

Multiple choice economics solution to basic economic problems under different economic systems supply curve and price determination in the market price mechanism and solutions supply

Price mechanism tends to create economic stability.

  1. True

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

Price mechanism refers to the mechanism where price directs the flow of goods and services in the market as it directs the supply by the production sector i.e supply will increase if price increases and vice-versa and purchase by the demand sector i.e demand will increase if price decreases and vice-versa. So due to this freedom policy, there are many fraudulent practices that take place in the market which makes the economy very unstable. 

Multiple choice economics solution to basic economic problems under different economic systems supply curve and price determination in the market price mechanism and solutions supply

Which of the following is a reason for the negative slope of the PPF?

  1. Inverse relationship between the use of technology and the use of natural resources.

  2. Scarcity, i.e., at any point in time we have limited amount of productive resources.

  3. Resource specialisation.

  4. Increasing opportunity costs.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The slope of production possibility curve represents the marginal opportunity cost, which refers to the additional sacrifice that would have to be made when resources and technology are shifted from production of one commodity to the other owing to limited resources. This opportunity cost between two goods is increasing which is denoted through the negative slope of PPC.

Multiple choice economics solution to basic economic problems under different economic systems supply curve and price determination in the market price mechanism and solutions supply

Inflation means:

  1. High prices

  2. Prices must be continuously rising

  3. Both (A) and (B)

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

Inflation which is often expressed in percentage is a quantitative measure of the rate at which the average price level of a basket of selected goods and services in an economy increases over a period of time continuously which indicates a decrease in the purchasing power of a nation's currency.

Multiple choice economics solution to basic economic problems under different economic systems supply curve and price determination in the market price mechanism and solutions supply

The government in a mixed economy seeks to control price mechanism through which of the following policies?

  1. Industrial policy

  2. Fiscal policy

  3. Monetary policy

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

In a mixed economy, price mechanism are intervened by the government through many policies which includes industrial policy i.e. industrial acts, wage rate system etc, fiscal policy i.e. taxation policy on goods and services, and monetary policy i.e. central bank's qualitative and quantitative policy.

Multiple choice commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

The open market Operations occur when the government:

  1. reduces spending

  2. buys and sells bonds and securities

  3. increases taxation

  4. increases the exchange rate
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Open market operation (OMO) is a monetary policy by the central bank in which the bank through government deals in the sale and purchase of securities and bonds in the open market to control the supply of money in the economy. By selling the securities and bonds, the government soaks liquidity from the economy which controls the inflation in the economy by decreasing the purchasing power of the people and by buying the securities and bonds, the government releases liquidity which controls deflation in the economy by increasing the purchasing power of the people.