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 political science problem of unemployment in india introduction and features of unemployment quality of population unemployment- types, causes and measures

Deficiency in effective demand increases the ______ in the economy.

  1. employment

  2. unemployment

  3. inflation

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

Effective demand is the total amount of goods and services that consumers are willing and able to buy. When this demand is deficient, businesses reduce production and lay off workers, leading to higher unemployment.

Multiple choice business economics and quantitative methods introduction to micro economics microeconomics and macroeconomics : introduction economic ideas of j k mehta micro and macro economics

When the rate of money inflation increases then the prices of commodities _____.

  1. Increase

  2. Decrease

  3. Remain constant

  4. Do not change
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Inflation affects economies in various positive and negative ways. The negative effects of inflation include an increase in the opportunity cost of holding money, uncertainty over future inflation which may discourage investment and savings, and if inflation were rapid enough, shortages of goods as consumers begin hoarding out of concern that prices will increase in the future. Positive effects include reducing the real burden of public and private debt, keeping nominal interest rates above zero so that central banks can adjust interest rates to stabilize the economy, and reducing unemployment due to nominal wage rigidity.

Multiple choice business economics and quantitative methods introduction to micro economics microeconomics and macroeconomics : introduction economic ideas of j k mehta micro and macro economics

Which of the following issues are related to micro-economics?

  1. Impact of crude price hike on inflation

  2. Impact of change in bank rate on bank savings and investment

  3. Impact of information technology on economic growth

  4. Impact of shortage of wheat production on wheat price
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Impact of a shortage of wheat production on wheat price comes under the domain of Microeconomics. Microeconomics is that part of economics which deals with the individual units of the economy. It takes into account the demand and supply of individual units and helps in studying the prices of products according to it. All the other options are the concern of macroeconomics as they take into account the larger picture into consideration.

Multiple choice business economics and quantitative methods introduction to micro economics microeconomics and macroeconomics : introduction economic ideas of j k mehta micro and macro economics

___________ is a microeconomics domain.

  1. Hardening of interest rates

  2. Strengthening of rupee against dollar

  3. Stagnation of economic growth

  4. Increased CNG rates by IGL
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Increased CNG rates by IGL comes under the domain of Microeconomics. Microeconomics is that part of economics which deals with the individual units of the economy. It takes into account the demand and supply of individual units and helps in studying the prices of products according to it. All the other options are the concern of macroeconomics.

Multiple choice business economics and quantitative methods introduction to micro economics microeconomics and macroeconomics : introduction economic ideas of j k mehta micro and macro economics

____________ is/are the concerns of macroeconomics.

  1. rate of inflation

  2. population growth

  3. rate of unemployment

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

All these options are the concerns of Macro economics. The term ‘Macro’ means large. So Macroeconomics is that part of economics which studies the economic problems and issue that are on a large scale. It studies about the performance of the economy as a whole and not of any individual firm or business. It focuses on the study of problems like inflation, unemployment, poverty, etc. 

Multiple choice business economics and quantitative methods introduction to micro economics microeconomics and macroeconomics : introduction economic ideas of j k mehta micro and macro economics

___________ is/are in the domain of macroeconomics.

  1. Hardening of interest rates

  2. Strengthening of rupee against dollar

  3. Stagnation of economic growth

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

All these options are the concerns of Macro economics. The term ‘Macro’ means large. So Macroeconomics is that part of economics which studies the economic problems and issue that are on a large scale. It studies about the performance of the economy as a whole and not of any individual firm or business. It focuses on the study of problems like inflation, unemployment, poverty, etc. 

Multiple choice business economics and quantitative methods introduction to micro economics microeconomics and macroeconomics : introduction economic ideas of j k mehta micro and macro economics

To study the impact of increase in CRR on inflation is the subject matter of ___________.

  1. normative economics

  2. positive economics

  3. macroeconomics

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

The study of impact of increase in CRR on inflation is the subject matter of macro economics. 

The term ‘Macro’ is derived from the Greek word 'Makro' meaning large. So Macroeconomics is that part of economics which studies the economic problems and issue that are on a large scale. It studies about the performance of the economy as a whole and not of any individual firm or business. It focuses on the study of problems like inflation, unemployment, poverty, etc.  

Multiple choice business economics and quantitative methods introduction to micro economics microeconomics and macroeconomics : introduction economic ideas of j k mehta micro and macro economics

All are subject matter of macro-economics except _________.

  1. hardening of interest rates

  2. strengthening of rupee against dollar

  3. stagnation of economic growth

  4. increase in maximum selling price of fertilizers
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation
  • All these options except for option D are the concerns of Macro economics.
  • The term ‘Macro’ means large. So Macroeconomics is that part of economics which studies the economic problems and issue that are on a large scale. It studies about the performance of the economy as a whole and not of any individual firm or business. It focuses on the study of problems like inflation, unemployment, poverty, etc. 
  • Whereas Increase in maximum selling price of fertilizers is a micro issue and comes under the domain of micro-economics.
Multiple choice business economics and quantitative methods introduction to micro economics microeconomics and macroeconomics : introduction economic ideas of j k mehta micro and macro economics

Which of the following does not fall under Macro Economics?

  1. Value of Rupee visa-vis US Dollar

  2. Balance of Payments Deficits

  3. Price Fixation by Producer Firm

  4. Low saving rates in the economy
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Price fixation by producer firm is a micro variable as it is a individual firm who is deciding the price of the commodity.

Multiple choice business economics and quantitative methods introduction to micro economics microeconomics and macroeconomics : introduction economic ideas of j k mehta micro and macro economics

Which of these are a part of subject matter of macroeconomics?

  1. Problem of unemployment in India

  2. Rising price level in the country

  3. Increase in disparities of income

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

The subject matter of macroeconomics includes determination of the level of employment, national  income and price level in the economy.

Macroeconomics is a general equilibrium analysis which studies an economic phenomenon by taking all the aggregate units in the economy into consideration. 

Multiple choice instruments of monetary policy and the reserve bank of india money and banking economics

An increase in the Bank rate generally indicates that the ________________.

  1. market rate of interest is likely to fall

  2. Central Bank is no longer making loans to commercial banks

  3. Central Bank is following an easy money policy

  4. Central Bank is following a tight money policy
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Bank rate is the interest rate of the RBI for long-term lending to its clients. Higher 'bank rate' indicates the RBI signalling for a tighter money policy.

Multiple choice instruments of monetary policy and the reserve bank of india money and banking economics

Which of the following is not a cure for inflation?

  1. Better capacity utilization

  2. Lowering of bank rate

  3. Public distribution system

  4. Reducing bedget deficit
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

When banks want to borrow long term funds from RBI, bank rate is the interest rate which RBI charges to them. Increase in the bank rate will be useful to control inflation.

It is currently set to 6.75 % (Second Bi-monthly Monetary Policy Statement, 2018–19). The bank rate is not used to control money supply these days.

Multiple choice instruments of monetary policy and the reserve bank of india money and banking economics

In order to control credit and investment, the Central Bank of a country should _____________.

  1. Sell securities in the open market and hike the Cash Reserve Ratio.

  2. Buy securities from the open market and lower the Cash Reserve Ratio.

  3. Buy securities from the open market and hike the Cash Reserve Ratio.

  4. Sell securities in the open market and lower the Cash Reserve Ratio.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

To control credit and investment, the Central Bank needs to reduce liquidity. Selling securities drains cash from the system, and hiking the Cash Reserve Ratio (CRR) forces banks to hold more idle reserves, thereby restricting lending capacity.

Multiple choice instruments of monetary policy and the reserve bank of india money and banking economics

Cheap money policy is followed __________.

  1. to counter inflation

  2. to reverse depression

  3. to appease the public

  4. to increase disposal income of the households
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Cheap money policy refers to a monetary policy by the central bank where the central bank sets low interest rates so that credit is easily available to the general public in order to bring efficiency in trade and commerce in an economy. Such a policy is used by the government at the time of depression in the economy as it increases the money supply in the economy which reverses depression.