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 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 part of income which is not spent on consumption is called _______. 

  1. expenditure

  2. saving

  3. investment

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

Savings refers to the part of the income which is not spent on the consumption of goods and services in the economy. It is that portion of the income which is kept aside for an instant and then re-invested into some asset in order to generate more income through these savings. 

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.

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

____________ 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

A study of how an increase in the corporate income tax rate will affect the national unemployment rate is an example of:

  1. Macro economics

  2. Descriptive economics

  3. Micro economics

  4. Normative economics
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Macroeconomics deals with all the issues affecting the national economy.


For example, an increase in the direct tax such as corporate income tax will increase the cost of the corporate sector. 

Thus, in order to compensate their costs, one of the measure may be to lessen the employees which will further affect the unemployment in the economy.

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.