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 economics concept of consumption function, saving function and investment function capital economy of a village wealth, capital and money

An increase in income tax adversely affects the willingness to save.

  1. True

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

This statement is true as persons feel demotivated to work hard in order to earn more as because the real income after paying the increased income tax is much less despite the hard work of the individuals .Therefore the willingness to save is also less as the willingness to earn more is less.

Multiple choice economics concept of consumption function, saving function and investment function capital economy of a village wealth, capital and money

Which of the following is the suggestion to increase the rate of capital formation?

  1. The taxation policy should be revised and adequate tax reliefs should be allowed to salaried persons and industrialists.

  2. Saving schemes like provident fund, compulsory insurance, compulsory deposits, etc., should be encouraged and extended.

  3. The law and order condition in every part of the country should be improved and security of life and property must be ensured

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

Capital formation requires incentivizing savings and ensuring a stable environment for investment. Tax reliefs, structured saving schemes, and a secure legal environment all promote the accumulation of capital.

Multiple choice

The Stock Market crash in 1929 was largely caused by...

  1. the fact that people spent too much money.

  2. the fact that the banks failed.

  3. the fact that people could not repay their debts.

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

The 1929 crash was a culmination of systemic issues, including over-speculation, excessive debt, bank instability, and unsustainable spending habits.

Multiple choice

A change in interest rates is an example of which external factor?

  1. Political

  2. Economic

  3. Technological

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

Interest rates directly affect borrowing costs, consumer spending, and inflation, making them a key economic factor in a PESTEL analysis. They are determined by monetary policy and impact the overall financial environment of a business.

Multiple choice

Which was a contributing factor in causing the Great Depression (before Stock Market crash)?

  1. overproduction and surplus

  2. shortage and famine

  3. inflation and prices rising

  4. 1918 Influenza pandemic
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Overproduction in agriculture and industry led to a surplus of goods that consumers could not afford to buy, causing prices to plummet and businesses to fail. This economic imbalance was a primary structural cause of the Great Depression.

Multiple choice

Which is NOT one of the effects of the Great Depression?

  1. People lose jobs

  2. Herbert Hoover is praised as president

  3. Banks fail

  4. Changes in government
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Herbert Hoover was widely blamed for the severity of the Great Depression, and his perceived inaction led to his defeat in the 1932 election. He was not praised for his handling of the crisis.

Multiple choice

Which of the following had been responsible for the heavy burden of the deal and its interest?

  1. BOP surplus

  2. BOP deficit

  3. Equilibrium

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

The Balance of Payments (BOP) deficit creates a heavy debt burden because countries must borrow to cover the excess of imports/payments over exports/receipts. This debt accumulates with compound interest, creating long-term economic strain. A BOP surplus would not create such a burden.

Multiple choice organization of commerce and management entrepreneurship: an introduction, nature, importance and problems functions and role of an entrepreneur entrepreneurs types of entrepreneurs

What measures the percentage increase in capital formation required  for obtaining a percentage increase in GDP?

  1. Liquidity ratio

  2. Incremental capital output ratio

  3. Financial leverage ratio

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

Incremental capital output ratio measures the marginal amount of investment capital needed to generate a next unit of production.

Incremental capital output ratio= Annual Investment/Annual increase in GDP.

Multiple choice commercial studies budgeting meaning, merits and demerits of cash flow statement meaning and objectives of cash flow statement statement of changes in financial position

If there is no inflation during a period, then the money cashflow would be equal to _____________.

  1. Present value

  2. Real cash flow

  3. Real cash flow + present value

  4. Real cash flow present value
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Inflation is defined as the increase in prices of general goods and services. If there is no inflation during a particular period, there will be no impact on cash flows. The money cash flow must be equal to real cash flow.

Multiple choice political science india and the united nations the united nations (u.n.) united nation organisation (u.n.o) international institutions

Which of the following issues was Bretton Woods Conference associated with?

  1. Post war economic system of US

  2. Establishment of World Bank

  3. Establishment of IMF
  4. Both $(2)$ and $(3)$
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The Bretton Woods Conference, officially known as the United Nations Monetary and Financial Conference was a gathering of delegates from 44 nations that met from July 1 to 22 , 1944 in Bretton Woods, New Hampshire, to agree upon a series of new rule for the post-World War II international monetary system. It was associated with Establishment of World Bank and Establishment of IMF.

Multiple choice international experience of exchange rate systems open economy macroeconomics international economics economics

Other things remaining unchanged, when in a country the price of foreign currency rises, national income is __________.

  1. likely to rise

  2. likely to fall

  3. likely to rise and fall both

  4. remain unaffected
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Other things remaining unchanged, when in a country the price of foreign currency rises, national income is likely to rise as it indicates that the greater flow of foreign exchange in the domestic economy promotes higher level of development. Hence, national income rises as the price of foreign currency rises.

Multiple choice international experience of exchange rate systems open economy macroeconomics international economics economics

The problem with the Bretton Woods exchange rate system was identified by Robert Triffin and was termed as _____________.

  1. Triffin dilemma

  2. Triffin paradox

  3. Triffin rigidity

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

The Triffin dilemma refers to the conflict of economic interests that arises for a country that issues the global reserve currency, identified by economist Robert Triffin.

Multiple choice international experience of exchange rate systems open economy macroeconomics international economics economics

Which of the following is/are the reasons for the collapse of Bretton Woods system?
$1$. The refusal by the US Treasury to convert short-term liability into gold.
$2$. The US move to make dollar inconvertible.
$3$. The devaluation of US dollar in 1973.
Select the correct answer using the code given.

  1. $1$ only
  2. $1$ and $2$
  3. $2$ and $3$
  4. $1, 2$ and $3$
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The primary cause of the collapse was the US Treasury's inability to maintain the gold-dollar convertibility due to excessive dollar supply and gold outflows. While the US did eventually make the dollar inconvertible (Nixon Shock), the refusal to convert short-term liabilities was the core systemic issue.