Tag: business economics and quantitative methods

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Questions Related to business economics and quantitative methods

Multiple choice business economics and quantitative methods introduction to managerial economics theories of employment and income concept of international trade macro economic analysis

According to Keynesian model of income determination, an economy's total income in the short run depends on _____________________.

  1. aggregate demand

  2. aggregate supply

  3. demand

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

In the Keynesian model, aggregate demand is the primary driver of output and income in the short run because prices and wages are assumed to be sticky.

Multiple choice business economics and quantitative methods introduction to managerial economics theories of employment and income concept of international trade macro economic analysis

A/An _____________ economy is an economy which does not engage in international trade.

  1. open

  2. developing

  3. closed

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

A closed economy is one that has no trading activity with outside economies. The closed economy is therefore entirely self-sufficient, which means no imports come into the country and no exports leave the country. The closed economy is self-sufficient, which means no imports come into the country and no exports leave the country. The purpose of a closed economy is to provide domestic consumers with everything they need from within the country's borders.

Multiple choice business economics and quantitative methods introduction to managerial economics theories of employment and income concept of international trade macro economic analysis

In the two-sector model, households provide factor services to the firms and receive income in the form of ____________.

  1. rent

  2. wages

  3. interest and profits

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

In a two sector economy, the household sector renders factor services and is in return rewarded with factor payments by the firms in the form of rent, wages, interest and profits.

Multiple choice business economics and quantitative methods introduction to managerial economics theories of employment and income concept of international trade macro economic analysis

In an open economy, ___________ plays an important role.

  1. government

  2. foreign trade

  3. firms

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

A country that undertakes trade with other countries is termed as an open economy. The open economy is characterised with four sectors, namely, firms, households, government and the foreign sector.

Multiple choice business economics and quantitative methods introduction to managerial economics theories of employment and income concept of international trade macro economic analysis

________________________ is the total amount of goods and services demanded in the economy.

  1. Aggregate demand

  2. Demand

  3. Individual demand

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

Aggregate demand refers to the demand for the final output in the economy, which all the buyers in the economy desire to purchase, backed by sufficient purchasing power at the general price level and the employment level in the economy. 

Multiple choice business economics and quantitative methods introduction to managerial economics theories of employment and income concept of international trade macro economic analysis

According to the Keynesian theory of income determination, income and output in the short run depends on aggregate demand.

  1. True

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

Keynesian theory posits that in the short run, the level of economic activity is determined by the total spending (aggregate demand) in the economy.

Multiple choice business economics and quantitative methods introduction to managerial economics theories of employment and income concept of international trade macro economic analysis

In a two-sector economy model factor income of the households is equal to factor payments by firms.

  1. True

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

In a two sector economy, the household sector renders factor services and in return receive factor payments from the firms, which includes rent, wages, interest and profits which is regarded as the factor income by the household sector. Thus, factor incomes equal factor payments in a two sector economy.

Multiple choice business economics and quantitative methods introduction to managerial economics theories of employment and income concept of international trade macro economic analysis

An open economy is an economy that engages in international trade in goods and services.

  1. True

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

A country that undertakes trade with other countries, i.e, imports and exports goods and services, is termed as an open economy. The open economy is characterised with four sectors, namely, firms, households, government and the foreign sector.


Multiple choice business economics and quantitative methods introduction to managerial economics theories of employment and income concept of international trade macro economic analysis

At the point of equilibrium of firm (under perfect competition) _____________.

  1. MC curve must be rising

  2. MC curve must be falling

  3. MR cure must be rising

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

A firm is said to be in equilibrium when it maximizes its profit. It is the point when it has no tendency either to increase or contract its output. ... So in order to be in equilibrium, the firm will attempt to maximize the difference between total revenue and total costs.When MC is falling, the cost of producing an additional unit of output tends to decrease. Under perfect competition, when price is constant, the difference between the total revenue and total variable cost tends to increase.

Multiple choice business economics and quantitative methods introduction to managerial economics theories of employment and income concept of international trade macro economic analysis

In binomial approach of option pricing model, fourth step is to create ________________.

  1. equalize domain of payoff

  2. equalize ending price

  3. riskless investment

  4. high risky investment
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Binomial option pricing model is a risk-neutral model used to value path-dependent options. Under the binomial model, current value of an option equals the present value of the probability-weighted future payoffs from the options.