Tag: economy of a village

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

As a Factor of Production, "Capital" is _________________.

  1. A free gift of nature

  2. Produced by man alone

  3. Produced by the man working with nature

  4. Not relevant at all.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Capital is created by human labor acting upon natural resources. It is neither a free gift of nature nor produced by man alone without raw materials.

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

As a Factor of Production, "Capital" is a ________ means of Production.

  1. Original

  2. Primary

  3. Produced

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

Capital is classified as a produced means of production because it is created by humans to facilitate further production, unlike land which is an original or primary factor.

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

Capital Formation is required for _____________________.

  1. Replacement and renovation of existing machinery and equipments

  2. Creating additional productive capacity

  3. Both (a) and (b)

  4. Neither (a) nor (b)
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Capital formation is essential for both maintaining existing productive capacity (replacement/renovation) and expanding it (additional capacity).

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

If current consumption is reduced for the purpose of Capital Formation, that represents a _________________.

  1. Uneconomic activity

  2. Current sacrifice for future growth

  3. Decrease in demand

  4. Decrease in resources
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Capital formation requires saving, which means reducing current consumption to invest in future productive capacity. This is a trade-off between present and future.

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

Larger production of ____________ goods would lead to higher production in future.

  1. consumer

  2. capital

  3. agricultural

  4. public

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

An increase in the stock of capital goods, which are used for the production of consumer goods, will lead to increased production of consumer goods and enhance the future production output.

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

For the purpose of Capital Formation _____________________.

  1. Current consumption is to be sacrificed to a certain extent

  2. Current income should be saved

  3. Both (a) and (b)

  4. Neither (a) nor (b)
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Capital formation requires both the willingness to save (sacrificing current consumption) and the actual act of saving income, which is then channeled into investment.

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

A 100% Consumption Economy ______________________.

  1. Cannot have any Capital Formation

  2. Will become static and cannot grow

  3. Both (a) and (b)

  4. Neither (a) nor (b)
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

If an economy consumes everything it produces, there is no surplus left for investment. Without investment, there is no capital formation, and the economy cannot grow.

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

Capital Formation is possible by _______________________.

  1. Using whole of the current capacity to produce only Consumer Goods

  2. Reducing present consumption to a certain extent

  3. Both (a) and (b)

  4. Neither (a) nor (b)
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Capital formation is only possible if resources are diverted from producing consumer goods to producing capital goods, which requires a reduction in present consumption.

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

Capital Formation is required for _________________.

  1. Increasing the efficiency of production efforts

  2. Expansion of output of consumer goods in the future.

  3. Ensuring growth of the economy

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

Capital formation involves the accumulation of assets that increase an economy's productive capacity. This process facilitates higher production efficiency, future output growth, and overall economic development.