Tag: economy of a village

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Questions Related to economy of a village

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

Capital formation is highly affected by market conditions of boom and depression.

  1. True

  2. False
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A Correct answer
Explanation

During boom market condition, the economy flourishes,investment rises and thus capital formation rises and during depression period , market sinks down and rate of capital formation falls.

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

The prosperity encourages and enhances the saving but depression reduces the saving of people.

  1. True

  2. False
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A Correct answer
Explanation

The prosperity of a country helps to provide the citizens with more investment channels and thus people tend to save more but during depression period of an economy ,market sinks down and falls into a low -equilibrium trap which results in less investment,less savings and low rate of capital formation.

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

The inadequate number of investment channels is one of the reasons for low capital formation in India.

  1. True

  2. False
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A Correct answer
Explanation

Insufficient options to invest in an economy results in low net capital accumulation during a period of time in an economy since the people of that economy is left with very few options to invest.

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

What does capital formation mean?

  1. The increase in the stock of real capital in a country

  2. The increase in the supply of money in a country

  3. The decrease in the supply of money in a country

  4. The improvement of technological factors
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Explanation

Capital formation means the net accumulation of stock in a country during a particular accounting period.

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

The term capital in economics means ___________.

  1. factor of production

  2. investment in shares and debentures

  3. funds brought in by the entrepreneur

  4. an important city of the state
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Explanation

Capital is used as a factor of production in economics as it helps in production process and helps to increase the productivity.

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

The cost of capital as a factor of production is expressed in the form of _______.

  1. interest

  2. dividend

  3. rent

  4. wages
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Explanation

Interest is known as the cost of capital as a factor of production.For instance, when we keep a certain amount in bank,we get some extra money with the principle amount .This extra amount is known as interest.

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

In economics we call the buildings, machinery, other equipment used in production as _______.

  1. capital

  2. land

  3. money

  4. none of the above
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A Correct answer
Explanation

Buildings,machinery,other equipment used in production process -all are regarded as capital in economics as these are fixed assets and helps to increase productivity in an economy.