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

Give an example of a sunk capital.

  1. A textile weaving machine

  2. Photographic films

  3. Railways

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

Sunk capital refers to assets that are specific to a particular use and cannot be easily repurposed or recovered. A textile weaving machine is designed for a specific production process, making it a classic example of sunk capital.

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

Circulating capital is directly absorbed into the finished products.

  1. True

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

Capital gets circulated and all results into the finished products as capital holds enough significance in the functional relationship between inputs and outputs produced in an economy during a given period of time.

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

The functions of capital include provision for subsistence, provision for appliances, _______.

  1. provision for raw material

  2. provision for marketing and sales promotion

  3. economic development

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

Capital has a large set of effects and is generally used for multiple purposes. 

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

Those producer goods having a long life which can be used again and again in production processes are called ___________.

  1. trade capital

  2. fixed capital

  3. social capital

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

Fixed capital refers to durable producer goods, such as machinery or buildings, that are used repeatedly in the production process over a long period. Unlike circulating capital, they do not change their form during production.

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

The saving by individuals depends more or less upon ___________.

  1. ability (or power) to save

  2. willingness (or desire) to save

  3. opportunity to save

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

Individual saving is influenced by the ability to save (income level), the willingness to save (psychological factors), and the opportunity to save (availability of banking or investment channels). Therefore, all these factors contribute to the total saving.

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

The rate of capital formation is the ratio between the gross capital formation and gross domestic product at current prices.

  1. True

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

The rate of capital formation is the ratio between (the increase in fixed capital and inventories) and (the total value of good produced and services provided in a country during one year).

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.