Tag: wealth, capital and money

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Questions Related to wealth, capital and money

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 are true or false?
a) Capital formation means the increase in the stock of real capital in a country 
b) Saving is not essential for capital formation

  1. Both (a) and (b) are true

  2. (a) is true, but (b) is false

  3. (a) is false, but (b) is true

  4. Both (a) and (b) are false
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
1)Capital formation refers to the net capital accumulation during an accounting period for a particular area.Thus 1st statement is true.
2)Savings is essential for capital formation as savings leads to investment in an economy which in turn leads to more capital formation.
Multiple choice economics concept of consumption function, saving function and investment function capital economy of a village wealth, capital and money

What is marginal efficiency of capital ?

  1. Expected rate of return on new investment

  2. Expected rate of return of existing investment

  3. Difference between rate of profit and rate of interest

  4. Value of output per unit of capital invested
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

It is calculated in order to make the future prediction and to check the efficiency of the return which the investors will receive when they will invest in that new investment opportunity.It is extremely important in order to draw more shareholders in the financial market.

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

Capital-output ratio of a commodity measures ________. 

  1. its per unit cost of production

  2. the amount of capital invested per unit of output

  3. the ratio of capital depreciation to quantity of output

  4. the ratio of working capital employed to quantity of output
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Capital-output ratio is measured by calculating the proportion of capital investment needed to produce one unit of output. Capital-output ratio helps to determine the productivity of the economy.

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

Capital-Output Ratio measures ________.

  1. its per unit cost of production

  2. the amount of capital invested per unit of output

  3. the ratio of capital depreciation to quantity of output

  4. the ratio of working capital employed to quantity of output
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

It is the amount of capital needed to produce one unit of output.

It represent the proportionate change in the amount of investment due to a fixed capital investment in an economy in a particular period of time.

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

In the short run which of the following is fixed?

  1. Labor

  2. Capital

  3. Raw material

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

In short run period(which generally means period within 1 year)capital remains fixed as capital formation needs high investment and moreover in short run even when the output is zero some fixed cost is incurred by the firm due to capital .

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

Labour intensive technique would get chosen in a _______.

  1. Labour surplus economy

  2. Capital surplus economy

  3. Developed economy

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

The economy has to decide about technique of production on the basis of cost of labour and capital. A labour surplus economy choose labour intensive techniques and a capital surplus economy choose capital - intensive technique.

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

Find the odd option out.

  1. Capital is man-made

  2. All capital is wealth

  3. Capital is durable

  4. Mobilisation of savings
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Capital is that wealth which is used in the production of goods and services in an economy: capital and human resource have an integrated  relationship:capital has to withstand wear ,pressure, damage etc.MOBILISATION OF SAVINGS is the odd one as it is not a feature of capital

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

Capital that can be used for several purposes or by several industries is ___________.

  1. working capital

  2. social capital

  3. floating capital

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

Floating capital can be used for many purposes or by several industries. It is a part of capital that is invested in current assets of the organization, like raw materials.

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

Leather in a shoe factory is _______.

  1. fixed capital

  2. sunk capital

  3. floating capital

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

Floating capital refers to the raw material part of the capital also known as working capital which can be used in many ways in the factory. Therefore, leather in a shoe factory is a floating capital.