Tag: economics

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Multiple choice economics basic concepts of national income macroeconomic theories some basic concepts of macroeconomics introduction to macroeconomics

The following statements true or false? Give reasons
Intermediate goods have a derived demand, while final goods have direct demand. 

  1. True

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

Intermediate goods have a derived demand as their demand depends on demand for final goods.
On the other hand, final goods have a direct demand as they satisfy the wants directly.

Multiple choice economics basic concepts of national income macroeconomic theories some basic concepts of macroeconomics introduction to macroeconomics

The following statements true or false? Give reasons.
A good can be an intermediary good in one case and a final good in another case. 

  1. True

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

A good can be an intermediate good as well as a final good, depending upon its nature of use.
For example, a car purchased by a household is a final good, whereas, It will be an intermediate good if it is purchased by a car dealer. 

Multiple choice economics basic concepts of national income macroeconomic theories some basic concepts of macroeconomics introduction to macroeconomics

In a two-sector economy, total production is always equal to total consumption.

  1. True

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

Households and firms depend on each other in the circular flow of income in case of a two-sector model. Participants of the two-sector economy are households and producers.  Flow of money from producers to households as payments for the purchase of factor services has been a continuous process. So, there has been the flow of money from households to producers as payments for the purchase of consumer goods and services, This non-stop continuity of inter-sectoral flows is called 'circularity of flows'. Hence, total consumption by households is always equal to total production by the producers.

Multiple choice economics basic concepts of national income macroeconomic theories some basic concepts of macroeconomics introduction to macroeconomics

The following statements true or false? Give reasons.
Both 'Expected Obsolescence' and 'Unexpected Obsolescence' are considered for determining the amount of depreciation.

  1. True

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

Both 'Expected Obsolescence' and 'Unexpected Obsolescence' are considered for determining the amount of depreciation- this is a false statement since only expected obsolescence is considered for determining the amount of depreciation. It has two components: loss of value of fixed assets due to change in technology and change in demand.

Multiple choice economics basic concepts of national income macroeconomic theories some basic concepts of macroeconomics introduction to macroeconomics

Which of the following is not an example of flow variable?

  1. Number of births during a year

  2. National wealth

  3. National income

  4. Wheat produced during a year
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

National wealth is not an example of flow variable. It is a stock since it is measured at a point of time. National wealth is not time dimensional. It is not measured over a specified period of time like flow. Therefore, national wealth is a stock concept.

Multiple choice economics basic concepts of national income macroeconomic theories some basic concepts of macroeconomics introduction to macroeconomics

Depreciation means ___________________.

  1. Destruction of a plant in a fire accident

  2. Loss of fixed assets overtime due to wear and tear

  3. Loss of fixed assets in an earthquake

  4. Closure of the plant due to lockout
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Depreciation means loss of fixed assets overtime due to wear and tear. Depreciation is also called consumption of fixed capital. Loss of fixed assets happen on account of normal wear and tear, normal rate of accidental damages and expected obsolescence.

Multiple choice economics basic concepts of national income macroeconomic theories some basic concepts of macroeconomics introduction to macroeconomics

Final goods refer to those goods which are used either for ______ or for ________.

  1. Consumption, investment

  2. Consumption, resale

  3. Resale, investment

  4. Resale, further production
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Final goods refer to those goods which are used either for consumption or for investment. Final goods have crossed the boundary of production and are ready for use by their final users. These goods are included in the estimation of national product or national income. Example: Bread and butter used by the consumers.

Multiple choice economics basic concepts of national income macroeconomic theories some basic concepts of macroeconomics introduction to macroeconomics

Net factor income from abroad is ________________.

  1. Exports minus Imports

  2. Visible Exports minus Visible Imports

  3. Factor income received from abroad minus factor income paid abroad

  4. Factor incomes received from abroad
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation
Net factor income from abroad is factor income received from abroad minus factor incomes paid abroad.
Equation:
Net factor income from abroad= Factor income earned by our residents from the rest of the world - Factor income earned by non- residents in our domestic territory.
Multiple choice economics basic concepts of national income macroeconomic theories some basic concepts of macroeconomics introduction to macroeconomics

Which of the following is an example of an intermediate goods? 

  1. Car sold by a dealer of second hand cars

  2. Steel and cement used to construct a flyover

  3. Fertilizers purchased by a farmer

  4. All the these
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation
All of the following are examples of an intermediate good:
a) Car sold by a dealer of second hand cars: It is an intermediate good since cars are purchased by a dealer as goods for resale.
b) Steel and cement used to construct a flyover: It is an intermediate good since steel and cement are used as a raw material.
c) Fertilizers purchased by a farmer: It is an intermediate good since fertilizers is used as a raw material in agriculture.