Tag: economics

Questions Related to economics

Induced consumption expenditure is ___________ in nature.

economics income-output determination public debt public debt main feature of tax

  1. income inelastic

  2. income elastic

  3. either A or B

  4. neither A nor B

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Correct Option: B
Explanation:

Induced consumption refers to that consumption which occurs on the basis of change in income. It changes when there is some same change in the level of income in the economy. Therefore, it is income elastic as it depends on the level of income in the economy. 

Determinants of aggregate demand is symbolically expressed as _______________.

economics income-output determination public debt public debt main feature of tax

  1. $AD = C+I$

  2. $AD = C+I+G+(X-M)$

  3. $AD = C+I+(X-M)$

  4. None of the above

Show answer
Correct Option: B
Explanation:

Aggregate Demand refers to the desired level of expenditure in the economy during an accounting year. It is what people wish to spend on the purchase of goods and services during an accounting year.

The determinants of aggregate demand is expressed as: 

Aggregate demand= C+I+G+ (X-M) where

C= Consumption expenditure

I= Investment expenditure

G= Government expenditure

(X-M)= Net export.

____________ consumption expenditure refers to the expenditure, which is independent of income.

economics income-output determination public debt public debt main feature of tax

  1. Autonomous

  2. Induced

  3. Aggregate

  4. None of the above

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Correct Option: A
Explanation:

Autonomous consumption refers to that consumption which occurs when there is no income in the economy. It is the minimum level of consumption that takes place in the economy. It is the consumption expenditure which is not affected by the income in the economy. 

The expected rate of return from an additional unit of capital invested is termed as _____________.

economics income-output determination public debt public debt main feature of tax

  1. Marginal efficiency of capital (MEC)

  2. Marginal efficiency of investment (MEI)

  3. Both A & B

  4. Neither A nor B

Show answer
Correct Option: C
Explanation:

Marginal efficiency of capital (MEC) or Marginal efficiency of investment (MEI) refers to the expected rate of return from the allocation of a proportion of income or capital invested in the business. It is the rate of return which is expected as per the economic behavior of the business since past few years. 

___________ refers to the amount of sales proceeds which an entrepreneur actually expects from the sale of output produced at a given level of employment during the year.

economics income-output determination public debt public debt main feature of tax

  1. Aggregate demand

  2. Market demand

  3. Aggregate supply

  4. Aggregate income

Show answer
Correct Option: A
Explanation:

Aggregate Demand refers to the desired level of expenditure in the economy during an accounting year. So it can also be expressed as the sale proceeds because the expenditure from consumer's point of view is sales proceeds or earnings from producer's point of view. Therefore, Aggregate demand is the amount of sales proceeds which an entrepreneur actually expects from the sale of output produced during the year assuming it to be the full employment level of output. 

____________ is the expenditure incurred for those goods and services which satisfy the wants of private individuals and institutions directly.

economics income-output determination public debt public debt main feature of tax

  1. Consumption expenditure

  2. Investment expenditure

  3. Induced expenditure

  4. None of the above

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Correct Option: A
Explanation:

Consumption expenditure refers to the expenditure which is incurred on the basic act of consuming goods and services to satisfy the wants of the individuals. It is usually incurred directly by private individuals and institutions. 

Who propounded the 'market law'?

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  1. Adam Smith

  2. J B Say

  3. T R Malthus

  4. David Recardo

Show answer
Correct Option: B
Explanation:

Law was propounded by J.B say
This law means that ‘supply always creates its own demand.’ In other words, according to J.B. Say, there cannot be general over­production or general unemployment on account of the excess of supply over demand because whatever is supplied or produced is automatically exchanged for money.

What is the break even point?

economics income-output determination public debt public debt main feature of tax

  1. Marginal revenue equals marginal cost

  2. Average revenue equals average cost

  3. Total revenue equals total cost

  4. None of the above

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Correct Option: C
Explanation:

Break-even point is that point where the producer is able to recover the total cost of production through sale of output and incurs no profit or loss. The total revenue here must equal the total cost for the firm to break-even at a given level of production of output.

Graphically, when demand curve moves upward, there is __________.

economics income-output determination public debt public debt main feature of tax

  1. more demand 

  2. more supply

  3. equilibrium

  4. none of these

Show answer
Correct Option: D
Explanation:

The demand curve is a graphical representation of the relationship between the price of a good or service and the quantity demanded for a given period of time.

When the demand curve moves upward this shows that the price of good increases and the demand for goods falls this will show the upward movement in the demand curve

Geometric method is also known as Point Method.

economics income-output determination public debt public debt main feature of tax

  1. True

  2. False

Show answer
Correct Option: A
Explanation:

Geometric method was suggested by Prof. Marshall and is used to measure the elasticity at a point on the demand curve. When there are infinitely small changes in price and demand, then the 'Geometric Method' is used. This method is also known as 'Graphic Method' or 'Point Method' or 'Arc Method'.