Which of the following is not assumed to be constant along the money

demand curve?

Ans-the interest rate

Which of the following will be hurt by inflation

A wage earner who bargains wages as a member of a trade union

Total fixed cost divided by the level of output yields

Average fixed costs

Demand curve faced by nuclear plant a monopoly shell be __ and for a

wholesaler

Inelastic, perfectly elastic

Circular flow diagram in national income accounting is used to describe

Flow of income and expenditures in an economy

If a firm must produce a significant share of market output before low

average cost can be achieved
Either monopolistic competition or oligopoly

When diminishing marginal returns set in the marginal product is

Negative and decreasing

If a perfectly competitive firms marginal revenue is rs 35

Its average revenue is rs 35

If the demand for Swordfish is price elastic and the price of Swordfish
increases then

Total Revenue from Sword Fish sales will decrease

A US company owns a fast food store in India. The value of Goods and
services produced in the store are included

The GDP of India but not of US

Which of the following is unique to oligopoly among all the market structures

Mutual interdependence

 
Which Real world market most closely approximates perfect competition

Wholesale wheat market

Which one of the following will shift the money demand curve to the right,
keeping other things constant?

A decrease in the interest rate

What is the effect of an expansionary monetary policy on the demand for

investment curve?

It causes downward movement along the curve

The Average fixed curve is

Downward slopping due to constant total fixed cost

Green GDP means

Measuring the impact of production on air pollution, water pollution, soil

depletion and the loss of other natural resources

Demand Pull inflation is shown by an

outward shift of the aggregate demand curve

The consumer still gets the newspaper at Re 1.50 with growing number of
supplements, better printing quality a lot of promotional rewards, gifts and
better news coverage…

Tacit Collusion between the two dailies in future may lead to

Monopoly profits to both the firms

In the end the benefits from price war between TOI and HT were made by
the

All of these

Newspaper market described in the case shows features of

Oligopoly

Benefits for both the Times of India and Hindustan Times would have been
higher if they would have completed primarily on

Quality of news coverage

 
A firm facing a downward-sloping demand curve sells 50 units of output at Rs
10 each. The firm’s marginal revenue is

Ans- less than 10

The additional output obtained by adding another unit of labor to the

production process is called _____.

Ans- the marginal product of labor

If there is a decrease in the supply of money, which one of the following is

most likely to happen?

Ans- interest rates will rise

A cartel’s marginal cost curve is the:

Ans- horizontal sum of all the individual firms’ marginal cost curves

total revenue of a good falls with fall in price, this indicates

Ans- the price elasticity of demand is lower than 1

In the range of increasing marginal returns, the total product is

Ans-increasing at an increasing rate

The distinction between discretionary fiscal policy and automatic stabilizers is

that

Ans- only discretionary fiscal policy can stimulate the economy

Automatic stabilizers act to ______ government expenditures and _______

government revenues during recession in United States

Ans-Increase, decrease

In the short run, a monopolistic competitive firm will shut down when

Ans-average total cost is more than average revenue.

Which of the following actions would not increase GDP?

Ans-Tom gets fired for being late so often after his alarm clock breaks, so he
moves off to the wilderness.

The money demand curve slopes downward because

Ans- None of these (higher interest rate increases the opportunity cost of
holding money)
 

The income effect refers to the impact of a change in

Ans-the price of a good on real income

Which one of the following would be shown on IBM’s accounting statement?

Ans-revenue, explicit costs and accounting profit

Suppose it costs Minnie’s Mini-Golf (a monopolist) not a penny more to let

another person on the course. If Minnie’s faces a linear (downward-sloping)
market demand curve, it will maximize profits by choosing the point on the
demand curve where

Ans-price elasticity is unit elastic

Resources are divided into the following broad categories

Ans-Natural resources, labor, capital, and entrepreneurial ability

The income effect of an increase in the price of potatoes (an inferior good) is
a

Ans-decrease in the quantity demanded of potatoes

 
Which of the following is true regarding Gross Domestic Product?

Ans-it can be measured either from total spending or total expenditure.

For an equilibrium interest rate of 5%, an increase in the money supply other
factors taken constant will most likely

Ans-Decrease the interest rate below 5%

The value of intermediate goods that are sold is

Ans-Not added to GDP

John spends exactly the same rupee amount on chocolates each week,
regardless of their price John’s demand curve for chocolates is

Ans-unit elastic

if the loss minimizing output for a perfectly competitive firm is zero then at
all other output levels

Ans- total revenue is less than total cost

The automobile industry is

ans-an oligopoly due to heavy…..

Which one of the following actions will not increase GDP?

Ans-An installer of an automobile tyre punctures the cars tyres parked near
his neighbourhood

Which of the following statement/s Is/are correct?

1. a) Economic information is usually scarce and cosy to acquire

2. b) Economic information is usually not required for rational decision
making
Ans- A is correct, b is false

When break even point is 2000 units, selling price per unit Rs 14 and
variable cost is rs. 8, find out fixed cost

Ans- 12000

The base year for a price index is the year

Ans-that serves as a reference point

Which of the following could be true of perfect competition but not of

monopoly?
Ans-There are no barriers to entry.

If a firm is producing at an output where the total revenue curve crosses the
total cost curve

Ans- revenue is maximized

The law of demand states that

Ans-price and quantity demand are inversely related to each other, other
factors being constant

Macroeconomics deals with

Ans-economic aggregates

The demand for products from monopolistic competition is elastic due to:

Ans- large number of buyers

Which one of the following characterizes a perfectly competitive market?

Ans- perfect product information available to buyers

 
If rice is a normal good, then the income effect of a price change means that

Ans- if income increases, demand for rice shifts rightward

In the short run, a monopolistically competitive firm is

Ans-not guaranteed any level of economic profit

In the context of circular flow of income and expenditure which of the

following statements is not correct?

Ans- firms sells factors of production to households

If the marginal propensity to Consume (MPC) 0.75, a decrease in net taxes

of Rs. 100 billion will increase he equilibrium level of real GDP

Ans- $400 Billion

anticipated inflation

ans- causes fewer problem than unanticipated

if the marginal propensity to save MPS is 0.2 and the government purchases
decrease by 5000
ans-dcerease by 25000

As output expands, the slope of the average total cost curve

Ans- is first negative and then positive

Natural monopolies form when

Ans- long-run average cost declines as a firm expands output

Which of the following would not be included in GDP as a form of

consumption spending?

ans -Ann prepares Tim’s income tax return.

All of the following are true of a perfectly competitive firm in long-run

equilibrium except one. Which is the exception

Ans- Marginal cost is minimized

-If the managers of a theater plan to raise ticket prices to increase ticket
revenue then they must believe that demand is

Ans- inelastic
 

cost-push inflation is typically depicted graphically as an

Ans-inward shift of aggregate supply and demand

Dunng inflationary times, which of the following is unlikely to happen?

Ans-People are willing to lend money for longer periods

Statement A firm in monopolistic competition are not producing at minimum

average cost,

Statement B statement a firms in monopolistic competition have excess

capacity

Ans- Both A and B is true

For a renter, the income effect of an increase in apartment rents will:

ans-have a greater impact than the income effect of an increase in the price
of a chewing gum.

An increase in the interest rate, other things taken as constant, will

Ans- increase the quantity of loanable funds supplied

 

Economists classify all of the following as capital, except one. Which one is
not capital?

ans- a $20 bill in a firm’s petty cash drawer

Transfer payments are

Ans-not included in GDP because they do not represent payments for

currently produced goods or services.

Suppose sales of Maruti Brezza increases with an increase in the price of

Hyundai Venue. Which one of the following options best explain the
situation?

Ans- the substitution effect

if the inflation rate is 5 percent and you receive a wage increase of 5

percent.

Ans- your nominal income increases by 5 percent but your real Income is
unchanged

If the cigarette sellers in the tobacco industry formed a cartel and decided to
set price along a straight line downward sloping demand curve, which point
would they choose if they want to gain the highest total revenue?
Ans-The point which MR is equal to MC.

Which one of the following is true about the MC curve?

Ans- it intersects both the AVC and ATC at their minimum points

Movements along the demand curve are called changes in

Ans- quantity demanded

In economics, ‘capital’ refers to

Ans-machines, buildings, tools and knowledge

The demand curve a monopolist’s faces

Ans-downward sloping market/inelastic demand curve

Microsoft Edge closed unexpectedly.

Ans-is the inelastic demand curve

A monopolistic competitor’s demand curve is

Ans-more elastic than a monopolist but less elastic than a perfect competitor

Which one of the following is most likely to be a fixed resource for the
Speedy Word Processing and Resume Company?

Ans- computer terminals

The automobile industry is

Ans- an oligopoly due to heavy Investment in plant and machinery and R&D.

The four components of GDP as per expenditure approach are

Ans-Investment, government purchases consumption and net exports.

The defining characteristic of oligopoly is that each firm

Ans- its mutually interdependent

The total revenue from selling trucks is equal to

Ans-the price of a truck times the quantity sold

 
staement A: money income is simply the number of rupees received per
period. Statement B: change in price level keeps the money income constant
but may increase or decrease income.

Ans- Both A and B is correct

slow-moving and non moving items of inventories, other than stock of

finished goods and merchandise, is described as

Ans- non current asset

Suppose you received a 3 percent increase in your nominal wage. Over the
year, inflation ran about 6 percent. Which of the following is true

Ans-Your real wage fell

A decrease in the interest rate will

Ans- increase the quantity of money people want to hold

which one of the following commodities has the highest elasticity of demand

Ans-tea

 
Which of the following is most likely produced in a monopolistically
competitive market

Ans-oranges

GDP of India denotes

Ans-the market value of all final goods and services produced during a year
in india regardless of who owns the resources

If a firm is experiencing diminishing marginal returns to labor which one of

the following must be true?

Ans-The positive effect of specialization in production is being offset by the

negative effect of crowding of inputs

The total revenue from selling trucks is equal to

Ans- the price of a truck times the quantity sold

The immediate effect on GDP of Ibrahim’s purchase of a government bond is

Ans- nonexistent since no real goods and services have been produced

The reason economists assume that firms try to maximize economic profits
Ans-if over time firms that don’t earns profits would face difficulty in bearing
the variable

If equilibrium real GDP demanded rises from $4 trillion to $6 trillion when

government purchases increase by $1 trilion, how large is the marginal
propensity to consume

Ans-0.5

If the marginal cost is greater than the average cost then

Ans-the average cost is increasing

If the marginal cost is less than the average cost then

Ans-the average variable cost is below marginal cost

If the Indian economy is already producing at its potential, the spending

multiplier in the long-run

Ans-zero

Average revenue for a perfectly competitive firm is equal to

Ans-total revenue/marginal revenue

The government imposed a price floor above the market price of the milk
which would increase consumers’ expenditure on milk

Ans-demand is inelastic

in the context of national income accounting depreciation

Ans-is the loss a value of capital assets

Which of the following can increase real GDP per person?

Ans- all of these

Inputs that can be increased or decreased in the short run are called

Ans-variable inputs

The ToysForU an Indian Toy Company can produce 500 water pistol for a
total cost of Rs.1 of Rs.3,000, but it would have costs of Rs.200 even if it
produced no water pistols. Which o
Ans-Total cost is increasing at a decreasing rate.

Which one of the following is a constant elasticity supply curve?

Ans- supply curve passing through the origin

Which is the best method of computing National Income?

Ans- Combination of all these methods.

The demand curve faced by a perfectly competitive firm

Ans- is perfectly elastic

if the GDP price index is 150 and nominal GDP is Rs.9,000 billion, then real
GDP is

Ans-6000 Billion

Which if the following is most likely to be a fixed resource for the Speedy
Word Processing & Resume Company?

Ans-Computer terminals

 
Which of the following would be included in GDP?

Ans-payment of the monthly telephone bill by Mr. Laconic

Economics is the study of

Ans- how people use limited resources to satisfy their unlimited wants

Accounting profit is

Ans-never less than economic profit

For a non-price discriminating monopolist, an economic profit is maximized in

the short run at a price of Rs 140 Marginal revenue at that output level is

Ans-less than RS 140

In the case of a normal good, an increase in consumers’ incomes would shift

the

Ans-demand curve outward

If the manager of a theater plan to raise ticket prices to increase the revenue
then they must believe that demand is
Ans-inelastic

A characteristic of monopolistic competition is:

Ans-High barriers to entry and exit

The demand curve facing Imelda’s Shoe Boutique, a monopolistically

competitive firm

Ans-slopes downward because Imelda’s sells a differentiated product

Which of the following is NOT a cause of inflation?

Ans-Increase in demand for goods/products and services

On a graph of production costs, the vertical distance between the fixed cost
curve and the total cost curve at a specific quantity represents

Ans-average variable cost

Other things remaining constant, the quantity of money demanded varies

Ans-inversely with the market interest rate

 
A brand name may contribute to oligopolists’ economic profit by

Ans-acting as a barrier to entry

Which of the following is not considered a barrier to entry?

diseconomies of scale

In a perfectly competitive industry we are likely to find

Ans-firms that do not advertise

Firms in a perfectly competitive market have no control over

Ans- what price to charge

Which one of the following is most likely to be the price inelastic demand?

Ans-all of these

Government purchases are assumed to be autonomous because they are

Ans-independent of the level real GDP

 
Natural monopolies form when

Ans-long-run average cost declines as a firm expands output

Which of the following is a component of aggregate demand?

Ans- purchases by government

A firm practising price discrimination will be

Ans- charging different prices for a product in different market

If the Indian economy is operating at less than the potential GDP an increase
in the money supply in the short run will lead to

Ans- demand side inflation

Along a demand curve, real income is assumed to be constant

Ans-always false

A Monopolist

Ans- can charge whatever price it wants

 

If Joe says that nothing comes close to a Pepsi, his demand for Pepsi is likely
to be

Ans-relatively price inelastic

if the price of Pepsi-Cola increases from Rs. 5 to Rs. 6 per can and the
quantity demanded decreases from 100 cans to 50 cans, then the demand is

Ans-more elastic

An increase in a person’s real wage necessarily means

Ans-greater purchasing power

Which one of the following commodities has the lowest elasticity of demand?

Ans-salt

The quantity theory of money states that in the long run

Ans-an increase in nominal money supply will cause a proportionate increase

in the price level

 
In the circular flow of income and expenditure

Ans- inspections are equal to leakages

The circular flow of income shows the relationship between

Ans- government, firms, households, foriegn sector

Markets reduce transactions costs

Ans-by decreasing the time spent on searching for information about goods
and services

Given the availability of California oranges, demand for Florida oranges will

Ans-be more elastic than if there were no California oranges

In times of rapid inflation,

Ans-money loses its use as a medium of exchange

The demand curve facing a monopolist

Ans-lies above its marginal revenue curve

 

The law of demand assumes that as the price of a good increases,

Ans-consumers tend to shift their purchases to relatively cheaper substitute

If the cross elasticity of demand between product X and product Y is negative

then

Ans-X and Y are complementary goods

What do monopolistic competition, pure monopoly, and perfect competition

have in common?

Ans-the rule of profit maximization

Which of the following is a feature that monopolistic competition and

oligopoly have in common?

Ans-extensive advertising to differentiate products.

For perfectly competitive firms, the relationship been the market price (P),
average revenue (AR), and Marginal revenue (MR) is-

Ans- P=AR=MR

 
An increase in the interest rate will

Ans- decrease investment regardless of whether firms have to borrow money

to make an investment

If marginal benefit is greater than marginal cost, a rational choice Involves:

Ans- more of the activity

Which of the following is correct?

Ans- Expansionary gap is the excess of actual GDP over potential GDP and
government adopts a contractionary fiscal policy to address the issue

Monopolistic competition is best described as

Ans- many firms with some control over price and some product
differentiation

Transaction of financial assets (shares, stocks etc) cause

Ans-Do not affect the national income

If the IMT administration raises the tuition fees of our students in order to
increase revenue, it will
ANS-be successful it demand is inelastic

Which one of the following would an economist consider as a capital?

Ans-a lawyer’s personal computer

An example of an uncontrollable resource that contributes to diseconomies of

scale for a move theater Is

Ans-public roads congested with traffic

As wants are unlimited but resources are scarce

Ans- people must make choices

For luxury goods income elasticity is

Ans- greater than one

The demand curve faced by a firm will be more elastic if

Ans- More the substitutes for its product

 
Which one of the following statement about price elasticity of demand is NOT
true?

Ans-Higher the proportion of consumer’s budget spent on a good, the lower

the value of price elasticity

Statement A an increase in the price of pizza, other things constant,

increases the opportunity cost of pizza

Statement B Because of higher opportunity cost of pizza consumers will

reduce demand for other goods and increase the quantity demanded of pizza

Ans-Statement As correct but statement B is not correct

If the low GDP growth rate of India is attributed to the country’s monetary
policy then we should observe that the country’s money supply

Ans-had decreased and interest rates had increased

If the price of a haircut (a normal good) increases, other things constant, the

Ans-quantity demanded of haircuts decreases

Two heavy equipment manufacturers might collude in an effort to do all of

the following except one. Which is the exception?
Ans-take advantage of the legal benefits that cartels receive

The effect of a change in net taxes on the quantity of real GDP demanded
equals the resulting shift in the consumption function times

Ans-the autonomous net tax multiplier

In the real world, quantity demand is not likely to be perfectly inelastic

because

Ans-then supplier could charge any prices which the consumers will be
unable to afford

A cartel’s profit-maximizing quantity occurs where the cartel’s

Ans-marginal cost equals marginal revenue

For a monopolist, marginal revenue is

Ans-less than the price

Which of the following statement regarding the basic economic problem of

scarcity correct?
Ans-The problems will exist as long as resources are available in limited
amounts

Which of the following actions is an example of expansionary fiscal policy?

Ans- decrease in the income tax rates

As output expands, the slope of the average total cost curve

Ans-is first negative and then positive

Which of the following is the best example of an investment as defined by

economists?

Ans-firm buying personal computers for its secretarial staff

A perfectly competitive firm that earns an economic profit in the short run
choose the output that

Ans-maximizes total revenue

The marginal cost curve intersects the average total cost curve (ATC)

Ans- at the ATC’s minimum point

 

GDP does not include the

Ans-value of all transactions in the economy during given period

in double-entry GDP accounting

Ans-the value of output produced must equal the value of resource payments
generated in producing that output

A Family Travel Agency is a monopolistic competitor who offers services that

are differentiated from the services of other producers in the industry

Ans-has some power to control the price charges

A perfectly competitive firm is

Ans-price taker and hence cannot determine price but can determine the
amount of..

(a) ____expresses quantity theory of money and

(b) ____denotes the value of simple spending multiplier?

Ans- (a) MV= PY (b) 1/1- MPC

 

GDP is a poor measure of social well-being because

Ans-the value of leisure time is not counted in GDP

If the income elasticity for product X is positive but less than one then it is a

Ans-superior product and a necessity

A firm facing constant Input prices, increasing marginal returns

Ans-can occur due to specialization and division of labor

Golden rule of profit maximization says that a profit maximizing firm

produces

Ans-where marginal revenue equals marginal cost provided marginal cost

cuts marginal revenue from below

The steeper the short-run aggregate supply curve,

Ans-the impact of a shift in the aggregate demand curve will be less on real
GDP

 
If Marginal Propensity to consume (MPC) is 0.8 and the government
purchases increase by

Ans-Increase by Rs. 25,000

Rhonda sets a house she has owned for 15 years. To make it more
marketable, she buys…..

Ans-the sale price of the wallpaper and carpet cost along with the installation
fee for

The additional output obtained by adding another unit of labor to the

production process is

Ans-the marginal product of labor

Which one of the following is not considered as a natural monopoly

Ans-the automobile industry

Which one of the following statement about the market is not true?

Ans- All markets provide the same amounts of information

Fiscal policy refers to the regulation of

Ans-spending and taxing policies used by the government to influence the
economy

Because resources are scarce,

Ans-people must make choices among alternative

An intersection point known as Four Comers lies 300 kn from the nearest
town. Al this inter one small pharmacy. Which of the following is true?

Ans- The gas stations are oligopolists, the pharmacy is a monopolist.

Which of the following is most likely to be a fixed resource for the City
Slicker’s Dude Ranch?

Ans -The lodge where the guests stay

Suppose art n barf restaurant

Pay the higher rent and leave menu prices unchanged

The GDP price index is the ratio of

Nominal GDP to real GDP multiplied by 100

 

Economists believe that

Concern for the welfare of others is consistent with the concept of self
interest

Which of the following is most likely produced in a monopolistic competitive

market

Detergents

If a monopolistically competitive firm raises its price, it

Loses some, but not all, of its customers

A monopolistic competitive firm can raise price somewhat due to

Product differentiation

Not correct about monopolistic competition in the long run

Aggregate market demand remains the same

Best illustrates the use of discretionary fiscal policy

Income tax receipts

The barometric price leadership model

It has better industry

Economic resources are scarce and needs

Unlimited

Equilibrium interest rates is determined by

Both supply and demand for money

Price skimming

Only b is true

Monopolistically competitive market in the long run

Not a long run concept of production analysis

Returns to scale

Demand for fashion items is governed by effect

Brand

For inferior goods income elasticity is

Negative

Problem with the marginal concept is

Outflow and inflow of resources may not be equal

Multiple models of pricing behaviour in oligopolistic market because

It is difficult to predict

A firm emerges as a leader in an oligopoly market

Presence in all segment

A collusion is tacit when

Firms do not document

Market demand curve is given by Qd=15-8P

1.5

Price of apples falls by 5%

Inelastic

The division of tax burden depends

A true b false

In short run

Labour is variable

Inflation is generally high with

All of the above

Negative elasticity cross price elasticity

Complements

Price of pizza falls while the price of burger remains

Substitution effect

The reason for interdependence of oligopoly is

Similar product being sold by few firm

Feature of monopolistic market is

No government intervension

Four sector economy,national economy

Y=c+i+g+x-m

The demand curve a monopoly faces

Is not affected by the prices of complements

Firms in monopolistic competition do not produce at minimum average cost

Monopolistic competitive demand curve is

More elastic than a monopolist

Higher the isoquant volume of output

Greater

Negative left parallel shift in demand curve

Price increases

Marginal cost rises rapidly

Total cost is minimum when average cost is zero

Exception on tools of fiscal policy

Transfer payment

Production function explains

Relationship between quantities of physical input and quantities of output of

goods

Brinda Pharma

Marginal revenue is positive

Fiscal deficit not correct

Fiscal deficit denotes

Cost push inflation is typically depicted graphically as on

Inward shift of supply curve

Model of circular flow of income and expenditure

-infections are equal to leakages

Sertile corporation

Normal goods

Fixed cost is also called overhead cost