Business Economics MCQs

Multiple Choice Questions 27 Pages

Savitribai Phule Pune University

Bachelor of Business Administration

PLB

Contributed by

Parvez Lal Banik

Subject: Business Economics (Macro)-305 CLASS: SYBBA III SEM (2013 PATTERN)

Question Bank - Multiple Choice Questions (MCQs)

Unit: 1 Basic concepts of Macro economics

1) Who is credited with bringing the term "the invisible hand" in economics?
a) Adam Smith
b) John Maynard Keynes
c) F. Hayek
d) Samuelson

2) Macroeconomics as a separate branch came to be studied after the contributions of which
economist?
a) Adam Smith
b) John Maynard Keynes
c) F. Hayek
d) Samuelson

3) When did the Great Depression hit the United States?
a) 2007
b) 1929
c) 1936
d) 2001

4) Consider the following statements:
1. In a Capitalist economy there is private ownership of means of production
2. In a communist nation, the means of production are owned by the State
3. In a free-market economy there is minimum role of the Government

Which of the above 3 statement is/are true?

a) Only 1 and 3
b) Only 2 and 3
c) Only 3
d) All are true

5) Macroeconomics is a study of economics that deals with which 4 major factors:
a) households, firms, government, and demand-supply
b) households, firms, government and external sector
c) firms, government, free-market, and regulations
d) none of the above

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Subject: Business Economics (Macro)-305 CLASS: SYBBA III SEM (2013 PATTERN)

6) What are consumption goods?

a) Goods used for consumption in the production process
b) Goods such as tools, machinery, etc which are used to create final consumption goods
c) Goods and services that are consumed fully when purchased by the consumers
d) None of the above

7) What are Capital goods?
a) Goods used for consumption in the production process
b) Goods such as tools, machinery, etc which are used to create final consumer goods
c) Goods and services that are consumed fully when purchased by the consumers
d) None of the above

8) Intermediate goods are not included to calculate the final output because:
a) they do not have value
b) they have unknown value
c) their value is included in final goods so they are not added to avoid the problem of double
counting
d) none of the above

9) What does the term Gross investment mean while denoting a nation's economy?
a) Gross investment= Net investment + Depreciation
b) Gross investment= Net investment - Depreciation
c) Gross investment= Depreciation - Net investment
d) None of the above

10) What does the term free-market denote in terms of economy?
a) Minimal government intervention in trade and minimum regulations
b) Maximum government intervention in trade and maximum regulations
c) Means of production owned by the state
d) None of the above

11) ___________economics can study the problem of Inflation in the country.
a) Micro
b) Macro
c) Static
d) Dynamic

12) The credit of development of macroeconomic approach must go to ________.
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Subject: Business Economics (Macro)-305 CLASS: SYBBA III SEM (2013 PATTERN)

a) Dr. Marshall
b) Prof. Pigou
c) Lord Keynes
d) Mrs. Joan Robinson)

13) Macroeconomics does not study _________.
a) whole economy
b) national income
c) aggregate supply
d) product pricing)

14) _________ is the subject matter of Macroeconomics.
a) Growth theory
b) Factory Pricing
c) Market Structure
d) Individual Incomes

15) Micro and Macro approaches are ________.
a) Competitive
b) Alternative
c) Substitutes
d) Complementary
State the following statements are true or false:

16) Increase in national income is a Micro- Economic goal.
True / False

17) Macro-Economic adopts lumping method.
True / False

18) Study of price determination is a subject matter of Macro-Economics.
True / False

19) Micro-Economics deals with the study of aggregates.
True / False

20) For economists, statements about the world are of two types:
a) Assumptions and theories
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Subject: Business Economics (Macro)-305 CLASS: SYBBA III SEM (2013 PATTERN)

b) Positive statements and negative statements
c) Positive statements and normative statements
d) Specific statements and general statements

21) The opportunity cost of going to university is:
a) The total spent on food, clothing, books, transportation, tuition, lodging and other
expenses
b) Zero for students who are fortunate enough to have all of their university expenses paid
by someone else
c) Zero, since a university education will allow a student to earn a higher income after
graduation
d) The value of the best opportunity a student gives up to attend university

22) In a market economy:
a) Households decide which firms to work for and what to buy with their incomes
b) Profit and self-interest guide the decisions of firms and households
c) Firms decide whom to hire and what to produced.
d) All of the above are true

23) Statistics such as GDP, the unemployment rate, the rate of inflation and the trade balance
are:
a) Macro, since they tell us something about the entire economy
b) Neither macro nor micro, but properly in the realm of political science
c) Both micro and macro
d) Micro, since they affect individual households and firms

24) What do you mean by a mixed economy?
a) Modern and traditional industries
b) Public and private sectors
c) Foreign and domestic investments
d) Commercial and subsistence farming

25) “Capitalism” refers to?
a) The use of market
b) Government ownership of capital
c) Private ownership of capital goods
d) Private ownership of homes & cars

26) In Economics, a good is something which,
a) Is a service
b) Can be a service
c) Appears appealing
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Subject: Business Economics (Macro)-305 CLASS: SYBBA III SEM (2013 PATTERN)

d) Satisfies wants and needs

27) The basic factors of production are land, labour, capital and,
a) Enterprise
b) Investment
c) Machinery
d) Resources

28) Macroeconomics became popular after-------------
a) Great depression of 1929- 33
b) 1972-73
c) 1996- 97
d) 2006- 07

29) The term ‘macro’ has been derived from--------------
a) Greek word ‘makros’ which means large
b) English word ‘makros’ which means large
c) Greek word ‘makros’ which means small
d) French word ‘makros’ which means large

30) In macroeconomics, we study about ------------------
a) Theory of National Income & Employment
b) Theory of Money Supply & Price Level
c) Theory of International Trade & Eco growth
d) All of the above.

31) Which of the following is/are the goals of macroeconomics-----------?
a) To Achieve Higher Level of GDP
b) To Achieve Higher Level of Employment
c) Stability of Prices
d) all the above

32) The study of groups and broad aggregates of the economy is known as-----------
a) Microeconomics
b) Macroeconomics
c) International Economics
d) None of the above.

State the following statements are true or false:
33) The term microeconomics and macroeconomics were first given by Ragner Frisch in 1933.
True / False

34) Prof. J.M. Keynes is known as father of modern macroeconomics.
True / False

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Subject: Business Economics (Macro)-305 CLASS: SYBBA III SEM (2013 PATTERN)

35) Macroeconomics became popular after great depression of 1929- 33.
True / False

36) Prof. J. M. Keynes wrote the book General Theory of Employment, Interest and Money in
1936.
True / False

37) Price is the main determinant of macroeconomics.
True / False

38) Income is the main determinant of microeconomics.
True / False

39) Partial equilibrium analysis is used in microeconomics.
True / False

40) General equilibrium analysis is applied in microeconomics.
True / False

41) Keynesians believe in free- market economy.
True / False

42) Microeconomics and macroeconomics are independent to each other.
True / False

Unit 1 Answer Keys
1-a
2-b
3-b
4-d
5-b
6-c
7-b
8-c
9-a
10-a
11-b
12-c
13-d
14-a
15-d
16-F
17-T
18-F
19-T
20-c
21-d
22-d
23-a
24-b
25-c
26-d
27-a
28-a
29-a
30-d
31-d
32-b
33-T
34-T
35-T
36-T
37-F
38-F
39-T
40-F
41-F
42-F

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Subject: Business Economics (Macro)-305 CLASS: SYBBA III SEM (2013 PATTERN)

Unit: 2 National Income accounting

1) The average income of a country is called
a) Per capita income
b) Disposable income
c) Inflation rate
d) Real national income

2) The value of NNP at production point is called
a) NNP at factor cost
b) NNP at market price
c) GNP at market price
d) GNP at factor cost

3) The value of NNP at consumer point is called the
a) NNP at factor cost
b) NNP at market price
c) GNP at market price
d) GNP at factor cost

4) When depreciation is deducted from GNP, the net value is
a) Net national product (NNP)
b) Net domestic product
c) Gross national product
d) Disposable income

5) Consider the following statements and identify the right ones.
i. While calculating GNP, income generated by foreigners in a country is taken into
consideration
ii. While calculating GNP, income generated by nationals of a country outside the country is
taken into account

a) i only
b) ii only
c) both
d) none

6) What is the net value of GDP after deducting depreciation from GDP(Gross domestic product)?
a) Net national product
b) Net domestic product
c) Gross national product
d) Disposable income

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Subject: Business Economics (Macro)-305 CLASS: SYBBA III SEM (2013 PATTERN)

7) Consider the following statements and identify the right ones.

i. National income is the monetary value of all final goods and services produced.
ii. Depreciation is deducted from gross value to get the net value

a) i only
b) ii only
c) both
d) none

8) Which of the following is considered as financial year in India?
a) April 1 to March 31
b) January 1 to December 31
c) March 1 to April 30
d) March 16 to March 15

9) Which is not added in the calculation of national income of India?
a) The value of goods and services
b) The sold value of the old fridge
c) Services rendered by the housewives
d) Both [B] & [C]

10) Which sector contributes the most to India's economy in terms of GDP?
a) Service sector
b) Manufacturing sector
c) Agricultural sector
d) Small scale industries

11) Which Ministry is responsible for calculating GDP in India?
a) Ministry of Finance
b) Ministry of Commerce and Industry
c) Ministry of Central Statistical and Program Implementation (Central statistical organization)
d) Ministry of consumer Affairs

12) Which statement is true?
a) National Expenditure = National income
b) National Expenditure = National income + National savings
c) National Expenditure = National income + Taxes
d) National Expenditure = National income – Taxes

13) Which statement is true?
a) National Income = National expenditure - indirect taxes
b) NI = GNP - NNP
c) NI = NNP - indirect taxes (because, from NNP if we minus the indirect taxes it will give us
NNP@FC which is equal to NI)
d) NI = PI

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Subject: Business Economics (Macro)-305 CLASS: SYBBA III SEM (2013 PATTERN)

14) There are methods of measuring national income:
a) 5
b) 2
c) 1
d) 3

15) If we compare GDP and GNP, then:
a) GNP = GDP - net income from abroad
b) GNP = GDP + net income from abroad (R-P) ……. GDP+(R-P)
c) GNP = NNP - net income from abroad
d) GNP = NNP + net income from abroad

16) Select the correct statement:
a) Transfer payment are included in national income
b) Depreciation allowance is a part of GNP
c) Taxes are not included in NNP
d) GDP means Gross Direct Production

17) Which is the largest figure:
a) NNP
b) GNP
c) PI (Disposable Personal Income)
d) PI (personal income)

18) Which is a flow concept:
a) Number of my shirts
b) My total wealth
c) My monthly income
d) Money supply

19) To avoid double counting when GDP is estimated, economists:
a) Use GDP deflator
b) Calculate value added at each stage of production
c) Use retail prices
d) Use price of only intermediate goods

20) Personal income includes:
a) Direct taxes
b) Indirect taxes
c) Depreciation
d) None of these

21) Personal income includes:
a) Transfer payments
b) Indirect taxes
c) Depreciation
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Subject: Business Economics (Macro)-305 CLASS: SYBBA III SEM (2013 PATTERN)

d) All of the above

22) If savings exceed investment then:
a) National income rises
b) National income falls
c) National income is not affected
d) None of the above

23) This statement is true
a) NI = rent + interest + wages + profit
b) NI = rent + interest + wages + taxes
c) NI = Govt. expenditure + interest + wages + profit
d) NI = rent + interest + wages + pensions

24) Which Ministry is responsible for calculating GDP in India?
a) Ministry of Finance
b) Ministry of Commerce and Industry
c) Ministry of Central Statistical and Program Implementation
d) Ministry of consumer Affairs

Explanation: The work of computing the GDP is done by the Central Statistical Organization
(CSO) which is under the Ministry of Statistical and Program Implementation.

25) Which state of India currently has the highest Per Capita Income?
a) Goa
b) Delhi
c) Maharashtra
d) Punjab
26) How much does the primary sector contribute to India's GDP?
a) 26%
b) 20%
c) 53%
d) 14%
Explanation: The contribution of primary sector in India's GDP is 19.83%.

27) Which sector contributes the most to India's economy?
a) Service sector
b) Manufacturing sector
c) Agricultural sector
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Business Economics MCQs

Business Economics MCQs

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