Economics Test 7

Total Questions: 51

1 - Who among the following is most benefited from inflation?

A ) Government pensioners
B ) Creditors
C ) Savings Bank Account holders
D ) Debtors ✅

2 - Which of the following groups suffer the most from inflation?

A ) Debtors
B ) Creditors ✅
C ) Business class
D ) Holders of real assets

3 - Inflation implies

A ) Rise in budget deficit
B ) Rise in money supply
C ) Rise in general price index ✅
D ) Rise in prices of consumer goods

4 - The situation with increasing unemployment and inflation is termed as:

A ) Hyperinflation
B ) Galloping inflation
C ) Stagflation ✅
D ) Reflection

5 - Which of the following factors contributes to an inflationary trend?

A ) 15% fall in production of industrial goods
B ) 15% increase in prices of agricultural products
C ) 15% increase in supply of money in the market? ✅
D ) None of these

6 - Which of the following can be used for check inflation temporarily?

A ) Increased in wages
B ) Decrease in money supply
C ) Decrease in tax ✅
D ) None of these

7 - An essential attribute of inflation is:

A ) Fall in production
B ) Increase in prices ✅
C ) Absence of black market
D ) Presence of black market

8 - The best means of saving during inflation is to keep:

A ) Money ✅
B ) Government Bonds
C ) Equity
D ) Time deposits with Banks

9 - The period of high inflation and low economic growth is termed as:

A ) Stagnation
B ) Take-off stage in economy
C ) Stagflation ✅
D ) None of these

10 - Stagflation implies a case of:

A ) Galloping inflation
B ) Recession plus inflation ✅
C ) Adverse balance of trade
D ) Rising wages and employment

13 - Among the remedies of inflation we cannot include:

A ) Better capacity utilization
B ) Lowering bank rate ✅
C ) Reducing budgetary deficit
D ) An efficient public distribution system

15 - Inflationary Gap is a situation characterized by:

A ) Exceed of Aggregate Demand over Aggregative Supply at the full employment level ✅
B ) Gap between galloping Inflation and Runaway Inflation
C ) Inflation coupled with recession
D ) Inflation that usually prevails in a developing country

16 - Inflation is caused as a result of:

A ) Increase in money supply
B ) Fall in production
C ) Increase in money supply without a corresponding increase in production ✅
D ) Decrease in money supply without a corresponding decrease in production

17 - Which of the following accounts for Cost-push Inflation?

A ) Increase in money supply
B ) Increase in indirect taxation ✅
C ) Increase in population
D ) Increase in non-plan expenditure

18 - 'Devaluation' means:

A ) Converting rupee into gold
B ) Lowering of the value of one currency in comparison of some foreign currency ✅
C ) Making rupee dearer in comparison to some foreign currency
D ) None of these

19 - Monetary policy is regulated by:

A ) Money lenders
B ) Central Bank ✅
C ) Private entrepreneurs
D ) Government policy

20 - Black money is:

A ) Counterfeit currency
B ) Illegally earned money
C ) Money earned through underhand deals
D ) Income on which payment of tax is usually evaded ✅

21 - Hard currency is defined as currency:

A ) Which can hardly be used for international transactions
B ) Which is used in times of war
C ) Which loses its value very fast
D ) Traded in foreign exchange market for which demand is persistently relative to the supply ✅

22 - That the World Trade Organization (WTO) is a force or a flop will depend not on its merits or demerits as a viable effective structure but o

A ) Educating public opinion in member countries
B ) Introduction of the idea of sustainable development in relation to the optimal use of world's resource
C ) Securing a better share of growth in international trade for developing countries ✅
D ) The political will of the member nations

23 - Debenture is a

A ) Certificate issued by a Company promising the payment of a specified amount at a fixed rate of interest after a specified period promising the ✅
B ) Certificate for the investment in shares
C ) Certificate for the preference share
D ) Dividend warrant

24 - Which of the following is regarded as a factor of production?

A ) Capital ✅
B ) Interest
C ) Profit
D ) Rent

25 - Which source of finance cannot be used by a private company!

A ) A bank loan
B ) A bank overdraft
C ) An issue of shares on the Stick Exchange ✅
D ) Retained profits

26 - The demand for a good is totally inelastic with regard to price. What will happen to spending on the product,if the price rises by 20%?

A ) It will fall by 20%
B ) It will fall to zero.
C ) It will remain unchanged
D ) It will rise by 20%. ✅

27 - The term 'real wage' means the money wage

A ) After tax
B ) Allowing for change in prices. ✅
C ) Plus benefits in kind.
D ) Plus overtime payments.

29 - What is most likely to increase the level of savings in a country?

A ) A fall in income
B ) A rise in interest rates ✅
C ) Fewer tax-free saving schemes
D ) Greater availability of consumer goods

30 - What will be likely to cause inflation in an economy?

A ) A decrease in the cost of production
B ) A decrease in total expenditure
C ) An increase in productivity
D ) An increase in the average wage level ✅

31 - What must result if a firm expands it's output in the short run?

A ) Average fixed costs will fall. ✅
B ) Average total costs will fall.
C ) Average variable costs will fall.
D ) Total costs will fall.

32 - What describes a regressive tax?

A ) It is paid by a higher proportion of high income earners.
B ) It is paid by a higher proportion of low income earners.
C ) It takes a higher proportion from high incomes.
D ) It takes a higher proportion from low incomes. ✅

33 - Which of the following must always balance?

A ) The balance of visible trade
B ) The balance of invisible trade
C ) The balance on the current account
D ) The balance of payments ✅

34 - What is most likely to happen if Taiwan builds a factory, which becomes profitable,in the Czech Republic?

A ) Taiwan's invisible earnings will increase ✅
B ) Taiwan's visible imports will decrease
C ) The Czech invisible trade balance will improve
D ) The Czech terms of trade will improve.

35 - Which of the following is the most obvious sign of inflation?

A ) An increase in imports
B ) A rise in the national debt
C ) A rise in the rate of interest
D ) A rise in retail prices ✅

36 - What will happen if there is a fall in the death rate while the birth rate and migration remain unchanged?

A ) Population structure will remain the same
B ) Population will increase ✅
C ) The standard of living will increase
D ) There will be Change in the proportion of men to women.

37 - Which measures, taken by a government, would be intended to raise the price of imports?

A ) Embargoes
B ) Foreign exchange controls
C ) Quotas
D ) Tariffs ✅

38 - Which function is performed by both commercial banks and central banks?

A ) Acting as bankers to the government
B ) Advising the government on monetary policy
C ) Dealing in foreign exchange ✅
D ) Fixing the main interest rate

39 - A claim for higher wages would not be helped by an increase in

A ) Consumers demand
B ) Labour productivity
C ) Profit
D ) Unemployment ✅

40 - Which situation will a country face,if the birth rate falls sharply,while the death rate remains unchanged?

A ) A fall in living standards
B ) A more youthful population
C ) An ageing population ✅
D ) An increase in population

41 - What is likely to be higher in a developing country,such as Zimbabwe than in a developed country,such as Switzerland?

A ) Birth rate ✅
B ) GDP per head
C ) Life expectancy
D ) Net investment per head

42 - Which condition,found in a developing country,might contribute to its debt problem?

A ) It has a high level of savings.
B ) It has a highly developed infrastructure
C ) It has exports which are low in value. ✅
D ) It has highly levels of capital investment.

43 - Which of the following would not be a reason for imposing tariffs on imported goods?

A ) To encourage self-sufficiency
B ) To protect a growing domestic industry
C ) To raise government revenue
D ) To raise the general price level within the economy ✅

45 - What would reduce the role of central planning in an economy?

A ) Increasing government spending
B ) Increasing public ownership of firms
C ) Increasing the role of markets ✅
D ) Removing the profit motive

46 - What can a government do to increase demand in its economy?

A ) Budget for a surplus
B ) Cut taxes ✅
C ) Encourage savings
D ) Reduce its expenditure

47 - What does price elasticity of demand measure?

A ) Changes in Price caused by changes in demand
B ) The rate of change of sales
C ) The responsiveness of demand to price changes ✅
D ) The value of sales at a giv n price

48 - Which economic term describes the takeover of one textile manufacturer by another?

A ) Diversification
B ) Horizontal integration ✅
C ) Monopoly
D ) Vertical integration

49 - Which of the following is an example of government policy that could reduces inflation?

A ) Increasing bank lending
B ) Increasing import duties
C ) Reducing government expenditures ✅
D ) Reducing direct taxation

50 - The currencies of various South East Asian countries fall sharply against the US Dollar. What could help to stop this fall?

A ) An increased inflow of foreign investment
B ) Increased government spending
C ) Lower income tax
D ) Lower interest rates

51 - To what does the phrase 'terms of trade' refer?

A ) The currency exchange rate
B ) The difference between the value of visible exports and visible imports
C ) The government policies to increase exports
D ) The rate at which exports are exchanged for imports ✅