Multiple EABD.doc

8/14/2019 Multiple EABD.doc

http://slidepdf.com/reader/full/multiple-eabddoc 1/33

http://highered.mcgraw-

hill.com/sites/0077099850/student_view0/chapter5/student_self-tests.html

Indicate below what is NOT a factor of production. Capital.

!an" loan.

•

•

• In economics the central problem is:

scarcit#.

allocation.

mone#.

consumption.

production.

http://highered.mcgraw-hill.com/sites/0077099850/student_view0/chapter5/student_self-tests.html






$and.

$a!our.

Macroeconomics deals with: the !ehaviour of the electronics industr#.

the !ehaviour of firms.

the activities of individual units.

economic aggregates.

Microeconomics is not concerned with the behaviour of: industries.

aggregate demand.

firms.

consumers.

The study of inflation is part of : descriptive economics.

microeconomics. normative economics.

macroeconomics.



Aggregate supply is the total amount: of goods and services produced in an econom#.

of products produced !# a given industr#.

of la!our supplied !# all households.

produced !# the government.

The total demand for goods and services in an economy isknown as:

gross national product.

aggregate demand.

econom#-wide demand.

national demand.

Inflation is: an increase in the overall level of economic activit#.

an increase in the overall price level.

a decrease in the overall level of economic activit#.

a decrease in the overall price level.

A recession is: a period during which aggregate output declines.





marginal

total

The concept of opportunity cost: is relevant onl# for a capitalist econom# li"e the 'nited

(tates.

suggests all our wants can !e achieved.

suggests a ma)or increase in pu!lic health-care spending

means an e&pansion in other areas will !e harder to achieve.

would !e irrelevant if we eliminated povert#.

Opportunity cost is the cost incurred in the past !efore we ma"e a decision a!out

what to do in the future.

a cost that cannot !e avoided% regardless of what is done in

the future.

that which we forgo% or give up% when we ma"e a choice or a

decision.

the additional !enefit of !u#ing an additional unit of a

product.

A graph showing all the combinations of goods and services

that can be produced if all of society#s resources are used

efficiently is a: capital consumption frontier.



production possi!ilit# curve.

circular-flow diagram.

$oren* curve.

$eriods of less than full employment correspond to: points outside the production possi!ilit# curve.

points inside the production possi!ilit# curve.

either points inside or outside the production possi!ilit#

curve. points on the production possi!ilit# curve.

The circular flow of goods and incomes shows the

relationship between:

wages and salaries. goods and services.

income and mone#.

firms and households.

In a free market system! the amount of goods and services

that any one household gets depends upon its: wage and interest income.

income and wealth.

wealth.



income.

In a planned or command economy! all the economic

decisions are taken by the: government.

consumers.

wor"ers.

voters.

%hich one of the following is a normative statement& +ne,ualit# in the distri!ution of income is a more serious

pro!lem than unemplo#ment.

+nflation is rising.

he proportion of peoples income paid in ta&es is higherunder this government than under the previous one.

he richest 0 per cent of the population has had a !igger

percentage increase in incomes over the past 0 #ears than the

poorest 0 per cent.

. n 1n,uir# into the 2ature and Causes of 3ealth of 2ations4 is the

!oo" of economist

6 dam (mith

6 arshall

6C o!!ins

6; 2one of a!ove

ns : 6



<. 1conomics is the (cience of 3ealth4 who gave this definition =

6 >. ?. ehta

6 arshall6C dam (mith

6; o!!ins

ns : 6C

@. 1conomics is what economists do.4 +t has !een supported !#

6 ichard >ones

6 Comte

6C Aunnar #rdal

6; ll of the a!ove

ns : 6;

B. uman 3elfare is the su!)ect of 1conomics.4 his statement is

associated with the name of which of the economists =

6 arshall

6 Digou

6C Denson

6; ll of the a!ove

ns : 6;

5. 3ho has given scarcit# definition of economics =

6 dam (mith

6 arshall6C o!!ins

6; o!ertson

ns : 6C



E. 1conomics is a science4 the !asis of this statement is

6 elation !etween cause and effect

6 'se of deductive method and inductive method for the formations oflaws

6C 1&periments

6; ll of the a!ove

ns : 6;

7. Characteristics of economic laws are

6 ere statements of economic tendencies

6 $ess certain

6C #pothetical

6; ll of the a!ove

ns : 6;

8. 3hich theor# is generall# included under micro economics =

6 Drice heor#

6 +ncome heor#

6C 1mplo#ment heor#

6; 2one of the a!ove

ns : 6

9. 3hose opinions have revolutionised the scope of macro economics =

6 dam (mith

6 >.. (a#6C >.. ?e#nes

6; ll of the a!ove

ns : 6C



0. 3hich of the following is an economic activit# =

6 eaching of a teacher in the school

6 o teach son at home

6C o serve her child !# mother 6; o pla# foot!all !# a student

ns : 6

. Dassive factor of production is

6 Fnl# land

6 Fnl# capital

6C oth land and capital

6; 2either land nor capital

ns : 6C

<. 'nder law of demand

6 Drice of commodit# is an independent varia!le

6 Guantit# demanded is a dependent varia!le

6C eciprocal relationship is found !etween price and ,uantit#

demanded

6; ll of the a!ove

ns : 6;

@. Hor inferior commodities% income effect is

6 Iero

6 2egative

6C +nfinite6; Dositive

ns : 6

B. 3hen total utilit# !ecomes ma&imum% then marginal utilit# will !e





6 $aw of e,ui-marginal utilit#

6 $aw of e,ui-product

6C heor# of indifference curve

6; $aw of diminishing marginal utilit#ns : 6

9. otal utilit# of a commodit# is measured !# which price of that

commodit# =

6 Jalue in use

6 Jalue in e&change

6C oth of a!ove

6; 2one of a!ove

ns : 6

<0. ccording to arshall% the !asis of consumer surplus is

6 $aw of diminishing marginal utilit#


6C $aw of proportions

6; ll of the a!ove

ns : 6

@. 1conomics is what economists do.4 +t has !een supported !#

6 ichard >ones

6 Comte

6C Aunnar #rdal

6; ll of the a!ove

ns : 6;

B. uman 3elfare is the su!)ect of 1conomics.4 his statement is

associated with the name of which of the economists =



6 arshall

6 Digou

6C Denson

6; ll of the a!ovens : 6;

5. 3ho has given scarcit# definition of economics =

6 dam (mith

6 arshall

6C o!!ins

6; o!ertson

ns : 6C

. ;eficit financing increases

6 ate of mone# inflation

6 ate of mone# deflation

6C ate of devaluation

6; ll of the a!ove

ns : 6

<. 3hich is not a monetar# measure to control inflation =

6 (oft loan polic#

6 ard credit polic#

6C ight the regulation of mone# issue

6; o reduce the ,uantit# of mone#

ns : 6

@. 3hich is the monetar# measure to control inflation =

6 +ncrease in ta&ation

6 ;ecrease in ta&ation

6C (oft credit polic#



6; ard credit polic#

ns : 6;

B. (elling of securities in the open mar"et !# the central !an" creates6 +nflation

6 ;eflation

6C oth of a!ove


ns : 6

5. o control inflation the central !an" should do

6 o sell government securities and to decrease !an" rate

6 o sell government securities and to increase !an" rate

6C o purchase government securities and to increase !an" rate

6; o purchase government securities and to decrease !an" rate

ns : 6

. 3hich of the rate is not determined !# eserve an" of +ndia =

6 an" ate6 C

6C ($

6; D$

ns : 6;

<. th Dlan ;raft ;ocument as approved !# Dlanning Commission

presents a target of BK annual growth for agriculture. Hor industr# and

service sector growth rate has !een targeted !etween

6 7 to 9K

6 8 to 0K

6C 9 to K



6; 0 to 5K

ns : 6C

. Hiscal ;eficit means

6 Du!lic 1&penditure;e!ts froms sources other than +6 Du!lic Capital 1&penditure(urplus of evenue ccount

6C Aovt. 1&penditureevenue receipts

6; Du!lic 1&penditurea& and non-ta& revenue receipts

ns : 6;

. J is imposed

6 ;irectl# on consumer

6 Fn final stage of production

6C Fn first stage of production

6; Fn all stages !etween production and final sale

ns : 6;

E. 1conomics is a science4 the !asis of this statement is

6 elation !etween cause and effect

6 'se of deductive method and inductive method for the formations oflaws

6C 1&periments

6; ll of the a!ove

ns : 6;

7. Characteristics of economic laws are

6 ere statements of economic tendencies

6 $ess certain

6C #pothetical

6; ll of the a!ove

ns : 6;



8. 3hich theor# is generall# included under micro economics =

6 Drice heor#

6 +ncome heor#6C 1mplo#ment heor#


ns : 6

9. 3hose opinions have revolutionised the scope of macro economics =

6 dam (mith

6 >.. (a#

6C >.. ?e#nes

6; ll of the a!ove

ns : 6C

0. 3hich of the following is an economic activit# =

6 eaching of a teacher in the school

6 o teach son at home

6C o serve her child !# mother

6; o pla# foot!all !# a student

ns : 6

. Dassive factor of production is

6 Fnl# land

6 Fnl# capital

6C oth land and capital6; 2either land nor capital

ns : 6C

<. 'nder law of demand



6 Drice of commodit# is an independent varia!le

6 Guantit# demanded is a dependent varia!le

6C eciprocal relationship is found !etween price and ,uantit#

demanded6; ll of the a!ove

ns : 6;

@. Hor inferior commodities% income effect is

6 Iero

6 2egative

6C +nfinite

6; Dositive

ns : 6

B. 3hen total utilit# !ecomes ma&imum% then marginal utilit# will !e

6 inimum

6 verage

6C Iero

6; 2egative

ns : 6C

5. 'tilit# means

6 Dower to satisf# a want

6 'sefulness

6C 3illingness of a person6; armfulness

ns : 6

E. arginal utilit# is e,ual to average utilit# at that time when average



utilit# is

6 +ncreasing

6 a&imum

6C Halling6; inimum

ns : 6

7. t point of satiet#% marginal utilit# is

6 Iero

6 Dositive

6C a&imum

6; 2egative

ns : 6

8. 3hich of the following is the second law of Aossen =


6 $aw of e,ui-product

6C heor# of indifference curve

6; $aw of diminishing marginal utilit#

ns : 6

9. otal utilit# of a commodit# is measured !# which price of that

commodit# =

6 Jalue in use

6 Jalue in e&change

6C oth of a!ove6; 2one of a!ove

ns : 6

<0. ccording to arshall% the !asis of consumer surplus is



6 $aw of diminishing marginal utilit#


6C $aw of proportions

6; ll of the a!ovens : 6

8. 1conomics is the stud# of

a. how societ# manages its unlimited resources.

!. how to reduce our wants until we are satisfied.

c. how societ# manages its scarce resources.

d. how to full# satisf# our unlimited wants.

e. how to avoid having to ma"e trade-offs.

<5. 3hich of the following products would !e least capa!le of

producing an e&ternalit#=

a. inoculations against disease

!. cigarettes

c. food

d. education

e. stereo e,uipment

<E. 3hich of the following situations descri!es the greatest mar"et

power=

a. (u!aruLs impact on the price of cars

!. a farmers impact on the price of corn

c. icrosofts impact on the price of des"top operating s#stems

d. a students impact on college tuition

<7. 3hich of the following statements is true a!out a mar"eteconom#=

a.3ith a large enough computer% central planners could guide production

more efficientl# than mar"ets.

!.invisi!le hand to produce outcomes that ma&imi*e social welfare.

c. he strength of a mar"et s#stem is that it tends to distri!ute



resources evenl# across consumers.

d.a&es help prices communicate costs and !enefits to producers and

consumers.

. Change in which of the following is the !est indicator of the

change in the standard of living of the people of a countr#=

6 Cost of living inde& 6 +nde& of industrial productivit#

6C Der capita income 6; 3holesale price inde&

ns : 6C

1conomicsis the

stud# of

A' production technolog#

(' consumption decisions

)' how societ# decides what% how% and for whom to produce

*' the !est wa# to run societ#

+ resource is scarce if suppl# e&ceeds demand at *ero price

A' '1

(' H$(1

, he opportunit# cost of a good is

A' the time lost in finding it

(' the ,uantit# of other goods sacrificed to get another unit of that

good

)'the e&penditure on the good

*' the loss of interest in using savings

- mar"et can accuratel# !e descri!ed as

A' a place to !u# things

(' a place to sell things





(' the electronics industr#

)' the stud# of individual economic !ehaviour

*' the interactions within the entire econom#

33 acroeconomics is the stud# of ___________________

A' individual !uilding !loc"s in the econom#

(' the relationship !etween different sectors of the econom#

)' household purchase decisions

*' the econom# as a whole

3+ n economic model is a ph#sical representation of an econom#

A' '1

(' H$(1

3, ;ata are important in economics !ecause __________ and __________

A' the# suggest relationships for e&planation% allow testing of

h#potheses

(' the# can !e used for ta!les% the# can !e graphed

)' the# can !e used in computers% governments use them

*' the# provide interesting information% can !e summarised

3- ime series data show information

A' a!out the same point in time over different places

(' a!out different points in time over the same varia!le

)' a!out different varia!les over different places

*' a!out different points in time over different places

3 +nde& num!ers e&press !ase data in relation to some relative value

A' '1

(' H$(1

3/ he retail price inde& is used to ______________



A' construct price lists

(' compare shop prices

)' measure changes in the cost of living

*' none of the a!ove

30 real value can !e derived from a nominal value !#

A' ad)usting for changes over time

(' ad)usting for data collection errors

)' ad)usting for population changes

*' ad)usting for changes in prices

31o find the percentage change in a num!er% divide the a!solute change !# the

original num!er and multipl# !# 00

A' '1

(' H$(1

32 +f #our income during one #ear is M0%000 and the following #ear it is M<%000%

then it has grown !#

A' <0K

(' <K

)' <K

*' EK

+4 straight-line diagram can !e drawn "nowing the ______ and _________

A' vertical a&is and hori*ontal a&is

(' intercept and slope

)' scale and slope

*' intercept and scale

+3 Fn a graph% a positive linear relationship

A' moves down to the right

(' moves up to the left

)' moves up to the right



*' moves down to the left

++ +f the diagram of a line shows that lower values on the vertical scale are

associated with higher values on the hori*ontal scale% this is an e&ample of

_____________

A' a nonlinear relationship

(' a positive linear relationship

)' a scatter diagram

*' a negative linear relationship

+, 3hen we "now the ,uantit# of a product that !u#ers wish to purchase at each

possi!le price% we "now

A' ;emand

(' (uppl#

)' 1&cess demand

*' 1&cess suppl#

+- (uppl# is the ,uantit# of a good sellers wish to sell each time the mar"et opens

A' '1

(' H$(1

+ he e,uili!rium price clears the mar"etN it is the price at which ________ _________

A' 1ver#thing is sold

(' u#ers spend all their mone#

)' Guantit# demanded e,uals ,uantit# supplied

*' 1&cess demand is *ero

5' c and d

+/ 3hen a mar"et is in e,uili!rium

A' Guantit# demanded e,uals ,uantit# supplied

(' 1&cess demand and e&cess suppl# are *ero

)' he mar"et is cleared !# the e,uili!rium price

*' ll of the a!ove



+0 ________ and ________ do not directl# affect the demand curve

A' the price of related goods% consumer incomes

(' consumer incomes% tastes

)' the costs of production% !an" opening hours

*' the price of related goods% preferences

+1 change in price can cause a shift of a demand curve

A' '1

(' H$(1

+2 demand curve can shift !ecause of changing

A' incomes

(' prices of related goods

)' tastes

*' all of the a!ove

,4 suppl# curve is directl# affected !#

A' technolog#

(' input costs)' government regulation

*' all of the a!ove

,3 n increase in price will cause a suppl# curve to shift to the left

A' '1

(' H$(1

,+ +f a price increase of good increases the ,uantit# demanded of good % thengood is a

A' su!stitute good

(' complementar# good

)' !argain

*' inferior good



,, n increase in consumer income will increase demand for a _______ !ut

decrease demand for a _________

A' su!stitute good% inferior good

(' normal good% inferior good

)' inferior good% normal good

*' normal good% complementar# good

,- Drice ceilings are imposed increase price a!ove the free mar"et e,uili!rium price

A' '1

(' H$(1

he price elasticit# of demandmeasures ________________

A' the responsiveness of ,uantit# demanded

to a change in price

(' how far a demand curve shifts

)' a change in price

*' a change in ,uantit# demanded

++f demand is ___________ then price cuts will __________

spending

A' inelastic% increase

(' elastic% increase

)' elastic% decrease


, he cross-price elasticit# of demand measures how the ,uantit#

demanded of one good is related to consumer income

A' '1

(' H$(1

- Dositive cross-elasticities suggest that goods are _________ and

negative cross-elasticities that goods are __________

A' su!stitutes% inferior



(' normal% complements

)' su!stitutes% complements

*' normal% inferior

measurement showing how ,uantit# demanded varies withincome is the

A' price elasticit# of demand

(' cross-price elasticit# of demand

)' !udget elasticit# of demand

*' income elasticit# of demand

/ +nferior goods have ___________ and lu&ur# goods have

____________

A' negative income elasticities% income

elasticities greater than

(' income elasticities greater than % negative

income elasticities

)' positive income elasticities% negative

income elasticities


0 +f #our income dou!les and the prices of the goods #ou !u#

dou!le% then #our demand for these goods will li"el# ________ A' increase

(' not change

)' decrease

*' shift

1 n# price change can !e decomposed into an income effect and a

complementar# effect

A' '1

(' H$(1

2 he income effect of a price increase of a normal good is to

__________ of that good and the su!stitution effect is to _______

of that good

A' increase ,uantit# demanded% reduce



,uantit# demanded

(' increase ,uantit# demanded% increase

,uantit# demanded

)' reduce ,uantit# demanded% reduce ,uantit#

demanded

*' reduce ,uantit# demanded% increase

,uantit# demanded

34 he opportunit# cost of a student is

A' Course fees and rent

(' loan from the !an"

)' 3hat the student could have earned in the

!est )o! availa!le !# not stud#ing

*' 3hat the student will earn after graduation

33 1conomics assumes that people consume goods and services to

achieve

A' (tatus

(' Drestige

)' 'tilit#

*' (elf-esteem

3+ he e&tra utilit# from consuming one more unit of a good is called

A' arginal utilit#

(' dditional utilit#

)' (urplus utilit#

*' onus utilit#

3, dding up the ,uantities demanded of a good !# different people

facing the same price gives us the

A' (uppl# curve

(' ar"et demand curve

)' ;emand curve

*' ar"et suppl# curve



3- Hirms are assumed to _________ costs and to _________ profits

A' incur% desire

(' pa#% ma"e

)' charge% earn

*' minimi*e% ma&imi*e

3 he increase in total cost when one more unit is produced is

"nown as

A' marginal cost

(' opportunit# cost

)' limited cost

*' average cost

3/ arginal revenue is the _________ when output is ____________

A' change in average revenue% increased

(' change in total revenue% increased !# one

unit

)' change in average revenue% increased !#

one unit

*' change in total revenue% increased

30 Drofits are ma&imi*ed when _________________

A' costs are minimi*ed

(' revenue is ma&imi*ed

)' average cost is less than average revenue

*' marginal cost e,uals marginal revenue

31

+f a firm is producing a level of output where marginal cost is

greater than marginal revenue% it should increase output toma&imise profits

A' '1

(' H$(1

32 +f a firms wage costs increase this will cause __________ and

________



A' marginal cost to increase% output to fall

(' marginal revenue to increase% output to fall

)' opportunit# cost to increase% the firm will

close

*' average cost will rise% output will increase

+4 n upward shift in marginal cost ________output and an upward

shift in marginal revenue ________ output

A' reduces% reduces

(' reduces% increases

)' increases% increases

*' increases% reduces

+3 firm should close down if profits are *ero

A' '1

(' H$(1

++ firm that !rea"s even after all economic costs are paid is earning

A' 1conomic profit

(' ccounting profit

)' 2ormal profit

*' (upernormal profit

+, firm that ma"es profit in addition to normal profit is ma"ing

A' 1conomic profit

(' ccounting profit

)' 2ormal profit

*' (upernormal profit

+- +f !oth marginal cost and marginal revenue increase% a firm

__________

A' should increase output

(' should reduce output



)' will re,uire further information on how to

respond

*' should not change output

he suppl# rule of

the profitma&imising

monopolist is

different from that

of a competitive

firm

A' '1

(' H$(1

+Comparing a monopol# and a competitive firm% the monopolist will

_______________

A' produce less at a lower price

(' produce more at a lower price

)' produce less at a higher price

*' produce less at a lower price

, discriminating monopolist will charge a higher price to groups with

elastic demand

A' '1

(' H$(1

- Derfect price discrimination means that ever# customer ____________

A' !u#s the same amount

(' pa#s the same price

)' contri!utes the same revenue

*' pa#s what she thin"s the product is worth

monopol# ma# !e self-perpetuating !ecause profits ma# !e used for

A' research

(' cost-saving

)' technical advance



*' all of the a!ove

/ ll of the following are t#pes of imperfect competition e&cept

A' monopolistic competition

(' oligopol#

)' monopol#

*' unfair competition

0 natural monopol# has a declining ________ over a large range of output

A' long run marginal cost

(' short run marginal cost

)' long run average cost

*' long run marginal cost

1 3hen a mar"et is contesta!le% incum!ent firms must _____________ to

avoid the entr# of new competitors

A' !ehave li"e competitive firms

(' agree to act together

)' differentiate their products

*' practise price discrimination

2 he long run e,uili!rium in monopolistic competition involves competitors

ma"ing e&cess profits

A' '1

(' H$(1

34 he reason for the "in"ed demand curve is that

A' he oligopolist !elieves that competitors will match

output increases !ut not output reductions(' he oligopolist !elieves that competitors will match

price increases !ut not output reductions

)' he oligopolist !elieves that competitors will match

price cuts !ut not price rises

*' he oligopolist !elieves that competitors will match

price increases !ut not output increases



33 Aame theor# studies interdependent decision-ma"ing

A' '1

(' H$(1

3+ he Drisoners ;ilemma Aame demonstrates that

A' pla#ers are !etter off to act independentl#

(' monopol# is !etter than competition

)' people will alwa#s cheat

*' pla#ers are !etter off if the# co-operate

3, +n 2ash e,uili!rium each pla#er chooses the !est strateg# __________

A' assuming other pla#ers move first

(' dominated !# the other pla#ers

)' given the strategies of other pla#ers

*' that is a credi!le threat

3- dominant strateg# is ____________

A' a winning strateg#

(' a losing strateg#)' a pla#ers !est strateg# when moving first

*' a pla#ers !est strateg# whatever the strategies

adopted !# rivals

3 (trategic entr# !arriers are made !# nature

A' '1

(' H$(1

Documents

Multiple EABD.doc