Monday, August 4, 2014

Economics Quiz for SSC Exams

Economics Quiz

  • 1. The Major aim of Devaluation is to :

    1. encourage imports
    2. encourage Exports
    3. encourage both import and export
    4. discourage both import and export
    Answer And Explanation
    Answer: Option B
    Explanation:
    Note: Devaluation in modern monetary policy is a reduction in the value of a currency with respect to those goods, services or other monetary units with which that currency can be exchanged, 'Devaluation' means official lowering of the value of a country's currency within a fixed exchange rate system, by which the monetary authority formally sets a new fixed rate with respect to a foreign reference currency. There are two implications for a currency devaluation. First, devaluation makes a country's export relatively cheaper for foreigners and second, it makes foreign products relatively more expensive for domestic consumers, discouraging imports. As a result, this may help to reduce a country's trade deficit.

Economics Quiz

  • 2. Interest on public debt is a part of:

    1. transfer payments by the enterprises
    2. transfer payments by the Govt.
    3. National Income
    4. Interest Payment by house holds
    Answer And Explanation
    Answer: Option B
    Explanation:
    Note: In economics, a transfer payment( or government transfer or simply transfer) is a redistribution of income to the market system. These payments are considered to be exhaustive because they do not directly absorb resources or create output. In other words, the transfer is made without any exchange of goods or services. Examples of certain transfer payments include welfare(financial aid), interest on public debt, social security, and government making subsidies for certain businesses(firms).

Economics Quiz

  • 3. Structural unemployment arises due to:

    1. deflationary conditions
    2. heavy industry bias
    3. shortage of raw materials
    4. inadequate productive capacity
    Answer And Explanation
    Answer: Option D
    Explanation:
    Note:Structural unemployment is a for of unemployment resulting from a mismatch between demand in the labour market and the skills and locations of the workers seeking employment. Structural unemployment is a result of the dynamics of the labor market, such as agricultural workers being displaced by mechanized agriculture, unskilled laborers displaced by both mechanization and automation, or industries with declining employment. Many of these displaced workers are "left behind" due to costs of training and moving(e.g, the cost of selling one's house in a depressed local economy), inefficiencies in the labor market, such as discrimination or monopoly power, or because they are unsuited for work in growing sectors such as health care or high technology.

Economics Quiz

  • 4.The theory of distribution relates to which of the following?

    1. The distribution of assets
    2. The distribution of income
    3. The distribution of factor payments
    4. Equality in the distribution of the income and wealth
    Answer And Explanation
    Answer: Option D
    Explanation:
    Note: In economics, distribution theory is the systematic attempt to account for the sharing of the national income among the owners of the factors of production- land, labour, and capital. Traditionally, economists have studied how the costs of these factors and the size of their return- rent, wages and profits- are fixed. The theory of distribution involves three distinguishable sets of questions. First, how is the national income distributed among persons? Second, what determines the prices of the factors of production? Third, how is the national income distributed proportionally among the factors of production.

Economics Quiz

  • 5.If an Industry is characterized by economics of scale then

    1. barriers to entry are not very large
    2. long run unit costs of production decreases as the quantity the firm produces increases
    3. capital requirements are small due to the efficiency of the large scale operation
    4. the costs of the entry into the market are likely to be substantial
    Answer And Explanation
    Answer: Option B
    Explanation:
    Note: In micro economics, economies of scales are the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer's average cost per unit to fall as the scale of output is increased. "Economies of scale" is a long run concept and refers to reductions in unit cost as the size of a facility and the usage levels of other inputs increase.

Economics Quiz

  • 6.Say's Law of market holds that

    1. Supply is not equal to demand
    2. Supply creates its own demand
    3. Demand creates its own supply
    4. Supply is greater than demand
    Answer And Explanation
    Answer: Option B
    Explanation:
    Note:Say's Law of market states that "Supply creates its own demand".

Economics Quiz

  • 7.Movement along the same demand curve is known as 

    1. Extension and Contraction of Demand
    2. Increase and Decrease of Demand
    3. Contraction of Supply
    4. Increase of Supply
    Answer And Explanation
    Answer: Option B
    Explanation:
    Note: A shift in the demand curve is caused by a factor affecting demand other than a change in price. If any of these factors change then the amount consumers wish to purchase changes whatever the price. The shift in the demand curve is referred to as an increase or decrease in demand. A movement along the demand curve occurs when there is a change in price. This may occur because of a change in supply conditions. The factors affecting demand are assumed to he held constant. A change in price leads to a movement along the demand curve and is referred to as change in quantity demanded.

Economics Quiz

  • 8.A Tax is is characterized by horizontal equity if its liability is

    1. proportional to the income of tax payers
    2. similar for tax payers in similar circumstances
    3. proportional to the expenditure of tax payers
    4. the same for every tax payers
    Answer And Explanation
    Answer: Option A
    Explanation:
    Note:The principle of equity includes both horizontal and vertical. Equity is determined by first assessing an individual's ability to pay. The idea of the ability to pay principle considers whether or not it is fair to tax someone higher just because that person has ability and resources to pay. If it is decided that they should be required to pay more, the question of how much more arises. These questions can be analyzed through horizontal and vertical equity which are subsets of the ability to pay principle. Horizontal equity suggests it is fair for people of equal ability to pay the same amount in taxes, Vertical equity is the idea that people who has a higher ability to pay ore than those who have a lower ability to pay, as long as the increase in tax level is considered to be reasonable.

Economics Quiz

  • 9.What does a Leasing company provide?

    1. Machinery and Capital equipment on hire
    2. Legal guidance in establishing an enterprise
    3. Office accommodation on hire
    4. Technical consultancy and expert for free
    Answer And Explanation
    Answer: Option A
    Explanation:
    Note:Leasing is a process by which a firm can obtain the use of a certain fixed assets for which it must pay a series of contractual, periodic, tax deductible payments. Equipment leasing is a financing alternative for businesses to acquire needed machinery while saving precious operating capital. Leasing provides opportunities to use available money to operate assets that can make ore money over time. There are many distinct differences between buying and leasing, regardless if such a transaction or agreement applies to property, machinery, equipment or other assets. The difference lies in that a lease is conceptually very similar to the principle of "borrowing". The ownership of the leased property is not transferred under the terms of the lease agreement.

Economics Quiz

  • 10. When too much money is chasing too few goods, the situation is

    1. Deflation
    2. Inflation
    3. Recession
    4. Stagflation
    Answer And Explanation
    Answer: Option B
    Explanation:
    Note: Demand pull inflation is asserted to arise when aggregate demand in an economy outpaces aggregate supply. It involves inflation rising as real gross domestic product rises and unemployment falls, as the economy moves along the phillips curve. This is commonly described as "too much money chasing too few goods".

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