Economy Set 1 MCQs

Economy GK

Economy Set 1 MCQs

Practice Economy GK MCQs on basic economic concepts including economy, economics, microeconomics, macroeconomics, goods and services, demand and supply, factors of production, opportunity cost, economic activities, sectors of economy and other fundamental concepts frequently asked in SSC, Railway, Banking, UPSC, JKSSB, JKPSC, Police, Defence and other competitive examinations.

2220
Total Questions

Practice Questions

Page 73 of 111
Question #1441
The 'National Income' estimates in India are published with a base year of:
A. 2004-05
B. 2016-17
C. 2020-21
D. 2011-12
Discuss
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Correct Answer: Option D

Explanation:
The national accounts series uses 2011-12 as the base year.
This question belongs to: Economy GK Economy Set 1
Question #1442
The 'Gross Value Added' at basic prices excludes:
A. indirect taxes net of subsidies
B. all taxes
C. depreciation
D. net factor income from abroad
Discuss
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Correct Answer: Option A

Explanation:
GVA at basic prices is measured before net product taxes, so it excludes net indirect taxes.
This question belongs to: Economy GK Economy Set 1
Question #1443
The 'Gross National Product at market prices' equals GDP at market prices plus:
A. subsidies
B. net factor income from abroad
C. depreciation
D. indirect taxes
Discuss
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Correct Answer: Option B

Explanation:
GNP at market prices = GDP at market prices + net factor income from abroad.
This question belongs to: Economy GK Economy Set 1
Question #1444
The 'Net National Product at factor cost' is also known as:
A. Disposable Income
B. Personal Income
C. Gross Domestic Product
D. National Income
Discuss
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Correct Answer: Option D

Explanation:
National Income is NNP at factor cost.
This question belongs to: Economy GK Economy Set 1
Question #1445
The 'Personal Income' of a country includes:
A. only indirect taxes
B. transfer payments and factor incomes received by households
C. only wages
D. corporate profits retained
Discuss
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Correct Answer: Option B

Explanation:
Personal income includes all incomes received by households, including transfer payments.
This question belongs to: Economy GK Economy Set 1
Question #1446
The 'Personal Disposable Income' is personal income minus:
A. direct personal taxes and other deductions
B. indirect taxes
C. corporate tax
D. customs duty
Discuss
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Correct Answer: Option A

Explanation:
Personal disposable income is personal income minus direct personal taxes and other receipts of government.
This question belongs to: Economy GK Economy Set 1
Question #1447
The 'depreciation' in national accounting is also called:
A. transfer payment
B. factor income
C. capital consumption allowance
D. net investment
Discuss
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Correct Answer: Option C

Explanation:
Depreciation is also known as capital consumption allowance.
This question belongs to: Economy GK Economy Set 1
Question #1448
The 'net investment' is equal to gross investment minus:
A. consumption
B. depreciation
C. taxes
D. savings
Discuss
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Correct Answer: Option B

Explanation:
Net investment = gross investment - depreciation.
This question belongs to: Economy GK Economy Set 1
Question #1449
The 'national income' can be expressed as NNP at factor cost, which equals NNP at market prices minus:
A. direct taxes
B. indirect taxes plus subsidies
C. subsidies
D. depreciation
Discuss
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Correct Answer: Option B

Explanation:
NNP at factor cost = NNP at market prices - indirect taxes + subsidies.
This question belongs to: Economy GK Economy Set 1
Question #1450
The 'net factor income from abroad' is negative when factor incomes paid abroad are:
A. greater than factor incomes received from abroad
B. less than factor incomes received from abroad
C. zero
D. equal to factor incomes received
Discuss
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Correct Answer: Option A

Explanation:
Net factor income from abroad is negative when payments abroad exceed receipts from abroad.
This question belongs to: Economy GK Economy Set 1
Question #1451
The 'per capita income' is calculated by dividing national income by:
A. labour force
B. number of households
C. total population
D. working population
Discuss
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Correct Answer: Option C

Explanation:
Per capita income is national income divided by total population.
This question belongs to: Economy GK Economy Set 1
Question #1452
The 'circular flow of income' in a two-sector economy includes:
A. only households
B. only firms
C. households and firms
D. government and foreign sector
Discuss
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Correct Answer: Option C

Explanation:
A two-sector economy includes households and firms.
This question belongs to: Economy GK Economy Set 1
Question #1453
The 'circular flow of income' in a three-sector economy includes:
A. firms and government only
B. households, firms and government
C. government and foreign sector only
D. households, firms and foreign sector
Discuss
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Correct Answer: Option B

Explanation:
A three-sector economy includes households, firms and government.
This question belongs to: Economy GK Economy Set 1
Question #1454
The 'four-sector economy' circular flow includes:
A. households, firms, government and banks only
B. households, firms, government and foreign sector
C. households, government, banks and firms
D. households, firms, banks and foreign sector
Discuss
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Correct Answer: Option B

Explanation:
A four-sector economy includes households, firms, government and the external sector.
This question belongs to: Economy GK Economy Set 1
Question #1455
The 'withdrawal' from the circular flow in a three-sector economy includes:
A. exports
B. investment
C. taxes and saving
D. government expenditure
Discuss
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Correct Answer: Option C

Explanation:
In a three-sector economy, withdrawals include saving and taxes.
This question belongs to: Economy GK Economy Set 1
Question #1456
The 'injection' into the circular flow in a three-sector economy includes:
A. taxes
B. saving
C. government expenditure and investment
D. imports
Discuss
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Correct Answer: Option C

Explanation:
In a three-sector economy, injections include investment and government expenditure.
This question belongs to: Economy GK Economy Set 1
Question #1457
The 'marginal propensity to consume' can never be greater than:
A. infinity
B. 0.5
C. 1
D. 2
Discuss
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Correct Answer: Option C

Explanation:
MPC is the fraction of additional income consumed, so it ranges from 0 to 1.
This question belongs to: Economy GK Economy Set 1
Question #1458
The 'investment multiplier' is greater when the marginal propensity to consume is:
A. zero
B. negative
C. lower
D. higher
Discuss
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Correct Answer: Option D

Explanation:
The multiplier is higher when MPC is higher because more of each income increase is spent.
This question belongs to: Economy GK Economy Set 1
Question #1459
The 'consumption function' in Keynesian economics is usually expressed as:
A. Y = C + I
B. C = a + bY
C. S = I
D. MV = PT
Discuss
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Correct Answer: Option B

Explanation:
The Keynesian consumption function is C = a + bY, where a is autonomous consumption and b is MPC.
This question belongs to: Economy GK Economy Set 1
Question #1460
In the consumption function C = a + bY, 'a' represents:
A. investment
B. autonomous consumption
C. saving
D. marginal propensity to consume
Discuss
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Correct Answer: Option B

Explanation:
In C = a + bY, 'a' is autonomous consumption, consumption independent of income.
This question belongs to: Economy GK Economy Set 1
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