Saturday, 18 May 2019

caiib ABM MCQs 1

1) Micro-economic theory studies how an economy determines.
a)The price of goods b)The price of services c)The price of economic resources d) All of the above.
2) A producer's positively sloped supply curve for a commodity represents. a)In one sense a maximum and in another sense a minimum
boundary of the.producer's intentions. b)A maximum boundary of the producer's intentions.c)A minimum boundary of the producer's
intentions. d)None of the above.
3) The theory of distribution refers to: a)The distribution of income among various factors of the production. b)The distribution of income
among different individuals in the economy. c)Both of the above d)None of these
4) Interest is reward for parting with liquidity according to: a) B. Ohlin b) Von Haberler c) J.M. Keynes d) Alfred Marshall
5) Economics may be divided into macro-economics and micro-economics. Among the subject matter of micro economics may be found: a)The
nature of value in exchange.b)The size of a country's national income c)The allocation of resources among competing uses d) The relative prices
of specific services.
6) The statement that'economics is positive and not normative' means:
a)That economics can be used to prove that capitalism is better than socialism.b)That economics tells us what kind of economic behaviour or
policy is wholesome and what evil c)That economics tells policy makers which alternative to choose from among several efficient ones. d)That
economics can only indicate consequences of policies, choices, or conditions.
7) Which of the following statements is incorrect? a)Micro-economics is primarily concerned with the problem of what, how and for whom to
produce.b)Micro-economics is primarily concerned with the behaviour of individual decision making units when at equilibrium.c)MiCroeconomics
is primarily concerned with the time path and process by which one equilibrium position evolves into another d)Micro-economics is
primarily concerned with comparative static rather dynamics.
8) Economic laws may be described as: a)Principles derived from analysis of price input / output determination. b)Generations concerning the
economic behaviour of individuals and institutions.c)Forecasts in quantitative terms of the economic development of society.d)Expression of the
basic features of competition.
9) The main difference between positive economics and normative economics is that the former. a)Discusses the ethical implications of its
laws.b)Concerns itself only with hypotheses which can generally be tested.c) Is based on the value judgements of economists.d)Considers
carefully the political significance of its laws for a democratic society.
10) Adam Singh advocates: a) Laissez-faireb) Division of Labour c) Both of the above d) None of the above
11) The term'consumer goods' is used by economists to refer to: a) Goods produced for consumers in a free market only.b) Goods other than
free goods, whose use directly satisfies consumers wants.c) Goods produced by consumers in return for a wage.d) Goods which are used by
consumers in order to earn their living
12) The basic characteristic of a Capitalistic economy is: a) Full employment b) The private ownership of the means of production.c) An absence
of monopoly d) Large-scale production in primary industries.
13) In a free capitalist society the allocation of the factors of production among the various productive activities is determined by: a) The pattern
of consumer's spending b) The traditional employment of Locals c) Decisions of the Government d) The wealth of the entrepreneurs.
14) Who believed that an automatic equilibrating mechanism of the perfectly competitive market, known as'invisible hand' tended to maximize
national wealth: a) Adam Smith b) Keynes c) J.B. Say d) None of the above
15) The fundamental economic problem being faced is one of: a) Consumer's choice b) Decision-making by the governmentc) 'Multiplicity of
wants and scarcity of resources.d) Shortage of labour.
16) Which one of the following is not directly the concern of the economist? a) Aid to underdeveloped countries b) The effect of an increase in
Bank rate c) The choice between alternative sites for a factory d) The use of taxation to discourage smoking of cigarettes.
17) The meaning of the word'economic' is most closely connected with the word: a) Free b) Scarce c) Unlimited d) Restricted
18) Which of the following is not an economic problem?
a) Deciding between extra paid work and extra leisure. b) Deciding between different ways of spending leisure lime . c) ;:eciding on the level and
form of personal saving d) Deciding between expenditure on one good and another.
19) Which one of the following statement is not true?
a) Exchange is one method of helping to solve the basic economic problem. b) The basic ecolomic problem is one of choice.c) Choice is necessary
because of Limited wants.d) The means to satisfy wants i.e., the factors of production, are limited.
20) Who gave scarcity definition of economics? a) Adam Smith b) Robbins c) Keynes d) J.B. Say
21) Who is known as the Father of Economics? a) Keynes b) Ricardo c) Adam Smith d) J.S. Mill
22) Many of the basic problems of economics emerge from:
a) Unlimited resources b) Incompetent govt. c) The use of limited resources to satisfy human wants d) Unlimited wants
23) The utility may be defined as: a) The power of a commodity to satisfy wants b) The desire for a commodity c) The usefulness of a commodity
d) The necessity of a commodity
24) The utility of a commodity is: a) Its expected social value b) Its relative scarcity c) The extent of its practical use d) The degree of its fashion
25) Marginal utility curve of a given consumer is also his: a) Indifference curve b) Demand curve c) Supply curve d) Total utility curve
26) The total utility is maximum when: a) MU is zero b) AU is the highest c) MU is the highest d) MU is equal to AU
27) The law of diminishing marginal utility states that:
a) As more of a commodity is consumed total satisfaction diminishes.b) The more you have of a particular commodity the less you want more of
it. c) As more units of a commodity are produced the price of the commodity will fall d) The consumption of further units of a commodity will
bring a steady thcrease in the amount of satisfaction obtained.
28) The law of diminishing returns or increasing cost will operate at an earlier level, in agriculture than in industry because:
a) More mechanization is applicable to agriculture b) Agriculture is an industry where land is used extensively c) Less mechanization is applicable
to agriculture. d) More labour is used in agriculture.
29) Opportunity costs are also known as: a) Spillover costs b) Alternative cost c) Social costs d) Money costs
30) An increase in the price‘of a commodity, other things remaining same, results in:
a) Increase in pricing b) Increases in quantity supplied c) Increase in demand d) Taxes
31) Supply remaining constant, if demand increases, price will a) Rise b) Remains constant c) Fluctuate d) Fall
32) Perfect competition is said to exist if: a) There are homogenous products b) Each firm in the industry accepts the market price because it has
to accept it. c) Price is fixed not by a firm d) All of the above
33) Consumer's surplus is highest in case of: a) Luxuries b) Necessities c) Comforts d) Conventional necessities.
34) A "Giffen Goods" is one for which, in response to a small change in price. a) A zero income effect is just outweighed by a positive substitution
effect. b) A negative income effect is just outweighed by a positive substitution effect. c) A zero income effect is matched by a zero substitution
effect. d) A negative income effect outweighed any'substitution effect.
35) Which is correct?
a) An "increase of demand" is not the same thing as an "extension of demand". b) An "increase of demand is the same thing as an "extension of
demand". c) An increase of demand is just equal to the extension of demand. d) All the above statements are wrong e) An increase of demand
invariably reduces the extension of demand.
36) Demand means: a) The desire and willingness of an individual for all goods and services for his standard of living. b) The desire, ability and
willingness of an individual to purchase goods and services at a given time and price c) Both A and B d) None of the above
37) The demand function for a commodity is defined as: a) Quantity demanded as a function of the goods, own price, the price of the substitute
and the buyer's income b) Price of Substitutes as a functions of the goods own prices c)Quantity demanded as a function of tne price of other
goods d) All the above
38) In the typical demand schedule, quantity demanded.
a) Varies directly with price.b) Varies proportionately with price c) Is independent of price d) Varies inversely with price
39) Law of demand states that when:
a) Income rises demand rises.b) Price rises demand rises.c) Price falls demand falls.d) Price falls demand rises
40) The law of demand indicates: a) The relationship between income and quantity demanded b) The relationship between price of a
commodity and price of ifs cubstitutes c) The relationship between price of two commodity.d) The relationship between the price of commodity
and the quantity demanded.
41) Which of the following conditions is required condition for the operation of law of demand? a) Price of subStitute change,,,b) Income and
Taste of consumer remains constant c) Production does not increase d) Taste of the consumer change
42) Demand curve shows:
a) Inverse relationship between quiantitydemailed and its cost of production.b) Inverse relationship between the rate of change of demand and
price.c) Inverse relationship between the rate of change in demand and cost of production at a given times. d) Direct relationship between the
demand and the price of a commodity at a given time.
43) When we say that a demand curve for a commodity slopes downwards to the right we mean: a) More of the commodity will be demanded
as income increase b) More of the commodity will be demanded as the price of the substitutes falls. c) More of the commodity will be
demanded as population rise.d) More of the commodity will be demanded as its own price falls.
44) A fall in the price of a commodity leads to:
a) A shift in demand b) A fall in demand c) A fall in the consumers real income d) A rise in the consumers real income
45) An exceptional demand curve is one that slopes: a) Upward to the lift b) Upward to the right c) DoWnward to the right d) Horizontal
46) Which one is not an exception to the Law of Demand? a) Ignoranceb) Inferior good c) Normal good d) Articles of Distinction
47) Demand for a commodity is elastic when has:
a) Only one use b) Many Use c) Uses, which cannot be postponed d) Uses very essential for the consumer
48) Which of the following pairs of commodities is an example of substitute:
a) Coffee and milk b) Mustard oil and coconut oil c) Diamond and cow d) Pen and ink
49) For most customers apples and oranges are substitute goods. Therefore, we would expect a rise in the price of apples to lead to: a) A
rightward shift in the supply curve of oranges b) A leftward shift in the supply curve of oranges. c) A fall in the price of oranges d) An upward
change in the demand curve of oranges.
50) A change in climate ,conditions resulting in hot weather, price remaining the same, would cause a consumer of cold drinks: a) To move to a
lower curve b) To move lower down the demand curve c) To move to a higher demand curve d) To move up the same demand curve
51) When an individual's income falls (while everything else remains the same) his demand for an inferior goods:
a) Increase b) Remaining unchanged c) We cannot say without additional information d) Decrease

a) Increase b) Remaining unchanged c) We cannot say without additional information d) Decrease
17 | P a g e
52) A fall in the price of a commodity whose demand curve is a rectangular hyperbola causes total expenditure on the commodity to: a) Remain
unchanged b) Increasec) Decrease d) Any of the above
53) The relationship between demand for a commodity and price, ceteris paribus, is:
%a) Negative b) Positivec) Non-negative d) Non-positive
54) Other things being equal a decrease in the quantity supplied to the market at given prices leads to:
a) A higher price and a contraction of demand b) A higher price and an expansion of demand. c) A higher price and an expansion of demand d) A
lower price and a contraction of demand.
55) Law of demand explains: a) Quantitative relationship between price and demand b) Qualitative relationship between price and demand c)
Relationship between demand and supply d) Rate of change in price and demand
56) We can say with certainty that when the demand for TVs increases in the long run, prices:
a) Will go down b) Will go up c) Change proportionately d) Cannot be predicted with the knowledge of elasticity of demand
57) In the normal demand schedule, quantity demanded:
a) Varies directly with price b) Is independent of price c) Varies inversely with price d) Varies proportionately with price
58) An example of derived demand is demand for: a) Pen and ink b) Wool and mutton c) Petrol and Car d) None of the above
59) By increase in demand we mean: a) Movement upwards on a demand curve b) Movement downwards on demand curve c) Shifting
upwards of a demand curve d) None of these
60) Law of demand operates because of
a) Price changes b) The principle of different income c) Changes in advertisement expenses d) None of the above
61) Multiple uses of a commodity will make the demand go up when:
a) Price increases b) Price remains the samec) Price falls down d) None of the above
62) Status symbol goods are: a) Veblen goods b) Exception to law of demand c) Goods of conspicuous consumption d) ALL OF THE ABOVE
63) Price - demand relationship in the case of Giffen goods is: a) Inverse b) Direct c) Absent d) None of the above
64) The downward sloping demand curve may be partly explained by the "income effect" which refers to:
a) People's tendency to save more as their real incomes fall in the short period. b) An increase or decrease in the amount of a good purchased
because of a price-induced change in the purchasing power of a fixed income. c) Changes in the relative importance of good purchased because
of changes in the con imunity's tastes resulting from adverting. d) Changes in the distribution of income in a community.
65) The demand curve for a commodity is generally drawn on the assumption that:
a) The commodity has no substitutes b) Tastes, income and aii other prices remain constant. c) The average household consist of two persons d)
Purchases of the commodity are made by a free market.
66) A fall in the price of a commodity leads to:
a) A shift in demand b) A fall in demand c) A rise in consumer's real income d) A fall in the consumer's real income.
67) In the case of Giffin good like Bajra a fall in its price tends to:
a) Make the demand remain constant b) Reduce the demand c)Increase the demand d)Change demand in an abnormal way.
68) Which of the following pairs of commodities is an example of substitutes:
a) Coffee and milk b) Diamond and cow c) Pen and ink d) Mustard oil and coconut oil.
69) For most consumers apples and oranges are substitute goods. Therefore, we would expect a rise in the price of apples to lead to: a) A
rightward shift in the demand curve of oranges b) A leftward shift in the supply curve of apples c) A downward change in the demand curve of
oranges d) A fall in the price of oranges
70) A change in climatic conditions resulting in hot weather, price remaining the same, would cause a consumer of cold drink: a) To move to a
higher demand curve b) To move up the same demand curve c) To move lower down the curve d) To move to a lower demand curve.
71) If two goods are complementary, this means that a rise in the price of one commodity will induce:
a) An upward shift in demand for the other commodity b) Arise in the price of the other commodity c) A downward shift in demand for other
commodity d) No shift in demand for the other commodity.
72) If more is demanded at the same price or same quantity at a higher price, this fact of demand is known as:
Extension of demand b) Increase of demand c) Contraction of demand d) Decrease of demand.
73) Other things being equal a decrease in demand can be caused by: a. rise in the price of the commodity
b) A rise in the income of the consumer c) A fall in the price of the commodity d) A fall in the income of the consumer
74) An increase in demand can result from: a) A decline in market price b) An increase in income c) A reduction in the price of substitutes d) An
increase in the price of complementary goods e) All the above
75) Which of the following circumstances would be likely to bring about a change in the demand schedule for a product?
a) A fall in the price of the product b) An increase in the number of potential consumers c) A new method of producing the product d) An
increase in the quantity produced. e) Both a &b
76) If the price of good A affects the demand for good B, then: a) A is a substitute for B b) B is complement of A c) Changes in the price of A will
cause movement along the demand schedule for A d) Changes in the price of B will not change the demand for A. e) Changes in the price of A
will shift or change the demand for B.
77) Cross demand is the change in the quantity demanded of a given commodity in response to the:
a) Change in the utility of another commodity b) Change in the price of another commodity c) Change in the nature of another commodity d)
Change in the size of another commodity.
78) The law of demand states that: a) Demand increases with increase in income b) When income and prices rise. the demand also rises c)
When income and prices rise. the demand also rises d) When price increases, demand increases
79) A consumer's equilibrium choice or position is one at which:
a) His savings are maximised b) His assets are maximised c) His satisfaction is maximum d) Price of goods is maximised
80) For most consumers, milk and tea are substitute goods. Therefore, we should expect a rise in price of milk to lead to:
a) A rightward shift in the supply curve of tea. b) A leftward shift in the supply curve of tea. c) A fall in the price of tea. d) An upward shift in the
demand curve for tea.
81) Other things being equal, a fall I contraction in demand can be caused by a: a) Rise in prices of the substitute
a) Rise in prices of the substitute b) Rise in prices of the substitute c) Rise in the income of the consumer d) Rise in the price of the commodity
82) The demand for a good is elastic if:
a) The demand for that good increases when price falls b) A decrease in price results in a decrease in total expenditure c) The quantity
demanded increases less than proportionately with the decrease in price level
83) A rightwards shifts in supply schedule indicates:
a) A decrease in Supply b) A decrease in quantity supply c)An increase in quantity supply d) An increase in supply.
84) A rightwards shift in supply curve indicates:
a) A decrease in supply b) An increase in quantity supplied c) An increase in supply d) None of the above
85) A supply curve will generally take an upwardsslopin9 form left to right because:
a) Market price is normally above total costs of production. b) Consumers' income tend to increase in the long period. c) Producers' costs
tend 'to increase as their output expands d) Supply of most goods is essentially a short-term phenomenon.
86) Other things being equal an increase in supply can cause by:
a) A rise in the price of the commodity b) An improvement in the techniques of production c) A rise in the income of the consumer d) An
increase in the income of the seller.
87) The shift of the supply curve for a commodity to the left may indicate, other things being equal, that:
a) Shares in the producing firms are in great demand on the Stock Exchange. b) Producers of the commodity wish to make and sell less at same
price. c) Prices raw materials used in the production of the commodity have fallen. d) Wages paid to the producers' employees have fallen.
88) Ceteris paribus, a decrease in quantity supplied of a commodity can be caused by:
a) A fall in its price b) Fall in income c) Rise in price d) Fall in raw material
89) The supply schedule for a commodity is usually assumed to be directly open to influence by all the following except:
a) The quantity demanded b) The prices of the factors of production c) The costs of production d) The prices of other goods
90) Which of the following could explain why the supply curve for a commodity slopes downwards?
a) Producers do not like increasing production. b) Producers have to lower price to induce consumers to buy more c) Costs fall as production
increases d) Diminishing marginal utility is in operation
91) "Free Trade Area" denotes: a) Pitlicy of Laissez faire b) A group of countries which have decided to impose no duties of any kind on imports
from other members of the group c) Free Exports & Imports d) All the above
92) Temporary control of inflation can be effected by:
a) Lowering Bank Rate b) Purchasing of securities by RBI c) Restraint on the growth of money supply d) None of these
93) The term "hyper-inflation" is used to denote: a) Creeping inflation b) Step by step inflation c) A "Runaway" or "galloping" inflationary
situation where the monetary unit becomes almost worthless d) None of these
. 94) In calculating a country's GNP at market prices one of the following is not included:
a) Depreciation b) Net factor income from abroad c) Net indirect taxes d) Transfer Payment
95) Indian Economy can be best described as:
a) Developed economy b) Undeveloped economy c) Developing economy d) Underdeveloped
96) The term "balance of trade" means: a) Difference between exports & imports b) Net Exports including merchandise c) The difference
between the cost of the imports and exports of a country. d) a and c
97) The open market operations refer to the sale and purchase by the RBI of:
a) Foreign exchange b) Gold c) Government securities d) All c' the above
98) At full employment level, which of the following would be most likely to lead to inflation?
a) A fall in taxation with no changes in gevemment expenditure b) An increase in productivity without any increase in wages c) A fall in
investment with no change in prosperity to consumer d) A rise in the prosperity to save with no change in investment
99) Deflation is: a) Deficit budget b) Reduction in taxation c) Contraction in volume of money or credit that results in a decline of price level d)
Increase in public expenditure
100) Bank rate means: a) Interest rate charged by moneylenders, b) Interest rate charged by the scheduled banks c) Rate of profit of the banking
institution d) The official rate of interest charged by the central bank of the country Micro-economic theory studies how an economy
determines.


ANSWER
1 D 2 A 3 A 4 C 5 D 6 D 7 A 8 B 9 B 10 C
11 B 12 B 13 A 14 C 15 C 16 C 17 C 18 B 19 C 20 B
21 C 22 C 23 A 24 B 25 B 26 A 27 B 28 B 29 B 30 B
31 A 32 D 33 B 34 B 35 A 36 B 37 A 38 D 39 D 40 D
41 B 42 B 43 D 44 D 45 B 46 C 47 B 48 B 49 D 50 C
51 D 52 A 53 A 54 D 55 C 56 D 57 C 58 D 59 C 60 A
61 C 62 D 63 B 64 B 65 B 66 C 67 B 68 D 69 A 70 A
71 C 72 B 73 D 74 B 75 E 76 E 77 B 78 C 79 C 80 D
81 D 82 C 83 D 84 C 85 C 86 D 87 B 88 A 89 A 90 C
91 B 92 C 93 C 94 D 95 C 96 D 97 D 98 A 99 C 100 D

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