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This set of Introductory Economics 2 Multiple Choice Questions & Answers (MCQs) focuses on Introductory Economics 2 Set 2

Q1 | Two sector economy consists of:
  • households, firms
  • households, government
  • firms, foreign sector
  • firms, government.
Q2 | Real flow is also known as:
  • nominal flow
  • money flow
  • physical flow
  • both a and b
Q3 | Which of the following is the consumption sector?
  • household
  • firm
  • government
  • foreign
Q4 | Real flow refers to the flow of factor services from ------ to -----
  • firms to households
  • households to firms
  • firms to government
  • households to government
Q5 | Which of the following constitute the reason for difference between Market prices andfactor cost?
  • indirect taxes
  • subsidies
  • both a and b
  • neither a nor b
Q6 | If factor cost is greater than Market price, then it means that:
  • indirect taxes > subsidies
  • indirect taxes = subsidies
  • indirect taxes < subsidies
  • indirect taxes = and > subsidies
Q7 | Final goods refer to those goods which are used either for ............. or for ..........
  • consumption, investment
  • consumption, resale
  • resale, investment
  • resale,further production.
Q8 | Net Factor Income from Abroad is:
  • export minus imorts
  • visible exports minus visible imports
  • factor income received from abroad minus factor income paid abroad
  • factor income received from abroad
Q9 | Depreciation means:
  • destruction of a plant in a fire accident
  • loss of fixed assets over time due to wear and tear
  • loss of fixed assets in an earthquake
  • closure of the plant due to lockout
Q10 | Non-exclusion principle is related to:
  • private goods
  • public goods
  • merit goods
  • mixed goods 20.
Q11 | Education is an example of:
  • public good
  • merit good
  • social good
  • club good
Q12 | Public Goods are:
  • excludable
  • non – excludable
  • marketable
  • all of these
Q13 | Who is the father of Public Finance:
  • dalton
  • pigou
  • smith
  • musgrave
Q14 | Incidence of tax means:
  • direct money burden
  • indirect money burden
  • actual tax burden
  • none of these
Q15 | Which is the tax shifting
  • to bear the tax burden himself
  • to shift the tax burden on others
  • to bear some part of the tax himself and shift the rest on others
  • none of these
Q16 | The equity principle of taxation was propounded by:
  • adam smith
  • dalton
  • j.b. say
  • marshall
Q17 | BOP includes
  • current account
  • capital account
  • official reserve account
  • all the above
Q18 | International trade refers to trade between
  • two regions of a country
  • two countries
  • two commodities produced in different countries
  • non of the above
Q19 | Under a fixed exchange rate system, ____________________are official changes in the valueof a country's currency relative to other currencies.
  • devaluation
  • depreciation and appreciation
  • revaluation
  • both a and c
Q20 | __________ is the deliberate downward adjustment in the official exchange rate, reduces thecurrency's value.
  • devaluation
  • depreciation
  • revaluation
  • appreciation.
Q21 | A _______________is an upward adjustment in the official exchange rate, which increases thevalue of the currency.
  • devaluation
  • depreciation
  • revaluation
  • appreciation
Q22 | Which among following is NOT an implication of devaluation?
  • devaluation makes the country's exports relatively less expensive for foreigners.
  • devaluation makes foreign products relatively more expensive for domestic consumers, thus discouraging imports.
  • devaluation help to increase the country's exports
  • may therefore help to reduce the current account surplus.
Q23 | Which among following is an implication of revaluation?
  • revaluation makes the country's exports relatively more expensive for foreigners.
  • revaluation makes foreign products relatively more expensive for domestic consumers, thus encouraging imports.
  • revaluation help to reduce the country's exports to reduce the current account surplus.
  • all the above
Q24 | Devaluation leads to
  • increasing the price of imports and stimulating greater demand for domestic products.
  • domestic inflation.
  • rise in domestic interest rates.
  • all the above
Q25 | PDS Stands for:
  • public distribution system
  • public division system
  • price distribution system
  • all of these