Tag: business economics and quantitative methods

Questions Related to business economics and quantitative methods

 ______ refers to the situation when aggregate supply falls short of aggregate demand corresponding to full employment level of output in the economy.

business economics and quantitative methods equilibrium of a firm shifts in demand and supply producer's equilibrium income-output determination liquidity preference and profit

  1. Deficient Demand

  2. Excess Demand

  3. Inflationary Gap

  4. Deflationary gap

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Correct Option: C
Explanation:

Inflationary gap is the excess of aggregate demand over and above its level required to maintain full employment equilibrium in the economy. It implies two things-
1) Planned aggregate demand in the economy happens to exceed its full employment level.
2) The level of aggregate demand surpasses the level of aggregate supply even when the available factors are fully utilized.

Inflationary gap exists when aggregate demand is greater than aggregate supply.

business economics and quantitative methods equilibrium of a firm shifts in demand and supply producer's equilibrium income-output determination liquidity preference and profit

  1. True

  2. False

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Correct Option: B
Explanation:

Inflationary gap exists when Aggregate Demand is greater than Aggregate Supply at full employment.

Deficient Demand indicates __________________.

business economics and quantitative methods equilibrium of a firm shifts in demand and supply producer's equilibrium income-output determination liquidity preference and profit

  1. Under employment equilibrium

  2. Over Full employment equilibrium

  3. Full employment equilibrium

  4. None of these

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Correct Option: A
Explanation:

Deficient demand refers to the situation when aggregate demand is short of aggregate supply corresponding to full employment level in the economy. Aggregate supply being perfectly elastic, it converges with aggregate demand at a lower level of output lower than the full employment level of output in the economy. This is a situation of underemployment equilibrium.

______________ is the price paid for the use of capital.

business economics and quantitative methods equilibrium of a firm shifts in demand and supply producer's equilibrium income-output determination liquidity preference and profit

  1. Wages

  2. Rent

  3. Interest

  4. Profits

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Correct Option: C

Equilibrium price is determined at the interaction point of demand curve and supply curve.

business economics and quantitative methods equilibrium of a firm shifts in demand and supply producer's equilibrium income-output determination liquidity preference and profit

  1. True

  2. False

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Correct Option: A

Market supply depends upon price only.

business economics and quantitative methods equilibrium of a firm shifts in demand and supply producer's equilibrium income-output determination liquidity preference and profit

  1. True

  2. False

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Correct Option: B

Market demand is an aggregate of purchases by _____ buyers.

business economics and quantitative methods equilibrium of a firm shifts in demand and supply producer's equilibrium income-output determination liquidity preference and profit

  1. some

  2. all

  3. one

  4. two

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Correct Option: B

The law of demand states ______ relation between demand and price.

business economics and quantitative methods equilibrium of a firm shifts in demand and supply producer's equilibrium income-output determination liquidity preference and profit

  1. a direct

  2. an inverse

  3. no

  4. positive

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Correct Option: B

When price of commodity rise,the demand for it _____ .

business economics and quantitative methods equilibrium of a firm shifts in demand and supply producer's equilibrium income-output determination liquidity preference and profit

  1. rises

  2. falls

  3. remain

  4. constant

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Correct Option: B

When price falls the demand _____ .

business economics and quantitative methods equilibrium of a firm shifts in demand and supply producer's equilibrium income-output determination liquidity preference and profit

  1. falls

  2. contracts

  3. expands

  4. remain same

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Correct Option: C