Tag: economy of a village

Questions Related to economy of a village

The opportunity to save refers to the conditions of ___________.

economics concept of consumption function, saving function and investment function capital economy of a village wealth, capital and money

  1. peace and security in the country

  2. favorable political inducement policy of the government to motivate people to save

  3. both A and B

  4. none of the above

Show answer
Correct Option: C
Explanation:

Peace and financial security in the economy is necessary to create an environment where the general public experiences an opportunity to save. Moreover, there is a need for favorable political inducement by the government through its policies to motivate people to save.

Which of the following is the suggestion to increase the rate of capital formation?

economics concept of consumption function, saving function and investment function capital economy of a village wealth, capital and money

  1. The taxation policy should be revised and adequate tax reliefs should be allowed to salaried persons and industrialists.

  2. Saving schemes like provident fund, compulsory insurance, compulsory deposits, etc., should be encouraged and extended.

  3. The law and order condition in every part of the country should be improved and security of life and property must be ensured

  4. All of these

Show answer
Correct Option: D

The process of capital formation occurs in three stages.

economics concept of consumption function, saving function and investment function capital economy of a village wealth, capital and money

  1. True

  2. False

Show answer
Correct Option: A
Explanation:
The 3 stages of capital formation are as follows;
1)creation of savings;increase in the volume of savings
2)mobilization of saving;credit and financial mechanism so that available savings are utilized by private and public sectors
3)investment of savings:the act of investment by which resources are used for production of capital goods.

Who create the savings from an economic point of view?

economics concept of consumption function, saving function and investment function capital economy of a village wealth, capital and money

  1. Individuals

  2. Banks

  3. Markets

  4. None of these

Show answer
Correct Option: A

"Larger the volume of saving, larger the size of capital, smaller the volume of saving, less is the size of capital." Who said this? 

economics concept of consumption function, saving function and investment function capital economy of a village wealth, capital and money

  1. Prof. Marshal

  2. Peterson

  3. Adam Smith

  4. Benham

Show answer
Correct Option: A
Explanation:

The economy falls into a growth cycle-more savings lead to more investment, thus large capital availability in an economy, which will further lead to the upliftment of an economy. Prof. Marshal remarked this thought.

In which countries the extensive use of machinery and tools has yielded higher production?

economics concept of consumption function, saving function and investment function capital economy of a village wealth, capital and money

  1. U.S.A.

  2. U.K.

  3. Japan

  4. All of these

Show answer
Correct Option: D

Which of the following are true or false?
a) Capital formation means the increase in the stock of real capital in a country 
b) Saving is not essential for capital formation

economics concept of consumption function, saving function and investment function capital economy of a village wealth, capital and money

  1. Both (a) and (b) are true

  2. (a) is true, but (b) is false

  3. (a) is false, but (b) is true

  4. Both (a) and (b) are false

Show answer
Correct Option: B
Explanation:
1)Capital formation refers to the net capital accumulation during an accounting period for a particular area.Thus 1st statement is true.
2)Savings is essential for capital formation as savings leads to investment in an economy which in turn leads to more capital formation.

What is marginal efficiency of capital ?

economics concept of consumption function, saving function and investment function capital economy of a village wealth, capital and money

  1. Expected rate of return on new investment

  2. Expected rate of return of existing investment

  3. Difference between rate of profit and rate of interest

  4. Value of output per unit of capital invested

Show answer
Correct Option: A
Explanation:

It is calculated in order to make the future prediction and to check the efficiency of the return which the investors will receive when they will invest in that new investment opportunity.It is extremely important in order to draw more shareholders in the financial market.

Capital-output ratio of a commodity measures ________. 

economics concept of consumption function, saving function and investment function capital economy of a village wealth, capital and money

  1. its per unit cost of production

  2. the amount of capital invested per unit of output

  3. the ratio of capital depreciation to quantity of output

  4. the ratio of working capital employed to quantity of output

Show answer
Correct Option: B
Explanation:

Capital-output ratio is measured by calculating the proportion of capital investment needed to produce one unit of output. Capital-output ratio helps to determine the productivity of the economy.

Capital-Output Ratio measures ________.

economics concept of consumption function, saving function and investment function capital economy of a village wealth, capital and money

  1. its per unit cost of production

  2. the amount of capital invested per unit of output

  3. the ratio of capital depreciation to quantity of output

  4. the ratio of working capital employed to quantity of output

Show answer
Correct Option: B
Explanation:

It is the amount of capital needed to produce one unit of output.

It represent the proportionate change in the amount of investment due to a fixed capital investment in an economy in a particular period of time.