Tag: economy of a village

Questions Related to economy of a village

Capital helps in increasing production and productivity.

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

  1. True

  2. False

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Correct Option: A
Explanation:

Capital helps to improve the production,that is ,the action of transforming things from raw materials to finished products.It also helps in increasing the productivity,that is,the ability to produce things in a more efficient and effective manner.

Capital is not the core of economic development.

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

  1. True

  2. False

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Correct Option: A
Explanation:

Capital is a passive factor of production thus it is not the core of economic development. Economic development of a country depends on several factors including capital.

Capital is a gift of nature.

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

  1. True

  2. False

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Correct Option: B
Explanation:

Capital is man-made and not a free gift of nature. For example, machinery.

Countries like U.S.A. and some western countries have high per capita income, but the people over there have lower savings.

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

  1. True

  2. False

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Correct Option: B
Explanation:

Western countries have high per capita income and thus they have higher savings and investment in their respective economy.

The capital which is invested by the government in public sector is called __________.

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

  1. private capital

  2. public capital

  3. individual capital

  4. collective capital

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Correct Option: B
Explanation:

Public capital refers to the productive assets owned by the government. 

Capital helps in maintaining defence of the country.

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

  1. True

  2. False

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Correct Option: A
Explanation:

Several arms and ammunition is necessary to maintain the defence of the country, which is made with the help of capital such as machines, tools etc.Thus capital helps in maintaining the defence of the country.

When the people are provided with more facilities to mobilize the savings, the people save less and invest less. 

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

  1. True

  2. False

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Correct Option: B
Explanation:

When an economy provides more opportunities to save then people save more, thus in turn investment and rate of capital formation rise.

Lower __________ leads to low savings which lead to a lower rate of capital formation.

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

  1. per capita income

  2. gross domestic product

  3. development plan

  4. economic instability

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Correct Option: A

Besides the level of income, the taxation policies of the government also affect the ability to save.

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

  1. True

  2. False

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Correct Option: A
Explanation:

Even when the income of person is high , he is left with less real income after paying the high taxes levied by the government this then affects both the level of consumption and savings of the person.

When the rates of income tax and sales tax are high, the major portion of the earnings of people goes to the government exchequer and very little remains with people to save and invest.

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:

When high rate of taxes (income tax and sales tax)  are imposed by the government ,the real income of the consumers go down and hence the purchasing power falls so in turn savings of the people falls accordingly.