Tag: economics

Questions Related to economics

What are 'open market operations'?

national income identity for open economy open economy macroeconomics determination of income and employment economics

  1. Activities of SEBI registered brokers

  2. Selling of currency by the RBI

  3. Selling securities issued by the government

  4. Sale of shares by FIIs

Show answer
Correct Option: C
Explanation:

Open market operation is the method that the central bank employs to modify the level of money circulating in the banking system. It does this by selling or buying back government securities. If it wants to contract the money supply it will sell government securities in order to reduce the money available with people in the economy, usually to curb inflationary pressures.

Which of the following defines balanced growth?

national income identity for open economy open economy macroeconomics determination of income and employment economics

  1. The state of an economy in which there is a constant relationship between the components of aggregate rational income

  2. The effect upon the national income of equal changes in Government expenditure and revenue

  3. A situation in which the Government planned expenditure equals its expected income

  4. None of the above

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Correct Option: B

The level of income and employment in an economy is determined by the effective demand.

national income identity for open economy open economy macroeconomics determination of income and employment economics

  1. True

  2. False

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Correct Option: A

In an open economy GDP is composed of _______.

national income identity for open economy open economy macroeconomics determination of income and employment economics

  1. consumption, government spending

  2. gross investment

  3. net exports

  4. sum of all

Show answer
Correct Option: D
Explanation:

In an open economy the GDP is calculated as the sum of the 4 sectors of the economy. 

GDP = C + I + G + (X-M) 
         =Consumption + Investment + Government spending + Net exports

In an open economy GDP is the sum of ________.

national income identity for open economy open economy macroeconomics determination of income and employment economics

  1. Consumption, Gross Investment, Government expenditure, Net export

  2. Consumption, Gross Investment, Government expenditure, Net import

  3. Consumption, Gross Investment, Government subsidy, Net export

  4. Consumption, Gross Investment, Net export, Personal saving

Show answer
Correct Option: A
Explanation:

The GDP is calculated using the formula

 $GDP = C + I + G + X - M$ 

Where: 
C = Consumption
I = Gross Investment
G = Government expenditure
X-M = Net export

DEPB stands for _______.

national income identity for open economy open economy macroeconomics determination of income and employment economics

  1. Daily Export Pass Book

  2. Duty Exemption Pass Book

  3. Duty Entitlement Pass Book

  4. Double Export Pass Book

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Correct Option: C

From the following equation estimate consumption when disposal income $Y _d$ is Rs.1000.
$C _0$=Rs. 200+0.80Y$ _d$

$C _1$= consumption
Y$ _d$= disposable income

national income identity for open economy open economy macroeconomics determination of income and employment economics

  1. Rs. 1000

  2. Rs. 1100

  3. Rs. 900

  4. Rs. 800

Show answer
Correct Option: A
Explanation:

Given that $Y _d= 1000$


$C = C _0+ C _1Y _d$
$C = 200 + 0.8 * 1000$
$C = 200 + 800$
$C = 1000$
 

EOU stands for ______.

national income identity for open economy open economy macroeconomics determination of income and employment economics

  1. Export Oriented units

  2. European Oil Union

  3. Export Oil Unity

  4. Excellent Official Unit

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Correct Option: A
Explanation:

 The Export Oriented Units (EOU) scheme was introduced to boost exports, increase foreign earnings and created employment in India. The EOU scheme is complementary to the scheme for Free Trade Zone, Export Processing Zone.

If supply of X products increases due to heavy imports, this will lead to ___________.

national income identity for open economy open economy macroeconomics determination of income and employment economics

  1. increase in equilibrium quantity

  2. increase in equilibrium price

  3. decrease in equilibrium price

  4. decrease in equilibrium quantity

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Correct Option: D

Net exports are negative when __________.

national income identity for open economy open economy macroeconomics determination of income and employment economics

  1. net investment is positive

  2. exports are exceeded by imports

  3. exports exceed private transfer to foreigners

  4. imports are exceeded by exports

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Correct Option: B