3524 + Interview Questions in Economics in Class 12 Page 57 InterviewSolution

2801.	Inflow of foreign exchange is recorded on the_______side.
Answer» Credit Debit Either (a) or (b) NEITHER (a) nor (b) SOLUTION :A. INFLOW of FOREIGN exchange is RECORDED on the Credit side.

Discussion

2802.	What is meant by current account?
Answer» Solution :Current account REFERS to the account which records all the TRANSACTIONS relating to export and import of GOODS, SERVICES and unilateral transfers during a GIVEN period of time.

Discussion

2803.	During excess demand, central bank __ the margin.
Answer» Decreases increases Removes Does not change Solution :B. During excess DEMAND, central BANK increases the MARGIN.

Discussion

2804.	What is consumption function ?
Answer» Solution :CONSUMPTION function refers to the FUNCTIONAL RELATIONSHIPBETWEEN consumption and nationalincome.

Discussion

2805.	Mention one maion difference between centralbank and commerical bank
Answer»

Discussion

2806.	Name the monetary measure indicated in the following statements. Also indicate, whetaher the following measures will be adopted during excess demand or deficit demand: (i) RBI starts selling government securities in the open market. (ii) Instead of 50%, now 70% of the security amount will be given as loan. (iii) Central bank reduces CRR. (iv) RBI instructed not to advance loan to producers in industrial sector in urbam areas.
Answer» Solution :(i) Open market OPERATION (ii) Margin requirements. (III) Legal reserve requirements (iv) Selective credit CONTROLS. Part (i) and Part (ii) measures will be adopted during EXCESS demand. Part (ii) and Part (iii) measures will be will be adopted during, deficient demand.

Discussion

2807.	In determinaiton of Equilibrium Level of economyby AD -AS approach. AD curve is represented by:
Answer» (C+S) CURVE (C+I)curve (S+I)curve (C+Y)curve Solution :B

Discussion

2808.	Which one of the following statements is a reason for the negative slope of PPF?
Answer» The inverserelationship between the use of technology and the use of natural resources. Scarcity at any POINT of time due to LIMITED amounts of productive resources. Resource specialisation. Increasing OPPORTUNITY costs. ANSWER :b

Discussion

2809.	The supply curve shifts to the right because of _______.
Answer» IMPROVED technology increased PRICE of FACTORS of production increased EXCISE duty all of them Answer :(a)

Discussion

2810.	A 'productionPossibility Frontier' (PPF) is always represented as a upward sloping curve.
Answer» Solution :False: A PPF representsdifferent COMBINATIONS of two commodities that can be PRODUCED with the help of available RESOURCES in an economy. If an economy decides to produce a larger quantity of one commodity, it would be left with lesser resources to produce ANOTHERCOMMODITY. A downward sloping curve REPRESENTS this relationship.

Discussion

2811.	APC can never be zero
Answer» Solution :APC can never be zero: APC can be zero only when consumption BECOMES zero. HOWEVER, consumption is never zero at any LEVEL of INCOME.

Discussion

2812.	In an economy C=200 +0.75Y is the consumption function where C is consumption expenditure national income. Investment expenditure is 4000. Calculate equilibrium level of income consumption expenditure.
Answer» SOLUTION :`16800,12800`

Discussion

2813.	An economyis in equilibrium.Calculate marginal propensityto save from the following : National income = 15,000 Investment = 1,000 Autonomousconsumption = 500
Answer» SOLUTION :`Y=bar(C)+(1-MPS) (Y) + I` `{:( "15,000 = 500+(1-MPS) 15,000 + 1,000"),("=500+15,000-15,000 MPS + 1,000"):}]` `{:("15,000 MPS = 16,500-15,000=1,500"),("MPS"=("1,500")/("15,000")=0.1):}]`

Discussion

2814.	What are visible and invisible items in BOP?
Answer» Solution :Visible items REFER to items relating to trading in goods with other countries such as machinery, tea, cloth, etc. Invisible items REFERS to items relating to trading of services with other countries and unilateral transfers. IMPORT and EXPORT of services like shipping, tourism, banks are invisible items since services can not be seen.

Discussion

2815.	If the value of marginal propensity to consume is 0.8, find out the value of multiplier.
Answer» SOLUTION :MULTIPLIER `=1/(1-MPC)=1/(1-0.8)=5`.

Discussion

2816.	Find out National Income from the following data :
Answer» Solution :1. `GDP_(MP)=PFCE+GFCE+GDCF+`Net exports `=PFCE+GFCE+(NDCF+"Consumption of fixed capital")+ ("Exports - Imports")` `=200+60+(70+15)+(20-20)` `=200+60+85+0= Rs 345` CRORE 2. `N NP_(FC)=GDP_(MP)-"Dep."+NFIA- NIT (IT-"SUBSIDIES")` `=345-15+(-5)-(40-10)` `=345-15-5-30= Rs 295` crore

Discussion

2817.	Let the production function of a firm be Q=5L^(1//2)K^(1//2) . Find the maximum possible output that the firm can produce with 100 units of L and 100 units of K.
Answer» SOLUTION :`Q=5L ^(1//2) K^(1//2)` (GIVEN) `Q=5 xx 100^(1//2) xx 100^(1//2)` `Q=5 xx 10 xx 10 = 500` UNITS So, the maximum possible units output (Q) `=500` units.

Discussion

2818.	C = 50 + 0.5 Y is the consumption function where C is consumption expenditure and Y is National Income and investment expenditure is 2,000 in an economy. Calculate (i) Equilibrium level of (National Income) (ii) Consumption expenditure at equilibrium level.
Answer» SOLUTION :Y = National Income, Consumption FUNCTION, `C = 50 + 0.5 Y` INVESTMENT, `I = 2,000`

Discussion

2819.	At higher level of MPC, the value of multiplier is
Answer» high low does not change all of these Answer :A

Discussion

2820.	Discuss the quantitative instruments used by central bank to control the noney supply
Answer»

Discussion

2821.	An economy is in equilibrium, Find investment expenditure : National income=1200, Autonomous consumption expenditure=150, MPC=0.8
Answer» SOLUTION :Y=C+I `Y=bar(C )+bY+I `1200=150+0.8(1200)+I` `1200=150+960+I` `I=1200-1110` INVESTMENT expenditure=90

Discussion

2822.	whatone stepcan be takenthroughmarketto to reducethe consumodityof productharmful forhealth ?
Answer» SOLUTION :impositionof hightaxon such PRODUCTBY the GOVERNMENTTO makeit COSTLIER so thatitsdemandcomesdown . Transformationcomment .

Discussion

2823.	Renewable sources of energy are preferred to non-renewable sources because :
Answer» They are not exhaustible They CANBE reproduced Both (a) and (B) NEITHER (a) nor (b) SOLUTION :N//A

Discussion

2824.	Increase in per capita real income means increase in per capital availability of goods and services. Does it necessarily mean rise in the welfare of the people of the country ? Give any one argument in support of your answer and exaplain the same.
Answer» Solution :Increase in per capital REAL income brings increase in per capita availability of goods and services and consequently welfare would also rise, but it may not necessarily always be so. For EXAMPLE, if increase in industrialisation is the outcome of increase in number of manufacturing units like factories, buildings, industries, it surely will increase the level of output and income, but at the same time it will also cause WATER, air and noise POLLUTION leading to increased medical bills, laundary bills ETC. Hence it will bring overall reduction in welfare of perople.

Discussion

2825.	AYUSH Programme aims at :
Answer» SPREADING MEDICAL facilities Strengthening non-allophatic system of medicines Spreading good SANITARY habits Popularising SELF cures. Solution :N//A

Discussion

2826.	Explain the effect of the following on demand for a good: (i) Fall in Income for Normal Goods. (ii) Fall in Income for Inferior Goods.
Answer» Solution :(i) Fal in Income for Normal Goods: (a) For normal commodity, with a fall in income, the DEMAND of the commodity also falls and vice -versa. (b)SHORTLY, direct relationship exists between income of a consumer and demand of normal commodity. (C) DUE to fall in Income of a consumer (say from Rs 6000to Rs 5000), the demand of normal goods shiftsleftwards from DD to `D_(1)D_(1)` asshown in figure above. (ii) Fall in Income for Inferior Goods: For inferior goods, with a fall in income, the demand of the commodity rises and vice-versa. (b) Shortly, inverse relationship exists between income of a consumer and demand of inferior goods,

Discussion

2827.	Total cost in the short run is classified into fixed costs and variable costs. Which one of the following is a variable cost?
Answer» COST of RAW MATERIALS. Cost of EQUIPMENT. Interest payment on PAST borrowings. Payment of rent on building. Answer :a

Discussion

2828.	What are components of current account?
Answer» Solution :i) EXPORTS and importsof goods. II) Exports and imports of services. iii) FOREIGN direct investment V) Portfolio investment.

Discussion

2829.	In an economy an increase in investment by 100 crore led to an increase in national income by 1000 crore. Find MPC.
Answer» SOLUTION :`K=(DELTAY)/(DELTAI)=(1000)/(100)=10` `"Also", K=(1)/(-MPC) or 10=(1)/(1-MPC) or 10(1-MPC)=1` `or10-10MPC=1 or 10MPC=9` `Rightarrow MPC=(9)/(10) Rightarrow MPC=0.9`

Discussion

2830.	If MPC = 1, the value of multiplier is
Answer» 0 1 Between 0 and 1 Infinity Answer :D

Discussion

2831.	A water resources are limited in our country, how can we economise the water resources so that it could not cause a future problem for us? Give any two suggestions.
Answer» Solution :(i) Rainwater should be conserved by rain WATER HARVESTING. (ii) Water wastage should be AVOIDED i.e., ECONOMICAL use of water. Value: AWARENESS about efficient use of water.

Discussion

2832.	What is the differnce between face value and intrinsic value ?
Answer» Solution :Face value REFERS to the value which is written on the unit of monety e.g face value of a 100 rupee NOTE is equal to 100 rupees means goods and serivices worth 100 can be pruchased using this note. WHEREAS .intrincsic value refers to the commodity or METALLIC value of the unit of money e.g the gold coin contains gold in it , if the coin is sold as gold the value at which it is soldis known as its INTRINSIC value.

Discussion

2833.	Categorise the following into direct tax or indirect tax Corporation tax
Answer» ANSWER :DIRECT TAX

Discussion

2834.	Which features of monopolistic competition are competitive in nature?
Answer» Solution :The features of MONOPOLISTIC competition, which are competitive in nature are: (i) Large number of SELLERS, and (ii) FREEDOM of entry and exit.

Discussion

2835.	Which of the following can have the value of more than one and less than zero: (i) APC, (ii) APS, (iii) MPC, and (iv) MPS ?
Answer» Solution :APC can be more than ONE as long as CONSUMPTION is more than national INCOME, i.e. before the break-even point, APC gt 1. APS can be less than zero at income levels which are lower that the break-even point. Both MPC and MPS cannot be more than one or less than zero as change in consumption or SAVING cannot be more than change in income.

Discussion

2836.	Give two examples of intermediate goods .
Answer» Solution :(i) MILK USED in DAIRY shop for RESALE ; (II) Coal used in factory for further production.

Discussion

2837.	Mention the situations in which following equations will hold true : (i). Value of Output is equal to Value Added. (ii) National income at Current Price=National income at Constant Price (iii) Gross domestic capital formation=Gross domestic fixed capital formation (iv) Operating Surplus=Rent+Royatty+Profit
Answer» Solution :(i) When intermediate consumption is zero. (ii) When Price in the base year=Price in the current year. (iii) When CHANGE in STOCK (or inventory investment ) is zero. (iv) When there is no income in the form of INTEREST.

Discussion

2838.	Define Marginal Opportunity cost.
Answer» SOLUTION :Marginal opportunity cost is an ADDITION to the cost in terms of a NUMBER of UNITS of a commodity sacrificed to produce an additional unit of ANOTHER commodity.

Discussion

2839.	Which of the following is a stock ?
Answer» WEALTH Saving Exports Profits Answer :A

Discussion

2840.	givemenings of (i)Ex- antesaving,(ii)ex-anteinvestment ,(iii)ex- anteconsumptionand (ic) Ex- anteaggregate demand .
Answer» Solution :(i) thesavingwhichall thehouseholds plan( DESIRE ) to makeatlevelsof incomearecalledex- antesaving(II) .Theinvestmentwhichthefirmsplanto makeat differentlevelsofincomeduringa givenperiodarecalledex- anteinvestment .(iii)EX- anteconsumptionmeansvalueof plannedcondumptionexperditureon FINALGOODS.(iv)Ex- anteaggregatedemandmeansplaned aggregatedemandforfinalgoodsand serives.

Discussion

2841.	If estimated government receipts are more than estimated government expenditure , it is said to be a :
Answer» SURPLUS BUDGET Deficit Budget Balanced Budget None of these ANSWER :A

Discussion

2842.	Which of the following is an example of transfer income ?
Answer» Bonus UNEMPLOYMENT Allowance COMPENSATION from the EMPLOYER All of the above Solution :B. Unemployment Allowanceis an EXAMPLE of TRANSFER income.

Discussion

2843.	Where are the following items recorded? Give reasons. (i) Import of machinery (ii) Sale of machinery to abroad (iii) Remittances from family members from abroad (iv) borrowing from abroad (v) Export and import of computers (vi) Lending abroad (vii) Foreign investment in India.
Answer» Solution :(i) Import of machinery is recorded in Current account as it is good (visible item). (ii) SALE of machinery to abroad is recorded in Current account as it is export of a good. Since this sale BRINGS in foreign exchange, therefore, recorded on credit side. (III) Remittances from abroad are recorded under unilateral transfer of Current account. (iv) BORROWING from abroad is credited in Capital account on credit side as it brings in foreign exchange. Mind, Capital account RECORDS only those transactions which result in inflow or outflow of foreign exchange. (v) Export and import of computers are recorded in Current account as they are export and import of goods. (vi) Indians lending abroad is recorded in capital account on the debit side as it leads to outflow of foreign exchange. (vii) Foreign investment in India is recorded in capital A/c on the credit side as it brings foreign exchange to the country.

Discussion

2844.	Name the institiution which perfroms thefunctionof acceptingdeposits, grantingloansandmakinginvestments, with the aim of earningprofits .
Answer» COMMERCIAL BANK CENTRAL Bank Neither(a)nor(B) Both (a) and (b) ANSWER :a

Discussion

2845.	Rural population needs short term loans :
Answer» For BUYING cattle For MEETING consumption expenditure For buying tractors For PAYING OLD debts Answer :B

Discussion

2846.	In an economy planned spending is greater than planned output. Explain all the changes that will take place in the economy Or Explain the changes that take place in an economy when aggregate demand is less thanaggregate supply.
Answer» Solution :when at any level of INCOME, if planned savings is more than planned investment It means that aggregate supplyis GREATER than aggregate demand. the STOCK will start getting ACCUMULATED and As a result, the entrepreneurs will not be able to sell their entire output at given prices. The result will be that output will be reduced and for that some WORKERS have to be uemployedwhich will result in the reduction of national income.

Discussion

2847.	In the Government of a country's budget for the year2013-14 , the Finance Minister proposed to raise the tax on cigarettes. He also proposed to increase incometaxon individuals earning more than rupees one crore per annum. Is the objective only to earn revenue for the government? What possible welfare objective can you think of from these proposals ? Explain .
Answer» Solution :Besides the objective of raising more revenue , the proposalsalso SERVE some welfare OBJECTIVES . (i) Firstly raising tax on cigarettes will MAKE cigarettes costlier and discourage smoking . Less smoking will have positive influence on health and raise welfare of the people . (ii) Secondly , raising income tax on INCOMES above rupees ONE crore with help inreducing inequalities in income . (iii) Thirdly , the extra revenue raised from these proposals , if spent on health and education of the poor will also raise welfare of the poor .

Discussion

2848.	Elasticity of supply is zero means
Answer» PERFECTLY INELASTIC supply perfectly ELASTIC supply imperfectly elastic supply none of them Answer :(a)

Discussion

2849.	Repayment of a loan to Asian Development Bank by Government of India.
Answer» SOLUTION :AUTONOMOUS

Discussion

2850.	Will the following be a part of domestic factor income of India? Give reasons for your answers. (i) Old age pension given by the government. (ii) Factor income from abroad. (iii) Salaries to Indian residents working in Russian embassy in India. (iv) Prifits earned by a compnay in India, which is owned by a nonresident.
Answer» Answer :(i) OLD age pension is not a PART of domestic income because no factor service is rendered in return. (ii) Factor income from abroad is not a part of domestic income because it is earned by the RESIDENTS from outside the economic (domestic) territory. (iii) Salaries to Indian residents by the Russian embassy is not a part of domestic income of INDIA because Russian embassy is a part of Russian economic territory It is a factor income from abroad. (iv) Profits (iv) Profits earned by a non-resident owned company in India is a part of domestic income of India because the income is created within the economic (domestic ) territory of India.

Discussion

Explore topic-wise InterviewSolutions in .

Inflow of foreign exchange is recorded on the_______side.

What is meant by current account?

During excess demand, central bank __ the margin.

What is consumption function ?

Mention one maion difference between centralbank and commerical bank

In determinaiton of Equilibrium Level of economyby AD -AS approach. AD curve is represented by:

Which one of the following statements is a reason for the negative slope of PPF?

The supply curve shifts to the right because of _______.

A 'productionPossibility Frontier' (PPF) is always represented as a upward sloping curve.

APC can never be zero

In an economy C=200 +0.75Y is the consumption function where C is consumption expenditure national income. Investment expenditure is 4000. Calculate equilibrium level of income consumption expenditure.

An economyis in equilibrium.Calculate marginal propensityto save from the following : National income = 15,000 Investment = 1,000 Autonomousconsumption = 500

What are visible and invisible items in BOP?

If the value of marginal propensity to consume is 0.8, find out the value of multiplier.

Find out National Income from the following data :

Let the production function of a firm be Q=5L^(1//2)K^(1//2) . Find the maximum possible output that the firm can produce with 100 units of L and 100 units of K.

C = 50 + 0.5 Y is the consumption function where C is consumption expenditure and Y is National Income and investment expenditure is 2,000 in an economy. Calculate (i) Equilibrium level of (National Income) (ii) Consumption expenditure at equilibrium level.

At higher level of MPC, the value of multiplier is

Discuss the quantitative instruments used by central bank to control the noney supply

An economy is in equilibrium, Find investment expenditure : National income=1200, Autonomous consumption expenditure=150, MPC=0.8

whatone stepcan be takenthroughmarketto to reducethe consumodityof productharmful forhealth ?

Renewable sources of energy are preferred to non-renewable sources because :

Increase in per capita real income means increase in per capital availability of goods and services. Does it necessarily mean rise in the welfare of the people of the country ? Give any one argument in support of your answer and exaplain the same.

AYUSH Programme aims at :

Explain the effect of the following on demand for a good: (i) Fall in Income for Normal Goods. (ii) Fall in Income for Inferior Goods.

Total cost in the short run is classified into fixed costs and variable costs. Which one of the following is a variable cost?

What are components of current account?

In an economy an increase in investment by 100 crore led to an increase in national income by 1000 crore. Find MPC.

If MPC = 1, the value of multiplier is

A water resources are limited in our country, how can we economise the water resources so that it could not cause a future problem for us? Give any two suggestions.

What is the differnce between face value and intrinsic value ?

Categorise the following into direct tax or indirect tax Corporation tax

Which features of monopolistic competition are competitive in nature?

Which of the following can have the value of more than one and less than zero: (i) APC, (ii) APS, (iii) MPC, and (iv) MPS ?

Give two examples of intermediate goods .

Define Marginal Opportunity cost.

Which of the following is a stock ?

givemenings of (i)Ex- antesaving,(ii)ex-anteinvestment ,(iii)ex- anteconsumptionand (ic) Ex- anteaggregate demand .

If estimated government receipts are more than estimated government expenditure , it is said to be a :

Which of the following is an example of transfer income ?

Where are the following items recorded? Give reasons. (i) Import of machinery (ii) Sale of machinery to abroad (iii) Remittances from family members from abroad (iv) borrowing from abroad (v) Export and import of computers (vi) Lending abroad (vii) Foreign investment in India.

Name the institiution which perfroms thefunctionof acceptingdeposits, grantingloansandmakinginvestments, with the aim of earningprofits .

Rural population needs short term loans :

In an economy planned spending is greater than planned output. Explain all the changes that will take place in the economy Or Explain the changes that take place in an economy when aggregate demand is less thanaggregate supply.

Elasticity of supply is zero means

Repayment of a loan to Asian Development Bank by Government of India.