Business Economics 14

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Objective Questions and Answers of MBA: Business Economics 14

Subject: Objective Questions and Answers of MBA: Business Economics 14

Part 14: Objective questions and answers of Business Economics


Q1. The higher the marginal income tax rate, the

a) Higher the mpc out of disposable income

b) Lower the mpc out of disposable income

c) Highest the autonomous expenditure multiplier

d) Lower the autonomous expenditure multiplier

e) None of the above


Q2. During the recession of 2001,

a) There were a number of proposals for tax increases or spending cuts to stir the economy, but the failed due to worries about their effects on the already large deficit

b) A series of tax cuts were passed, though the only occurred in late 2001

c) All the proposed tax and spending cuts were approved in order to motivate the economy and reduce the large deficit

d) The cyclical deficit increased but the structural deficit remained unchanged


Q3. According to the concept of rational expectations

a) Budget deficits are irrelevant to output in the short-run

b) Higher deficits should increase output in the short run if they are expected

c) Lower deficits can be used to stabilize output during expansions

d) None of these


Q4. The horizontal demand curve for a commodity shows that its demand is:

a) Perfectly elastic

b) Highly elastic

c) Perfectly inelastic

d) Moderately elastic


Q5. Cross elasticity of demand between tea and sugar is:

a) Positive

b) Zero

c) Infinity

d) Negative


Q6. Which of the following shocks have been emphasized most often with respect to real business cycle story?

a) Shocks to technology

b) Variations in environmental conditions

c) Changes in the real(relative) prices of imported raw materials

d) Changes in tax rates

e) None of the above


Q7. Advocates of real business cycle theories argue that all of the following could cause a recession except

a) A fall in consumer expectations

b) Natural disasters

c) Higher taxation

d) Increase in the price of oil


Q8. The five year plan in india are launched after the approval of

a) The president and prime minister

b) The rajya sabha

c) The national development council (ndc)

d) The lok sabha


Q9. Dualism in development economics refers to

a) Dual price policy

b) Co-existence of technical and non-technical sectors

c) Co-existence of modern and traditional sectors

d) Co-existence of institutional and non- institutional agencies


Q10. The imposition of an import tariff by a nation will increase the nation's welfare:

a) Never

b) Often

c) Sometimes

d) Always


Q11. A situation where the firm is not in a position to recover its variable costs at the prevailing prices is known as:

a) Point of inflation

b) Equilibrium point

c) Optimum point

d) None of these


Q12. Suppose that the mpc out of disposable income was 0.8 and the marginal tax rate was

0.25 for a given economy. In this case, the value of the tax multiplier in the simple Keynesian model would be

a) 1

b) -2

c) 2.5

d) 2

e) None of the above


Q13. According to the partisan theory,

a) Politicians are viewed as working only for their own welfare.

b) There are two parties with flexible goals

c) Moderates and liberals often switch political goals

d) Macroeconomic policy is not a key focus of most politicians

e) None of these


Q14. Which of the following statements are(is) correct?

a) Expansionary monetary policy and expansionary fiscal that leads to budget deficits create low interest rates

b) High interest rates in the first half of the 1980s resulted from falls in the budget deficit under the reagan administration

c) The best monetary-fiscal policy mix to keep interest rates low would be to raise taxes and raise the money supply

d) The answer depends upon the school of thought used to evaluate the effects of deficit policies


Q15. The cyclical deficit is that portion of the deficit

a) That results form the economy being below the natural rate of output

b) That would exist even if the economy were at its natural rate of output

c) Is a function of the level of automatic stabilizers

d) Both a & c


Q16. When an individual's income falls(while everything else remains the same), his demand for an inferior good:

a) Increases

b) Decrease

c) Remains unchanged

d) We cannot say without additional information


Q17. If the quantity of a commodity demanded remains unchanged as its price changes, the coefficient of price elasticity of demand is

a) Greater than 1

b) Equal to 1

c) Less than 1

d) Zero


Q18. In real business cycle models and new classical models

a) Monetary factors are responsible for fluctuations in output and employment

b) Changes in unemployment are involuntary

c) Markets always clear

d) Prices and wages are perfectly flexible

e) None of the above


Q19. The real business cycle theory and the new classical theory agree that

a) Business cycles are driven by changes in aggregate demand

b) Expectations are formed rationally

c) Imperfect information plays a big role in business cycles

d) None of the above


Q20. New keynesian theories of efficiency wages imply

a) Voluntary unemployment

b) Real wage rigidity

c) Changes in unemployment represent changes in the natural rate of unemployment

d) None of the above


Part 14: Objective questions and answers of Business Economics


Q1. Answer d


Q2. Answer b


Q3. Answer a


Q4. Answer a


Q5. Answer d


Q6. Answer a


Q7. Answer a


Q8. Answer c


Q9. Answer c


Q10. Answer c


Q11. Answer d


Q12. Answer b


Q13. Answer a


Q14. Answer d


Q15. Answer d


Q16. Answer b


Q17. Answer d


Q18. Answer d


Q19. Answer b


Q20. Answer b

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