Business Economics

301. The proportionality between the velocity of price movement and the inflationary gap is:

  1. Indirect and irregular
  2. Direct and linear
  3. Irregular and direct
  4. Indirect and non-linear
Correct answer: (B)
Direct and linear

302. The fundamental cause for the collapse of the Bretton woods system was:

  1. The liquidity problem
  2. The adjustment problem
  3. The confidence problem
  4. None of the above
Correct answer: (C)
The confidence problem

303. When automatic fiscal stabilizers are in place, a shock that causes a fall in the kevel of economic activity automatically

  1. Results in a decline in the federal budget deficit that lessens the fall in income
  2. Results in a rise in the federal deficit that lessens the fall in income
  3. Requires the federal government to balance the budget
  4. Will lead to a permanent increase in the budget deficit
Correct answer: (B)
Results in a rise in the federal deficit that lessens the fall in income

304. According to the Keynesians,

  1. An easy-fiscal tight-monetary policy reduces the trade deficit, such as what occurred during the 1980s
  2. An easy-fiscal tight-monetary policy mix affects the composition of output by encouraging imports of foreign goods and discouraging U.S. exports, as was experienced during the 1980s
  3. There was not a link between the rising government budgetary deficit and the rising trade deficit during the mid-1980s
  4. Budget deficits and trade deficits should not be a source of concern
Correct answer: (B)
An easy-fiscal tight-monetary policy mix affects the composition of output by encouraging imports of foreign goods and discouraging U.S. exports, as was experienced during the 1980s

305. Which of the following hypotheses about voter behaviour have been advanced in public-choice literature?

  1. Voters are myopic
  2. Unemployment is more likely to result in vote loss than is higher inflation
  3. Deficit bias of the budget process
  4. Both a and c
  5. All of the above
Correct answer: (E)
All of the above

306. The Historical school was based on

  1. Deductive method
  2. Inductive method
  3. Both of above
  4. None of these
Correct answer: (B)
Inductive method

307. Demand for a commodity is elastic when it has:

  1. Only one use
  2. Uses which can not be postponed
  3. Many uses
  4. Uses very essential for the consumer
Correct answer: (C)
Many uses

308. The utility may be defined as:

  1. The desire for a commodity
  2. The usefulness of a commodity
  3. The necessity of a commodity
  4. The power of a commodity to satisfy wants
Correct answer: (D)
The necessity of a commodity

309. The elasticity of demand for a product will be higher:

  1. The more available are substitutes for that product
  2. The more its buyers demand loyalty
  3. The more the product is considered a necessity by its buyers
  4. All of the above
Correct answer: (A)
The more available are substitutes for that product

310. If the percentage increase in quantity of a commodity demanded is its price, the coefficient of price elasticity of demand is:

  1. Greater than 1
  2. Equal to 1
  3. Less than 1
  4. Zero
Correct answer: (C)
Less than 1
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