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ECONOMICS :- MCQ with Short & Long Questions


Choose the correct alternative

1. Sale of second-hand goods will not be comprised in the GDP because :

(a) Second-hand goods can be obtained at a low price

(b) These goods are useless

(c) Both (a) and (b)

(d) It is not a product of the current year

2.Which is the main point on the basis of which public finance can be separated from private finance?

(a) Price Policy

(b) Borrowings

(c) Secrecy

(d) Elasticity in Income

3.Public debt leads to extravagance, encouraged resort to war and induced bad economic

conditions. This statement was given by :

(a) Dalton

(b) Adam Smith

(c) J.K. Mehta

(d) Findley Shirras

4.Economic Planning is in :

(a) Union List

(b) State List

(c) Concurrent List

(d) Not specified any List

5.War expenditure is a ______.

(a) Waste of Money

(b) Investment

(c) Forced Expenditure

(d) None of these

6.Which economist has classified public expenditure on the basis of revenue ?

(a) J.K. Mehta

(b) Pigou

(c) Nicholson

(d) Wagner

7.Which one of the following statements is correct ?

(a) GNP includes depreciation

(b) Value added includes transfer payment

(c) Personal income includes undistributed profits

(d) Disposable income includes personal taxes

8. Suppose both real GDP and prices double. We can conclude that nominal output will be :

(a) More than doubled

(b) Doubled

(c) Rose by less than double

(d) Did not increase

9.Which of the following days has been declared as Income Tax Day in India ?

(a) July 18

(b) July 24

(c) August 16

(d) September 1

10.National Income estimates in India are prepared by :

(a) Planning Commission

(b) RBI

(c) Finance Ministry

(d) C.S.O.

11.The food for work program was subsumed in :

(a) IRDP


(c) RLEP

(d) JRY

12.Finance Commission is constituted :

(a) Every year

(b) Once in two years

(c) Once in four years

(d) Once in five years

13.Which one of the following measures does not include final goods and services ?

(a) GNP

(b) NNP

(c) Disposable Income

(d) National Income

14.Mahalanobis Model has been associated with which five year plan ?

(a) First Five Year Plan

(b) Second Five Year Plan

(c) Third Five Year Plan

(d) Fourth Five Year Plan

15.The smallest national income accounting aggregate is usually :

(a) PI

(b) GNP

(c) DPI

(d) NI

16.National Income calculated at current prices has shown a tendency to rise at a faster rate than

national income calculated at constant prices. This is because :

(a) India's population has been rising fast

(b) Planned expenditure has been rising fast

(c) Statistical manipulation are employed by the planners.

(d) General price level has been rising fast.

17. Which of the following is the items for country planning ?

(a) Rising standard of living

(b) Opportunities for work

(c) Facilities for education

(d) All of above

18.Which of the following measures cannot remove unemployment ?

(a) Population control

(b) Government subsidies

(c) Increase in production

(d) Equitable distribution

19.A five year plan is a :

(a) Medium Term Plan

(b) Perspective plan

(c) Short Term Plan

(d) None of the above

20.The GNP gap is the gap between :

(a) GNP and NNP

(b) GNP and depreciation

(c) GNP and GDP

(d) Potential and actual GNP

21.State earn maximum revenue through :

(a) Land revenue

(b) Custom duties

(c) Commercial duties

(d) Excise duties on intoxicants

22.Which of the public sector has completed 100 years of its establishment on December 21, 2011?

(a) Central Bank of India

(b) State Bank of India

(c) Punjab National Bank

(d) Bank of Baroda

23.Find the tax which is direct tax among the following :

(a) Personal income tax

(b) Excise duty

(c) Sales tax

(d) Service tax

24.When some workers are, temporarily out of work while changing jobs leads to unemployment?

(a) Cyclical

(b) Voluntary

(c) Frictional

(d) Seasonal

25.Public debt produces :

(a) Contradictory effect on the economy (b) Expansionary effect on the economy

(c) Proportional effect on the economy (d) None of the above

26.Which of the following is the function of Central Bank ?

(a) Acceptance of deposits

(b) Monopoly over note issue

(c) Advancing loan

(d) Credit creation.

27.Which one is not the objective of economic planning ?

(a) Optimum Resource Utilization

(b) Provision of social overheads for the development.

(c) Adjusting to economic fluctuations

(d) Fostering complete freedom to market economy.

28.According to the latest amendment in Banking Regulation Act, nationalised bank can release a share of total paid up capital upto a maximum ceiling of :

(a) 40%

(b) 49%

(c) 51%

(d) 100%

29.The best method of computing national income is :

(a) Product method

(b) Income method

(c) Expenditure method

(d) Combination of income and production method.

30.The most liquid asset, next to cash, which the banks possess is :

(a) Advances to customers

(b) Money at call

(c) Treasury bill

(d) Inland bill.

31.The burden of long-term public loan is on :

(a) Present generation

(b) Past generation

(c) Future generation

(d) None of these

32.Which of the following method is used to measure national income at factor cost ?

(a) Production method

(b) Income method

(c) Expenditure method

(d) Final expenditure method

33.Indirect taxes are not made as part of national income because :

(a) They influence the price

(b) They are not factor income

(c) They are income for the government (d) None of the above

34.What is the Cash Reserve Ratio (CRR) ?

(a) The fraction of the deposits that commercial banks lend to the customers

(b) The fraction of the deposits that RBI must keep with commercial banks

(c) The fraction of the deposits that commercial banks must keep with RBI

(d) None of the above

35.RBI was established in the year :

(a) 1935

(b) 1932

(c) 1940

(d) 1925

36.Banks create credit :

(a) Out of nothing

(b) On the basis of their security

(c) On the basis of their total assets

(d) On the basis of their cash deposits

37.The internal debt comprises :

(a) Market borrowings

(b) Treasury bills

(c) Special securities issued to RBI

(d) All the above

38.The Indian Planning Commission was set up in :

(a) 1950

(b) 1951

(c) 1945

(d) 1949

39.Nehru Rozgar Yojna was started to help :

(a) Urban unemployment

(b) Rural unemployment

(c) Agricultural unemployment

(d) Seasonal unemployment

40.Depreciation is the loss of value of :

(a) Capital Assets

(b) Stocks

(c) Final Goods

(d) Intermediate Goods

41.What is the main objective of a tax ?

(a) Increase in consumption

(b) Increase in production

(c) Raising public revenue

(d) Reduction in capital formation

42.Which of the following is non-wage income ?

(a) Profit

(b) Interest on capital

(c) Rent on land

(d) All of the above

43.For how many days NREGA provides employment ?

(a) 70

(b) 80

(c) 90

(d) 100

44.The type of unemployment mostly found in India can be characterised as :

(a) Structural

(b) Frictional

(c) Cyclical

(d) Disguised

45. Scope of Public Finance includes :

(a) Public revenue

(b) Public debt

(c) Public expenditure

(d) All of the above

Answer the following

  1. What are the functions of the Central Bank in a country?

  2. What are the reasons for unemployment in rural areas?

  3. Discuss the economic effects of Public Expenditure.

  4. What are the defects of the Indian Tax structure?

  5. The central bank and Co-operative Bank

  6. Public Expenditure and Private Expenditure

  7. Internal Debt and External Debt

  8. GDP at Market Price and NNP at Factor Cost. 5×3=15

  9. Distinguish between Direct and Indirect Taxes.

  10. Distinguish between Public Debt and Public Expenditure.

  11. State the remedies on unemployment.

  12. Give the objectives of economic planning.

Write short notes

  1. Public Finance and Private Finance

  2. Co-operative Bank

  3. Different types of Taxes

  4. Public Debt and Public Expenditure.

  5. Credit Control.

  6. Principles of Public Finance.

  7. Principles of Central Bank.

  8. Features of National Income.

  9. What are the economic effects of taxes in an economy ?

  10. Highlight the specific difficulties faced by India in the estimation of National Income.

  11. Give the objectives of 12th Five Year Plan.

  12. Give the measures to remove ‘White Collared’ unemployment.

Write Long notes

  1. Discuss the functions performed by cooperative credit societies.

  2. Discuss the canons of Taxation.

  3. Explain the various methods of measuring National Income.

  4. Discuss the objective of 5 years of planning in India.

  5. Discuss the effects of public debts.

  6. What are the main functions of commercial banks? What is their utility to the community?Throw light on the content and importance of Public Finance.

  7. Discuss the credit creation by commercial banks.

  8. Explain the process of credit creation by Commercial Banks.

  9. What are the reasons for increasing public expenditure in the last few years in India? Do you justify the increase?

  10. Explain Adam Smith’s canons of taxation. What additions have been made to these canons in recent years?

  11. Has the Economic Planning in India been able to achieve its objectives ?’ Discuss.

  12. Explain the various methods of calculating National Income. Which method is the ideal method?

  13. How unemployment has affected the Indian Economy? How has this problem been handled by the Indian Government?

  14. What is Public Debt? Describe the classification of Public Debt.

  15. Explain the significance of Selective Credit Controls. How do they operate and with what success?

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