ECO & BCK TEST TIME – 2HR DATE-21.10.

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Q.1 Economic goods are considered scarce resources because they __________.
(a) Cannot be increased in quantity.
(b) Do not exist in adequate quantity to satisfy the requirements of the society.
(c) Are of primary importance in satisfying social requirements.
(d) Are limited to man made goods.

Q.2 Capital intensive technique would get chosen in a __________.

(a) Labour surplus economy where the relative price of capital is lower.
(b) Capital surplus economy where the relative price of capital is lower.
(c) Developed economy where technology is better.
(d) Developing economy where technology is poor.

Q.3. Production does not include work done ________.

(a) Within a household out of love & affection (b) Voluntary services
(c) For self consumption (d) All of the above.

Q.4.Which one of the following is not a subject matter of Micro-Economics?

(a) Behavior of Firms (b) External Value of Currency
(c) Factor Pricing (d) Location of Industry

Q.5. Which of the following is a vari-able cost in the short run₹

(a) Rent of the factory. (b) Wages paid to the factory labour.
(c) Interest payments on borrowed financial capital.
(d) Payment on the lease for factory equipment.

Q.6. Identify the correct statement:

(a) The average product is at its maxi-mum when marginal product is equal to average product.
(b) The law of increasing returns to scale relates to the effect of changes in factor proportions.
(c) Economies of scale arise only because of indivisibilities of factor proportions.
(d) Internal economies of scale can accrue when industry expands beyond optimum.

Q.7.Which of the following statements is correct?

(a) Fixed costs vary with change in output.
(b) If we add total variable cost and total fixed cost we get the average cost.
(c) Marginal cost is the result of total cost divided by number of units produced.
(d) Total cost is obtained by adding up the fixed cost and total variable cost.

Q.8. Business Cycles have _________ consequences on the well-being of the society.
(a) Some (b) Serious (c) No (d) Moderate
Q.9. Calculate total fixed cost at 4 Unit:
Output 0 10 20

Total cost ₹ 200 ₹ 400 ₹ 800

(a) ₹ 40 (b) ₹ 20 (c) ₹ 200 (d) ₹ 400

Q.10.Which of the following statements describes increasing returns to scale?

(a) Doubling of all inputs used leads to doubling of the output.
(b) Increasing the inputs by 50% leads to a 25% increase in output.
(c) Increasing inputs by 1 / 4 leads to an increase in output of 1/3.
(d) None of the above.

Q.11. AFC curve is :

(a) Convex & downward sloping (b) Concave & downward sloping
(c) Convex & upward sloping (d) Concave & upward rising

Q.12. Which of the following is not a characteristic of business cycles _________.

(a) Business cycles have serious consequences on the well being of the society.
(b) Business cycles occur periodically, although they do not exhibit the same regularity.
(c) Business cycles have uniform characteristics and causes.
(d) Business cycles are contagious and unpredictable.

Q.13. A rational producer will produce in the stage in which marginal product is positive and:
(a) MP> AP (b) MP = AP (c) MP < AP (d) MP is zero

Q.14. Marginal product, mathematically, is the slope of the ________.

(a) Total product curve. (b) Average product curve.
(c) Marginal product curve. (d) Implicit product curve.

Q.15. A variable that tends to move later than aggregate economic activity is called _________.
(a) A leading variable. (b) A coincident variable.
(c) A lagging variable. (d) A cyclical variable.

Q.16. Which of the following statement is False?

(a) No economy follows a perfectly timed Cycle.
(b) Business Cycles vary in intensity and length.
(c) There is no set pattern which Business Cycles follow.
(d) Every Business Cycle has relatively longer period.
Q.17. Which phase is the Highest point of the business Cycle?
(a) Upswing (b) Downswing (c) Peak (d) Trough

Q.18. The marginal, average, and total product curves encountered by the firm producing in the short
run exhibit all of the following relationships except:
(a) When total product is rising, average and marginal product may be either rising or falling.
(b) When marginal product is negative, total product and average product are falling.
(c) When average product is at a maximum, marginal product equals average product, and total product
is rising.
(d) When marginal product is at a maximum, average product equals marginal product, and total product
is rising.

Q.19. Law of diminishing returns is applicable in:

(a) Manufacturing industry (b) Agriculture
(c) Neither (a) nor (b) (d) Any economic activity at a point of time.

Q.20. Average cost of producing 50 units of any commodity is ₹ 250 and fixed cost is ₹ 1,000. What
will be the average fixed cost of producing 100 units of the commodity?
(a) ₹ 10 (b) ₹ 30 (c) ₹ 20 (d) ₹ 05

Q.21. The positively sloped (rising) part of the long run average cost curve indicates working of the
________.
(a) Diseconomies of scale (b) Increasing returns to scale
(c) Constant returns to scale (d) Economies of scale

Q.22. If a firm’s output is zero, then:

(a) AFC will be positive (b) AVC will be zero
(c) Both of (a) and (b) (d) None of (a) and (b)

Q.23. Which of the following is anti-inflationary measure which causes a downward pressure on the
aggregate demand and the economy slows down?
(a) Reduction in Government Spending. (b) Increase in Taxes
(c) Increase in Interest Rates (d) All of these.

Q.24. Implicit cost can be defined as ________.

(a) Money payments made to the non-owners of the firm for the self-owned factors employed in the
business and therefore not entered into books of account.
(b) Money not paid out to the owners of the firm for the self owned factors employed in a business and
therefore not entered into books of account.
(c) Money payments which the self owned and employed resources could have earned in their next best
alternative employment and therefore entered into books of account.
(d) Money payments which the self owned and employed resources earn in their best use and therefore
entered into books of ac-count.
Q.25. A firm producing 7 units of output has an average total cost of ₹ 150 and has to pay ₹ 350 to its
fixed factors of production whether it produces or not. How much of the average total cost is made up of
variable costs?
(a) ₹ 200 (b) ₹ 50 (c) ₹ 300 (d) ₹ 100

Q.26. If Cobb-Douglas function is given by Q = KLaCb, then there will be ________ when (a+b)
________.
(a) Increasing returns, > 1 (b) Increasing returns to scale, > 1
(c) Diminishing returns, < 1 (d) Decreasing returns to scale, = 1

Q.27. A decrease in government spending would cause _________.

(a) The aggregate demand curve to shift to the right.
(b) The aggregate demand curve to shift to the left.
(c) A movement down and to the right along the aggregate demand curve.
(d) A movement up and to the left along the aggregate demand curve.

Q.28. Consider the following table: Calculate Total Product at 2 Unit of the table?
Labour Total Output Marginal Product

1 100 100

2 80

3 240
(a) 80 (b) 100 (c) 180 (d) 200

Q.29. A company produces 10 units of output and incurs ₹ 30 per unit as variable cost and ₹ 5 per unit
of fixed cost. What will be its total cost of producing 10 units₹
(a) ₹ 300 (b) ₹ 35 (c) ₹ 305 (d) ₹ 350

Q.30. A firm producing 9 units of output has an average total cost of f 200 and has to pay ₹ 630 to its
fixed cost of production. How much of the average total cost is made up of variable cost?
(a) ₹ 150 (b) ₹ 130 (c) ₹ 70 (d) ₹ 300

Q.31. ISO quants are also known as:

(a) Production possibility curves (b) Indifference curves
(c) Production indifference curves (d) None of the above

Q.32. The total supply of Land is ________ from the point of view of the economy. However, it is
relatively ________ from the point of view of a firm.
(a) Perfectly Inelastic, Inelastic (b) Perfectly Inelastic, Relatively Elastic
(c) Perfectly Elastic, Inelastic (d) Perfectly Elastic, elastic

Q.33. If decreasing returns to scale are present, then if all inputs are increased by 10% then:
(a) Output will also decrease by 10%. (b) Output will increase by 10%.
(c) Output will increase by less than 10% . (d) Output will increase by more than 10%.

Q.34. Which of the following is not an example of coincident indicator?

(a) Industrial production (b) Inflation (c) Retail sales
(d) New orders for plant and equipment
Q.35. Use the following diagram to answer the question given below it

The marginal physical product of the third unit of labour is ________, the MP of the ________ labour is
Negative
(a) Six; fourth (b) Six; third (c) Six; fifth (d) Six; sixth

Q.36. Opportunity Cost is ________

(a) Recorded in the books of account (b) Sacrificed alternative
(c) Both (a) and (b) (d) None of the above

Q.37. _________ theory holds that business cycles result from the fact that present prices substantially
influence the production at some future date.
(a) Schumpeter’s (b) Hawtrev’s (c) Cobweb (d) Pigou’s

Q.38. The most probable outcome of an increase in the money supply is _________.
(a) Interest rates to rise, investment spending to rise, and aggregate demand to rise.
(b) Interest rates to rise, investment spending to fall, and aggregate demand to fall.
(c) Interest rates to fall, investment spending to rise, and aggregate demand to rise.
(d) Interest rates to fall, investment spending to fall, and aggregate demand to fall.

Q.39. Normative aspect of Economics is given by:

(a) Marshall (b) Robbins (c) Adam Smith (d) Samuelson

Q.40 Which internal factor affect the Business cycle?

(a) Fluctuations in investment (b) Natural factors
(c) Technology shocks (d) Population growth

Q.41. Business Economics involves the elements of __________.

(a) Micro Environment (b) Macro Environment
(c) Both (a) and (b) (d) None of the above.

Q.42. Business Economics is also known as?

(a) Applied Economics (b) Managerial Economics
(c) Micro Economics (d) All of the above
Q.43 Adam Smith published his master piece “An enquiry into the nature and causes of wealth of
nations” in the year __________.
(a) 1776 (b) 1786 (e) 1789 (d) 1790

Q.44. Which of the following is not within the scope of Business Economics?
(a) Capital Budgeting (b) Risk Analysis (c) Business Cycles (d) Accounting Standards

Q.45. A capitalist economy uses __________ as the principal means of allocating resources.
(a) Demand (b) Supply (c) Efficiency (d) Prices

Q.46. An economic variable that moves in the opposite direction as aggregate economic activity down in
expansions, up in contractions is called.
(a) Procyclical (b) Countercyclical (c) A cyclical (d) A leading variable

Q.47. Freedom of choice is the advan-tage of __________.

(a) Socialism (b) Capitalist (c) Mixed economy (d) None of the above

Q.48. The basic minimum objective of all kinds of enterprises is to survive or to stay alive. It may be
regarded as ________ objective of the enterprise.
(a) Organic (b) Economic (c) Social (d) National

Q.49. Which one of the following is not a feature of Contraction?

(a) Decrease in input demand pulls input prices down
(b) Increases of wage and interest earns gradually decline
(c) Producers lower their prices in order to dispose of their inventories
(d) Business Firms become optimistic about future state of economy.

Q.50. Economic recession shares all of these characteristics except.

(a) Fall in the levels of investment, employment
(b) Incomes of wage and interest earners gradually decline resulting in decreased demand for goods and
services
(c) Investor confidence is adversely affected and new investments may not be forthcoming
(d) Increase in the price of inputs due to increased demand for inputs

Q.51 Which of the following statement about factors of production is not true?
(a) Land is a passive factor (b) Land is a free gift of nature
(c) Land is immobile (d) Land is perishable

Q.52. ________ shows the overall output generated at a given level of input:
(a) Cost function (b) Production function
(c) ISO cost (d) Marginal rate of technical substitution

Q.53 The economy-wide fluctuations in production, trade and general economic activity is referred as :
(a) Business Cycle (b) Economic cycle (c) Boom-bust Cycle (d) All of the above.

Q.54. Fixed costs are ________ a function of output.

(a) Not (b) Always (c) Treated as (d) Directly related
Q.55 Increasing returns to scale can be explained in terms of:
(a) External and internal economies (b) External and internal dis-econo- mies
(c) External economics and internal dis-economies (d) All of these

Q.56. The economy cannot continue to grow endlessly. Once Peak is reached, _________ in demand is
halted & starts _________ in certain sectors.
(a) Increase, decreasing (b) Decrease, Increasing
(c) Increase, Increasing (d) Decrease, Decreasing.

Q.57. What happens to marginal cost when average cost increases?

(a) Marginal cost is below average cost (b) Marginal cost is above average cost
(c) Marginal cost is equal to average variable cost (d) Marginal cost is equal to average cost

Q.58. U-shaped average cost curve is based on:

(a) Law of increasing cost (b) Law of decreasing cost
(c) Law of constant returns to scale (d) Law of variable proportions

Q.59. Greatest depression suffered by economy in which year.

(a) 1924 (b) 1930 (c) 2008 (d) 2009

Q.60. The different phases of a business cycle _________

(a) Do not have the same length and severity (b) Expansion phase always last more than ten years
(c) Last many years and are difficult to get over in short periods
(d) None of the above

Q.61 Indigo, Spice Jet and Vistara, operating in Indian aviation, are a result of?
(a) Privatisation (b) Liberalisation
(c) Globalisation (d) Foreign Direct Investment

Q.62 Which of the following is Government’s initiative for furthering and facilitating businesses in
India ?
(a) Good and Service Tax (b) Make in India
(c) Skill India (d) Beti Bachao Beti Padhao

Q.63 Foreign Exchange Management Act (FEMA), would fall under which of the following type of
Public Policy?
(a) Restrictive (b) Regulatory (c) Facilitating (d) Advisory

Q.64 Public policies are of three types:

(a) Restrictive, Regulatory, Participative (b) Restrictive, Regulatory, Facilitating
(c) Voluntarily, Participative, Facilitating (d) Regulatory, Voluntarily, Continuous

Q.65 In case of Maruti–Suzuki, the Union Government surrendered partial ownership and sold the
majority stake to Suzuki of Japan in course of time .This is a case of:
(a) Partial Disinvestment (b) Displacement (c) Delegation (d) Divestment

Q.66 Mark the Incorrect statement:

(a) FDI is made with an intention of exercising control over an enterprise.
(b) FDI is called Port folio Investment. (c) FDI is along run Investment.
(d) FDI helps in upgradation of technology

Q.67 After Independence and up to the first 3-4 decades the economic system prevalent in India may be
regarded as
(a) Capitalistic (b) Socialistic (c) Mixed (d) Colonial

Q.68 The form of privatization, where government keeps hold of responsibility and private enterprise
handles the management of it fully or partly is known as:
(a) Disinvestment (b) Deregulation (c) Delegation (d) Decentralization

Q.69 FDI in sectors / activities which do not require any prior approval either of the Government or the
Reserve Bank of India is identified as:
(a) Green Channel (b) Priority route (c) Non-Commercial Route
(d) Automatic Route

Q.70 FIFP stands for:

(a) Foreign Institutional Promotion Board (b) Foreign Institutional Preparatory Board
(c) Foreign Investment Priority Board (d) Foreign Investment Faciliation portal

Q.71 Sale of 50% stake in a PSU to a single private sector company is an example of:
(a) Displacement of stake (b) Decentralization of Authority
(c) Delegation of stake (d) Disinvestment to form a Joint Venture

Q.72 BRICS is an economic organization comprising:

(a) Brazil, Russia, India, China, South Korea
(b) Brazil, Russia, India, China and South Africa
(c) Bangladesh, Russia, India, China, South Korea
(d) Bhutan, Russia, India, China, South Africa

Q.73 Which of the following is not the concern of monetary policy?

(a) Interestrate (b) Quantity of money and credit
(c) Disposable income with the households (d) Both (a) & (b)

Q.74 Which of the following is the overarching, all inclusive assumption while assessing the
conduciveness of the macro variable for business?
(a) Corresponding conduciveness of politico-legal and so cio-cultural institutions
(b) Given other things constant (c) Time-lag
(d) Non retaliatory / compensatory adjustment neutralizing a particular impact

Q.75 Reasons why lower interest rate may be conducive for business include:
(a) Makes investment proposals with lower returns eligible
(b) Enables mobilization of savings of the households
(c) Reduces cost of capital (d) (a) & (c)

Q.76 Which of the following reasons is /are correct for considering moderately low external value of
domestic currency as conducive for domestic business?
(a) Protecting the domestic industry from competition from imported goods
(b) Protecting the Industry from competition from imported goods
(c) Tariff – jumping FDI (d) (a) & (c)

Q.77 Which of the following is not implied by liberalization?

(a) Decontrol (b) Deregulation
(c) General broadening of the freedom of private enterprise
(d) Disinvestment of public sector enterprises

Q.78 After independence, India followed a:

(a) Socialistic Path of Development (b) Common wealth Model of Growth
(c) Mixed Economic Path (d) Capitalistic Model of Development

Q.79 Hyundai India Limited came to India through the FDI route. It followed the path of:
(a) Divestment in Public Sector Unit (b) Joint Venture
(c) By creating a 100% Indian subsidiary (d) Replacement of a government sector business.

Q.80 Which of the following is not a Funding Institution?

(a) World Bank (b) NABARD (c) Reserve Bank of India (d) International Monetary Fund

Q.81 All scheduled banks are required to maintain a certain minimum cash reserve ratio with the RBI.
This provision enables RBI to ensure what?
(a) Forex Rate Fluctuation (b) Credit Position of the Country
(c) Savings of People (d) Collect Public Data of Money held by People

Q.82 Under which section of IRDAI Act can IRDAI function and impart its duties?
(a) Section 11 of IRDAI Act,1999 (b) Section 21 of IRDAI Act,1999
(c) Section 19 of IRDAI Act,1999 (d) Section 14 of IRDAI Act,1999

Q.83 Which of the following does SEBI not cater to?

(a) Government Organizations (b) Investors
(c) Intermediaries (d) Security Issuing Companies

Q.84 Who was the regulatory body for controlling financial affairs in India before SEBI?
(a) Controller of Capital Issues (b) Reserve Bank of India
(c) Insurance Regulatory and Development Authority of India
(d) Government of India
Q.85 Which of the following is NOT a function of RBI?
(a) Monopoly of Note issue (b) Banker to the Government
(c) Advancing loan to large business houses (d) Controller of Credit
Q.86 Where can the first appeal against SEBI be made?
(a) High Court (b) Supreme Court
(c) Securities Appellate Tribunal (d) RBI
Q.87 Which one is not correct about Bank rate?
(a) It is a quantitative measure. (b) It differs from repo rate.
(c) It is also known as discount rate. (d) It influences credit availability to particular sector
Q.88 When was IRDAI constituted?
(a) 1997 (b) 1998 (c) 1999 (d) 2000
Q.89 Where is the head quarter of NABARD?
(a) Mumbai (b) Delhi (c) Gurugram (d) Bangalore

Q.90 Which one of the following is an Indian Regulatory Body that facilitates business organizations?
(a) EXIM Bank (b) NABARD (c) IRDA (d) IFCI

Q.91 When was SEBI established?

(a) 1988 (b) 1990 (c) 1986 (d) 1989

Q.92 Identify the sector where, FDI is not permitted:

(a) Automobile (b) Infrastructure (c) Textile (d) Atomic energy

Q.93 Which of the following is not attributable to Facilitative/ Developmental policies?

(a) Lifting of curbs on business (b) Easing of doing business
(c) Creation of conducive conditions (d) Imposition of clearances and approvals.

Q.94 Which one of the following statements is correct?

(a) The SEBI members consist of a Chairman, who shall be appointed by State Government.
(b) The SEBI members consist of two members from amongst the officials of the Ministry of the State
Government.
(c) The SEBI members consist of two members from amongst the officials of the Ministry of the
Central Government.
(d) The SEBI members consist of five other members out of which at least four members shall be
whole-time members, who shall be appointed by Central Government.

Q.95 SEBI has several functions rolled into one body. Which one of the following is not the function of
SEBI?
(a) Quasi-legislative (b) Quasi-judicial (c) Quasi-professional (d) Quasi-executive

Q.96 A security which has a solid record of dividend payments and offer the dividend higher than the
common stock is
(a) Hedge (b) Holding Period (c) Index (d) Income stock

Q.97 Carrying forward of transaction from one settlement period to the next without effecting delivery
or payment is called________
(a) Badla (b) Beta (c) Blue Chips (d) Basket trading

Q.98_______ is the simultaneous sale and purchase of two identical commodities in order to take
advantage of the price variations in two different markets.
(a) Hedge (b) Cap (c) Arbitrage (d) Consolidation

Q.99 Combination of several companies working together:

(a) Consortium (b) Merger (c) Consolidation (d) None

Q.100 _______ is a strategy that is used to minimize the risk of a particular investment and maximize
the returns of an investment.
(a) Cap (b) Encryption (c) Hedge (d) Term Insurance