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Class Test 2 - Some Basic Concepts of Macroeconomics

The document is a Class Test on basic concepts of Macroeconomics, consisting of multiple-choice questions, short answer questions, assertions and reasons, fill in the blanks, and true or false statements. It covers topics such as flow and stock variables, consumer and capital goods, net investment, and the circular flow of income. The exam is worth 50 marks and is designed to assess understanding of fundamental macroeconomic principles.

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Tia Khandelwal
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56 views4 pages

Class Test 2 - Some Basic Concepts of Macroeconomics

The document is a Class Test on basic concepts of Macroeconomics, consisting of multiple-choice questions, short answer questions, assertions and reasons, fill in the blanks, and true or false statements. It covers topics such as flow and stock variables, consumer and capital goods, net investment, and the circular flow of income. The exam is worth 50 marks and is designed to assess understanding of fundamental macroeconomic principles.

Uploaded by

Tia Khandelwal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Class Test 2: Some Basic Concepts of Macroeconomics

Answer the following questions to the best of your knowledge. Good Luck!

This exam is worth 50 marks and 1 hour long

Section A – MCQs [10 marks]

1. Those goods which satisfy human wants directly are called:


a) intermediate goods
b) consumer goods
c) capital goods
d) none of these
2. An increase in the stock of capital is known as:
a. capital loss
b. capital gain
c. capital formation
d. none of these
3. Net investment is equal to:
a. gross investment + depreciation
b. gross investment x depreciation
c. gross investment - depreciation
d. gross investment + depreciation
4. 'Income of the family' is the example of which variable?
a. Stock
b. Flow
c. Both stock and flow
d. Neither stock nor flow
5. A car running between Delhi and Agra at a speed of 120 km/h includes:
a. only stock variables
b. only flow variables
c. both a stock and a flow variable
d. none of these
6. Which of the following is an example of a final consumer good?
a. Wood purchased by a carpenter
b. Bread and butter used by consumers
c. Paper purchased by a publisher
d. Sugar used as a raw material in biscuit production
7. Which of the following is a stock variable?
a. Income
b. Expenditure
c. Capital
d. Production
8. Which of the following is not a flow?
a. Income
b. Capital
c. Investment
d. Depreciation
9. Which of the following is a stock?
a. Wealth
b. Saving
c. Exports
d. Profits
10.Purchase of computers, equipment, tools, power, and raw materials, etc.
is a part of
a. Gross investment
b. Fixed investment
c. Inventory investment
d. All of the above
Section B – Short Answer Type Questions [20 marks]

1. Difference between flow and stock concepts. (Give any 2)


2. What are the reasons for depreciation of fixed assets?
3. Distinguish between consumption and capital goods with examples
4. Define Net investment. What is its significance?
5. Explain the concept of circular flow of income.

Section C – Assertion and Reason [5 marks]

i. If both the assertion and reason are true and the reason is the correct
explanation of the assertion
ii. If both the assertion and reason are true but the reason is not the
correct explanation of the assertion
iii. If the assertion is true but the reason is false
iv. If both the assertion and reason are false

(a) Assertion (A): All producer goods are not capital goods.
Reason (R): Capital goods include only fixed assets of the producers.
(b) Assertion (A): Desired inventory stock refers to unplanned inventory
stock.
Reason (R): Undesired inventory stock arises because demand for the
product turns out to be lower than expected.
(c) Assertion (A): Money flows are opposite to real flows.
Reason (R): Money flows are in response to the real flows.
(d) Assertion (A): Depreciation reserve fund is a fund to replace the worn-out
fixed assets.
Reason (R): Lack of depreciation reserve fund implies the lack of
replacement investment.
(e) Assertion (A): Capital loss is managed through insurance of the fixed
assets.
Reason (R): Capital loss refers to loss of value of fixed assets while these
are not in use.
Section D – Fill in the Blanks [5 marks]
1. The quantity of variables which is measured over a period of time is
known as _________________
2. The goods in which value is to be added or used for resale is known as
__________________
3. Expenditure on final goods must lead to either _____________
expenditure or _______________ expenditure.
4. ______________ are those goods which have crossed the boundary line
of production and are ready for use by their final users.
5. _____________ investment refers to increase in the stock of fixed assets
of the producers during an accounting year.
Section E – True or False [10 marks]
1. The quantity of a variable which is measured over a period of time is
known as a stock.
2. The goods in which value to be added or used for resale are known as
final goods.
3. Macroeconomics does not include consumer equilibrium.
4. Macroeconomics studies the economy as a whole or in aggregates.
5. The services of doctors, lawyers, teachers, domestic maids, etc. are
intermediate services.
6. Capital goods are only those durable goods which are used as producer
goods, not as consumer goods.
7. Unexpected obsolescence is a part of depreciation.
8. Higher rate of net capital formation leads to lower availability of capital
per unit of labour.
9. Consumption goods lead to direct satisfaction of human wants.
10.Stocks are measured over a period of time.

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