1. The ________ balance is the sum of the balance of merchandise trade, services and net transfers received from the rest of the world.
1. Current Account
2. Savings Account
3. Capital Account
4. Asset Account
Option “A” is correct The Current Account balance is the sum of the balance of merchandise trade, services and net transfers received from the rest of the world.
2. The demand for a normal good decreases with ________ in the consumers income.
1. Increase
2. Decrease
3. Constant
4. Double
Option “B” is correct In economics, normal goods are any goods for which demand increases when income increases, and falls when income decreases.
3. An increase in the growth rate of the nominal money supply results in –
1. Lower rate of inflation
2. Higher rate of inflation
3. Lower interest rates
4. Currency appreciation
Option “B” is correct Inflation is the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling. When money supply increase it tends to higher rate of inflation.
4. Unemployment that arises when there is a general downturn in business activity is known as –
Option “C” is correct Cyclical unemployment is a factor of overall unemployment that relates to the cyclical trends in growth and production that occur within the business cycle. When business cycles are at their peak, cyclical unemployment will be low because total economic output is being maximized.
5. This tax is entirely borne by the entity it is levied upon and cannot be passed
Option “A” is correct Direct taxes include the taxes that cannot be transferred or shifted to another person, for instance the income tax an individual pays directly to the government.
6. Match the characteristics with their market structure:
(i) Differentiated products, but close substitutes for consumers so their demand curves are elastic
(ii) Homogeneous product, all goods are perfect substitutes for consumers
Options1. (i) Monopolistic Competition, (ii) Pure Competition
2. (i) Monopolistic Competition, (ii) Pure Monopoly
3. (i) Pure Competition, (ii) Monopolistic Competition
4. (i) Pure Monopoly, (ii) Pure Competition
Option “A” is correct Differentiated products, but close substitutes for consumers so their demand curves are elastic, is an example of Monopolistic Competition and Homogeneous product, all goods are perfect substitutes for consumers, is an example of Pure Competition.
7. The demand for inferior goods decreases with ________ in the consumer’s income.
1. Increase
2. Decrease
3. Constant
4. Double
Option “A” is correct In economics, an inferior good is a good whose quantity demanded decreases when consumer income rises.
8. Goods for which the quantity that a consumer chooses, increases as the consumer’s income increases and decreases as the income decreases are called?
Option “B” is correct In economics, normal goods are any goods for which demand increases when income increases, and falls when income decreases but price remains constant, i.e. with a positive income elasticity of demand.
9. The _________ balance is equal to capital flows from the rest of the world, minus capital flows to the rest of the world.
1. Current Account
2. Savings Account
3. Capital Account
4. Asset Account
Option “C” is correct The Capital Account balance is equal to capital flows from the rest of the world, minus capital flows to the rest of the world.
10. Balance of Trade is the difference between
1. Country’s Income and Expense
2. Country’s Exports and Import
3. Country’s Tax Revenue and Expense
4. Country’s capital inflow and outflow
Option “B” is correct The balance of trade (BOT) is the difference between a country’s imports and its exports for a given time period. The balance of trade is the largest component of the country’s balance of payments (BOP).