191. If goods A and B are substitutes, a decrease in the price of good B will –

1. decrease demand for good B
2. decrease demand for both the goods
3. increase demand for both the goods
4. decrease demand for good A

Option “D” is correct
If goods A and B are substitutes, a decrease in the price of good B will decrease demand for good A.
192. A manufacturer faces a -1.2 price elasticity of demand for its product. It is presently selling 7,500 units/day. If it wants to increase quantity sold by 9%, it must lower its price by –

1. 7.5 percent
2. 7.8 percent
3. 10.2 percent
4. 10 percent

Option “A” is correct
193. Government borrowing to finance budget deficits _____.

1. will exert downward pressure on interest rates
2. will have no effect on interest rates
3. will increase supply of loanable funds
4. will put upward pressure on interest rates

Option “D” is correct
Government borrowing to finance budget deficits will put upward pressure on interest rates.
194. Which of the following concepts are most closely associated with J. M. Keynes?

1. Control of money supply
2. Marginal utility theory
3. Indifference curve analysis
4. Marginal efficiency of capital

Option “D” is correct
The marginal efficiency off capital (MEC) is that rate of discount which would equate the price of a fixed capital asset with its present discounted value of expected income. The term “marginal efficiency of capital” was introduced by John Maynard Keynes in his General Theory.
195. When aggregate supply exceeds aggregate demand

1. Unemployment falls
2. Prices rise
3. Inventories accumulate
4. Unemployment develops

Option “C” is correct
Deflation sets in when aggregate supply exceeds aggregate demand. Recession sets in. This will lead to a buildup in stocks (inventories) and this sends a signal to producers either to cut prices (to stimulate an increase in demand) or to reduce output so as to reduce the buildup of excess stocks.
196. In a business, raw materials, components, work in progress and finished goods are jointly regarded as

1. capital stock
2. Inventory
3. Investment
4. Net worth

Option “B” is correct
Inventory refers to raw materials, work-in-process goods and completely finished goods that are considered to be the portion of a business’s assets that are ready or will be ready for sale.
197. Investment and savings are kept equal through a change in the level of

1. Consumption
2. Investment
3. Government expenditure
4. Income

Option “A” is correct
Desired savings are kept equal to desired investment by responses to interest rate changes. Savings identity or the savings investment identity is a concept in National Income Accounting stating that the amount saved (S) in an economy will be amount invested (I).
198. The sum total of incomes received for the services of labour, land or capital in a country is called:

1. Gross domestic product
2. National income
3. Gross domestic income
4. Gross national income

Option “B” is correct
The income method of calculating national income takes into account the income generated from the basic factors of production. These include the land, labor, capital, and organization
199. While determining income the expenditure on which of the following items is not considered as investment?

1. Construction of factory
2. Computer
3. Increase in the stock of unsold articles
4. Stock and share in joint stock company

Option “C” is correct
Increase in the stock of unsold articles is not an investment. An investment is the purchase of goods that are not consumed today but are used in the future to create wealth.
200. Who estimated the National Income for the first time in India?

1. Mahalanobis
2. Dadabhai Naoroji
3. V K R V Rao
4. Sardar Patel

Option “B” is correct
Dadabhai Naoroji was the first to calculate the national income in India in 1868 .
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