Economics Page-2

11) Net Investment is
(A) Gross investment minus household investment
(B) Gross investment minus government investment
(C) Gross Investment minus capital consumption allowance
(D) None of the above

12) Market value of all final goods and services produced in a country during a year is definition of
(A) NI
(D) Consumption

13) Consumption spending does not include
(A) Household's purchases of food
(B) Household's purchase of a car
(C) Household's payment of rent for an apartment
(D) Household's purchase of stock in any XYZ corporation

14) Which of the following would increase national income?
(A) Increase in taxation
(B) Increase in savings
(C) Increase in govt spending
(D) Decrease in consumption spending

15) Which of the following is a withdrawal from the circular flow income stream
(A) Investment
(B) Subsidies
(C) Taxation
(D) Consumption

16) Real wages include
(A) all the services and goods
(B) wages in terms of money
(C) bonus
(D) accident compensation

17) A 'hard currency' is the one
(A) whose external value is increasing
(B) which can be acquired only with official permission
(C) which can be obtained only against sale of gold
(D) which is really accepted in international transaction

18) If tea and coffee are substitutes, a reduction in the price of coffee will
(A) increase the sale of tea
(B) decrease the sale of coffee
(C) increase the sale of coffee
(D) decrease the price of tea

19) A monopolist maximizes his profit when?
(A) price = average cost
(B) marginal cost = marginal revenue
(C) average cost = marginal cost
(D) marginal revenue = average cost

20) Which is most likely to cause a more even distribution of income
(A) An increase in indirect taxes
(B) An increase in managers' salaries
(C) An Increase in progressive taxation
(D) An increase in the rate of inflation

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