Microeconomics and Macroeconomics: Key Concepts

Multiple Choice Questions

Choose the correct option:

1. Concepts studied under Microeconomics.

   (a) National Income (b) General Price Level (c) Factor Pricing (d) Product Pricing

   Options: (i) a & b (ii) b & c (iii) c & d (iv) only b

   Ans: Option (iii) c & d

2. The law of DMU is important to

   (a) Producer (b) Consumer (c) Government (d) None of the above

   Option: (i) a & b (ii) b & c (iii) d (iv) a, b & c

   Ans: Option (iv) a, b and c

3. When price falls demand

   (a) Rises (b) Contracts (c) Remains constant (d) Becomes Negative

   Option: (i) a (ii) b (iii) c (iv) d

   Ans: Option (i) a

4. Product differentiation is possible in the following market

   a) Perfect competition. b) Monopoly c) Monopolistic competition. d) All of the above

   Option: (1) a & b (2) only b (3) only c (4) d

   Ans.: Option (2) only b

5. National income is a

   a) Stock concept. b) Final concept c) Intermediate concept. d) Flow concept

   Option: (1) only a (2) b and c (3) only d (4) a and d

   Ans: Option (3) only d

6. Non-tax sources of revenue

   a) Direct and indirect tax. B) Direct tax and fees. C) Fees d) Special levy

   Options: (1) b and c (2) a and c (3) a, b, c and d (4) c and d

   Ans: Option (4) c and d

7. Natural Monopoly created on the basis of natural conditions such as

   a) Climate b) Specific Location c) Rainfall d) OPEC

   Option: (1) a, b, c (2) b, c, d (3) c, d, a (4) d, a, b

   Ans: Option (1) a, b, c

8. Types of foreign trade.

   a) Import trade b) Export trade c) Internal trade d) Entrepot trade

   Option: (1) a, b & d (2) b & c (3) b & d (4) a & c

   Ans: Option (1) a, b & d

Find the Odd Word Out

1. Rent, wages, interest, profit, investment

   Ans. Investment

2. Continuity, constancy, rationality, homogeneity, perishable

   Ans. Perishable

3. Washing machine, mobile, laptop, salt.

   Ans. Salt

4. Types of price elasticity of demand: unitary elastic, perfectly elastic, cross elastic, relatively elastic.

   Ans. Cross elastic

5. Cost concept: total cost, marginal cost, average cost, production cost

   Ans. Production cost

6. Land, Labor, Capital, Sunshine.

   Ans. Sunshine

7. Income, Employment, Investment, Laissez Faire Policy.

   Ans. Laissez Faire Policy

8. Function of RBI: Issue of currency notes, Banker’s bank, Banker to the Government, Credit creation

   Ans. Credit Creation.

Complete the Correlation

1. Micro economy: slicing method :: Macro economy :____________

   Ans: Lumping method

2. Marginal utility: zero :: total utility:

   Ans: Maximum

3. Complementary demand: car and fuel :: : tea and coffee

   Ans: Competitive demand

4. Direct tax: progressive :: Indirect tax :

   Ans: Regressive

5. Price taker: ____________ :: Price maker: Monopoly

   Ans: Perfect competition

6. Central Bank:_____:: SBI : Commercial Bank

   Ans: RBI

7. Outer circle: Real flow :: _______: Money flow

   Ans: Inner circle

Economic Terms

1. Macroeconomics is known as

   Ans.: Income theory

2. The market where there are few sellers

   Ans.: Oligopoly

3. Capacity of a commodity to satisfy human wants

   Ans.: Utility

4. India exports goods to the USA

   Ans.: External Trade

5. Net addition made to the total cost by producing one more unit of output

   Ans: Marginal cost

6. Wear and tear of capital assets due to their use in the process of production

   Ans: Depreciation

7. The year with which the changes are measured

   Ans. Base year

8. Total expenditure is also known as

   Ans. Total outlay/ total revenue method