Insights Revision Plan for Prelims 2016: Test – 22
28 June 2016
Questions Based on Day – 25 Syllabus
Please Read before you Proceed to Take Today’s Test:
Hope you have completed yesterday’s targets and now ready to give this test. Please note that you should not worry about scores in these tests. Questions are mainly intended not to test your knowledge, but show which areas to focus when you study and how to study them. It’s more a learning process than testing process.
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Note: As sources are numerous, we can not cover all of them within 20-25 questions. Even then, please try to complete 100% of targets. You will never know from which topic question might come!
Insights Prelims 2016 Revision Tests
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The following Quiz is based on Topics given under Insights Revision Plan for Prelims 2016 (Click Here for timetable)
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Question 1 of 20
1. Question
2 pointsWhich of the following institutions/agencies is/are the macroeconomic decision makers in India?
- SEBI
- RBI
- SBI Group
Select the correct answer using codes below:
Correct
Solution: a)
NCERT Class XII, Introductory Macroeconomics, Page 3 – 4
Bodies such as RBI and SEBI will have public goals to achieve as demanded by law and constitution. Bodies like SBI, even though public, are mainly concerned with profit and microeconomic matters.
Incorrect
Solution: a)
NCERT Class XII, Introductory Macroeconomics, Page 3 – 4
Bodies such as RBI and SEBI will have public goals to achieve as demanded by law and constitution. Bodies like SBI, even though public, are mainly concerned with profit and microeconomic matters.
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Question 2 of 20
2. Question
2 pointsWhich of the following can be intermediate goods?
- Tea powder
- Sugar
- Wheat flour
Select the correct answer using codes below:
Correct
Solution: d)
NCERT Class XII, Introductory Macroeconomics, Page 9 – 10
All products can be used in restaurant or in bakery to produce some final goods.
Tea powder if it’s used at home for consumption, acts as a final good. So is sugar and wheat flour. But they are also intermediate goods.
(An intermediate good is a good or service that is used in the eventual production of a final good, or finished product. These goods are sold by industries to one another for the purpose of resale or producing other goods)
Incorrect
Solution: d)
NCERT Class XII, Introductory Macroeconomics, Page 9 – 10
All products can be used in restaurant or in bakery to produce some final goods.
Tea powder if it’s used at home for consumption, acts as a final good. So is sugar and wheat flour. But they are also intermediate goods.
(An intermediate good is a good or service that is used in the eventual production of a final good, or finished product. These goods are sold by industries to one another for the purpose of resale or producing other goods)
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Question 3 of 20
3. Question
2 pointsConsider the following statements:
- Producing more consumption goods than capital goods in good for economy
- Producing more capital goods decreases the productivity in an economy
Which of the above statements is/are correct?
Correct
Solution: d)
NCERT Class XII, Introductory Macroeconomics, Page 12 – 13
Statement 2 is hint for statement 1.
Producing more capital goods improves efficiency and productivity of labour, hence benefits production of consumer goods as well.
Incorrect
Solution: d)
NCERT Class XII, Introductory Macroeconomics, Page 12 – 13
Statement 2 is hint for statement 1.
Producing more capital goods improves efficiency and productivity of labour, hence benefits production of consumer goods as well.
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Question 4 of 20
4. Question
2 pointsConsider the following statements:
- In economics, Inventory, which is an unsold, semi finished or raw goods of a company, is treated as liability
- A change in the inventory of a firm is treated as investment
Which of the above statements is/are correct?
Correct
Solution: b)
NCERT Class XII, Introductory Macroeconomics, Page 19
Inventory is treated as capital.
Inventory is the raw materials, work-in-process products and finished goods that are considered to be the portion of a business’s assets that are ready or will be ready for sale. Inventory represents one of the most important assets of a business because the turnover of inventory represents one of the primary sources of revenue generation and subsequent earnings for the company’s shareholders .
Incorrect
Solution: b)
NCERT Class XII, Introductory Macroeconomics, Page 19
Inventory is treated as capital.
Inventory is the raw materials, work-in-process products and finished goods that are considered to be the portion of a business’s assets that are ready or will be ready for sale. Inventory represents one of the most important assets of a business because the turnover of inventory represents one of the primary sources of revenue generation and subsequent earnings for the company’s shareholders .
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Question 5 of 20
5. Question
2 pointsExpenditure method to calculate GDP considers
Correct
Solution: d)
NCERT Class XII, Introductory Macroeconomics, Page 20
The GDP under the expenditures approach is calculated by adding up all the expenditures made on final goods and services produced within the geographical boundaries of a region. These include consumption expenditure (by households), investment expenditures (by businesses), government expenditures (on purchase of goods and services) and net expenditures by foreigners (i.e. net exports which in turn equals total exports minus total imports).
(Spending, investing are all part of demand side economics)
Incorrect
Solution: d)
NCERT Class XII, Introductory Macroeconomics, Page 20
The GDP under the expenditures approach is calculated by adding up all the expenditures made on final goods and services produced within the geographical boundaries of a region. These include consumption expenditure (by households), investment expenditures (by businesses), government expenditures (on purchase of goods and services) and net expenditures by foreigners (i.e. net exports which in turn equals total exports minus total imports).
(Spending, investing are all part of demand side economics)
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Question 6 of 20
6. Question
2 pointsConsider the following statements:
- To calculate National Income, we need to deduct subsidies to the Net National Product evaluated at market prices
- In India, the Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation prepares and releases National Income data
Which of the above statements is/are correct?
Correct
Solution: b)
NCERT Class XII, Introductory Macroeconomics, Page 24
Subsidies is added and indirect taxes are deducted from NNP market prices to calculate National Income.
Incorrect
Solution: b)
NCERT Class XII, Introductory Macroeconomics, Page 24
Subsidies is added and indirect taxes are deducted from NNP market prices to calculate National Income.
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Question 7 of 20
7. Question
2 pointsTo compare the GDP figures of different countries at different points of time, we can not rely on GDPs calculated at current market prices. To which of the following factor is this mainly attributed?
Correct
Solution: a)
NCERT Class XII, Introductory Macroeconomics, Page 25 – 26
Incorrect
Solution: a)
NCERT Class XII, Introductory Macroeconomics, Page 25 – 26
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Question 8 of 20
8. Question
2 pointsConsider the following statements:
- Real GDP is calculated at Constant prices
- Compared to Nominal GDP, Real GDP can give more accurate figure of economic growth
Which of the above statements is/are correct?
Correct
Solution: c)
NCERT Class XII, Introductory Macroeconomics, Page 26
00:58 02:37 What is the ‘Real Gross Domestic Product (GDP)’ Real gross domestic product (GDP) is an inflation-adjusted measure that reflects the value of all goods and services produced by an economy in a given year, expressed in base-year prices, and is often referred to as “constant-price,” “inflation-corrected” GDP or “constant dollar GDP.” Unlike nominal GDP, real GDP can account for changes in price level and provide a more accurate figure of economic growth.
http://www.investopedia.com/terms/r/realgdp.asp#ixzz4CslolWn6
Incorrect
Solution: c)
NCERT Class XII, Introductory Macroeconomics, Page 26
00:58 02:37 What is the ‘Real Gross Domestic Product (GDP)’ Real gross domestic product (GDP) is an inflation-adjusted measure that reflects the value of all goods and services produced by an economy in a given year, expressed in base-year prices, and is often referred to as “constant-price,” “inflation-corrected” GDP or “constant dollar GDP.” Unlike nominal GDP, real GDP can account for changes in price level and provide a more accurate figure of economic growth.
http://www.investopedia.com/terms/r/realgdp.asp#ixzz4CslolWn6
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Question 9 of 20
9. Question
2 pointsConsider the following statements:
- In the past, India has always used the Consumer Price Index (CPI) to measure inflation
- Consumer Price Index (CPI) based inflation measure benefits common man
Which of the above statements is/are correct?
Correct
Solution: b)
NCERT Class XII, Introductory Macroeconomics, Page 27
Incorrect
Solution: b)
NCERT Class XII, Introductory Macroeconomics, Page 27
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Question 10 of 20
10. Question
2 pointsConsider the following statements:
- Minting of coins is the responsibility of the government of India, and not of the RBI
- How many notes are to be published is decided by the RBI
- The RBI has the powers to print currency notes of up to Rs 10,000 denomination
Which of the above statements is/are correct?
Correct
Solution: d)
NCERT Class XII, Introductory Macroeconomics, Page 38
Incorrect
Solution: d)
NCERT Class XII, Introductory Macroeconomics, Page 38
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Question 11 of 20
11. Question
2 pointsA High Bank Rate
Correct
Solution: b)
NCERT Class XII, Introductory Macroeconomics, Page 39 – 40
Bank rate is the rate at which commercial banks borrow from RBI.
Incorrect
Solution: b)
NCERT Class XII, Introductory Macroeconomics, Page 39 – 40
Bank rate is the rate at which commercial banks borrow from RBI.
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Question 12 of 20
12. Question
2 pointsIf foreign investors buy Indian bonds in foreign currency
Correct
Solution: a)
NCERT Class XII, Introductory Macroeconomics, Page 45
Incorrect
Solution: a)
NCERT Class XII, Introductory Macroeconomics, Page 45
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Question 13 of 20
13. Question
2 pointsWhich of the following is/are often referred to as ‘paper taxes’?
- Gift tax
- Wealth tax
- Corporate tax
- Estate duty
Select the correct answer using codes given below:
Correct
Solution: b)
NCERT Class XII, Introductory Macroeconomics, Page 61
They do not yield much revenue to government, hence referred to as paper taxes. (Estate duty is now abolished)
Incorrect
Solution: b)
NCERT Class XII, Introductory Macroeconomics, Page 61
They do not yield much revenue to government, hence referred to as paper taxes. (Estate duty is now abolished)
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Question 14 of 20
14. Question
2 pointsFiscal deficit minus the interest payments is called as
Correct
Solution: c)
NCERT Class XII, Introductory Macroeconomics, Page 65
Incorrect
Solution: c)
NCERT Class XII, Introductory Macroeconomics, Page 65
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Question 15 of 20
15. Question
2 pointsConsider the following statements:
- If government increases indirect taxes, it is a progressive step
- Fiscal deficit increases during recession and falls during boom
Which of the above statements is/are correct?
Correct
Solution: b)
NCERT Class XII, Introductory Macroeconomics, Page 72 – 73
Incorrect
Solution: b)
NCERT Class XII, Introductory Macroeconomics, Page 72 – 73
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Question 16 of 20
16. Question
2 pointsA bell rings every 18 minutes. A second bell rings every 24 minutes. A third bell rings every 32 minutes. If all the three bells ring at the same time at 8 o’clock in the morning, at what other time will they all ring together?
Correct
Solution: b)
Incorrect
Solution: b)
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Question 17 of 20
17. Question
2 points“Price is not the same thing as value. Suppose that on a day the price of everything viz., coal, bread, postage stamps, a day’s labour, the rent of houses, etc. were to double. Prices then would certainly rise, but- values of all things except one would not.”
The writer wants to say that if prices of all things were doubled
Correct
- Solution: d)
Incorrect
- Solution: d)
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Question 18 of 20
18. Question
2 pointsA and B decide to travel from place X to place Y by bus. A has Rs. 10 with him and he finds that it is 80% of the bus fare for two persons. B finds that he has Rs. 3 with him and hands it over to A. In this context, which one of the following statements is correct?
Correct
Solution: c)
Incorrect
Solution: c)
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Question 19 of 20
19. Question
2 pointsAs per agreement with a bank, a businessman had to refund a loan in some equal installments without interest. After paying 18 installments he found that 60 percent of his loan was refunded. How many installments were there in the agreement?
Correct
Solution: c)
Incorrect
Solution: c)
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Question 20 of 20
20. Question
2 points“Liberty, therefore, is never real unless the Government can be called to account when it invades rights.”
Which one of the following is the best justification of the above statement?
Correct
- Solution: d)
Incorrect
- Solution: d)
