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Economics Questions and Answers for Competitive Exams | Indian Economy Quiz Set 6

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(1) A Country can have an increased surplus in its balance of trade as a result of :
(1) declining imports and rising exports
(2) higher tariffs imposed by its trading partners
(3) an increase in domestic inflation
(4) an increase in capital inflow
Answer: declining imports and rising exports
(2) Which amongst the following economists can be classified as strong advocate of protectionist policy of trade ?
(1) F. List and A. Hamilton
(2) Adam Smith and David Ricardo
(3) J.S. Mill and P. Krugman
(4) A. Hamilton and J.S. Mill
Answer: F. List and A. Hamilton

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(3) An increase in which of the following would be most likely to increase Long - run growth in developing countries ?
(1) Tariffs on imported capital goods
(2) Subsidies to business for purchases of capital goods
(3) Unemployment compensations
(4) Pension payments
Answer: Subsidies to business for purchases of capital goods
(4) What is Baran’s explanation for under development in Asia, Africa and Latin America ?
(1) Monopolistic business from abroad
(2) Conservative ruling coalitions
(3) Weak domestic middle class
(4) All of the above
Answer: All of the above
(5) The Benefit Theory of allocation of tax burden was given by :
(1) Seligman
(2) Lindhal
(3) Dalton
(4) Pigou
Answer: Lindhal
(6) If marginal propensity to consume (m.p.c) = average propensity to consume (a.p.c) for all levels of income (Y) then the corresponding consumption function will be :
(1) C=a+bY
(2) C=bY
(3) C=bY2
(4) C=a+bY2
Answer: C=a+bY
(7) Which of the following goods is covered under GST as on 1ST July, 2017 ?
(1) Electricity
(2) Liquified Petroleum Gas
(3) High Speed Diesel
(4) Petroleum Crude
Answer: Liquified Petroleum Gas
(8) The greater the elasticity of supply, the greater is :
(1) Incidence of tax on buyers
(2) Incidence of tax on sellers
(3) Impact of tax onsellers
(4) Impact of tax on buyers
Answer: Incidence of tax on buyers
(9) The ability - to - pay principle of taxation is logically most consistent with the normative notion of :
(1) tax neutrality
(2) horizontal equity
(3) value - added taxation
(4) vertical equity
Answer: vertical equity
(10) Principle of maximum social advantage is concerned with :
(1) Taxation only
(2) Public expenditure only
(3) Public debt only
(4) Both taxation and public expenditure
Answer: Both taxation and public expenditure
(11) Which of the following is a distinctive implication of the New Trade Theory developed by Melitz as different from the New Trade Theory ?
(1) Trade increases the average productivity as more productive firms expand
(2) Helpful state intervention
(3) Trade encourage R & D and lead to new products
(4) A country may both export and import the goods from the same industry
Answer: Trade increases the average productivity as more productive firms expand
(12) The conjecture that inequalities of income first increase with development and then decrease with further development also known as ‘Inverted U’ hypothesis has been :
(1) Supported by all empirical studies
(2) Supported mainly by cross section studies and not by time series studies
(3) Supported by time series and not by cross section studies
(4) Generally repudiated by empirical studies
Answer: Supported mainly by cross section studies and not by time series studies
(13) The ultimate effect of the ‘invisible hand’ of Adam Smith is that in a competitive economy everyone :
(1) benefits if each acts in his/her own interest
(2) will increase their profits in a free market
(3) should act to maximise economic growth
(4) should act to promote the public interest
Answer: benefits if each acts in his/her own interest
(14) If the central prediction of the growth model of Solow is valid then :
(1) Per capita real GDP difference among nations will increase
(2) Per capita real GDP difference among the nations will diminish
(3) Economic freedom as measured by Heritage Foundation Index will decrease
(4) Population growth rate in rich countries will increase
Answer: Per capita real GDP difference among the nations will diminish
(15) Given the consumption function, C=0.75 Y and the investment function, I=110−0.25 i, then the equation of the IS function will be :
(1) Y=110−0.75 i
(2) Y=440−i
(3) Y=500−0.25 i
(4) Y=400−0.75 i
Answer: Y=440−i

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