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InterviewSolution
This section includes InterviewSolutions, each offering curated multiple-choice questions to sharpen your knowledge and support exam preparation. Choose a topic below to get started.
| 3251. |
Domestic factor income is another name for : |
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Answer» `NDP_(FC)` |
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| 3252. |
The government budget has a revenue deficit . This gets financied by :A. Borrowing ""B. Disinvestment C. Tax revenue "" D. Indirect taxes |
| Answer» Answer :C | |
| 3253. |
Which of the following can have a negative value ? |
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Answer» APC |
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| 3254. |
Why are imports not included in the estimation of national income ? |
| Answer» SOLUTION :Imports are not produced WITHIN the domestic territory of the country, THEREFORE, they are not included in the estimation of NATIONAL income. | |
| 3255. |
In a two sector economy the saving (s) and investment(I) functions are:S = - 10 +0.2Y ,I = 3+0.1YWhat will bethe equilibrium level of income (Y)? |
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Answer» Solution :EQUILIBRIUM level of income is attained when S= I It means : - 10 + 0.2Y = -3 +0.1Yor0.2Y - 0.1Y = - 3+10 Y = ₹ 70 Equilibrium level of income = ₹ 70. |
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| 3256. |
From the following data about a Government budget , find out (a) Revenue deficit (b) Fiscal deficit and (c) Primary deficit : |
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Answer» Solution :(a) REVENUE Deficit = Revenue Expenditure - Revenue RECEIPTS = ₹ 100 Arab - ₹ 80 Arab = ₹ 20 Arab (b) Fiscal Deficit = (Revenue Expenditure + Capital Expenditure ) - (Revenue Receipts + Capital Receipts net of Borrowings) (₹100 Arab + ₹ 110 Arab ) - (₹ 80 Arab + ₹ 95 Arab ) = ₹ 35 Arab (c) Primary Deficit = Fiscal Deficit - Interest Payment Primary Deficit = ₹ 35 Arab - ₹ 10 Arab = ₹ 25 Arab |
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| 3257. |
Why are exports included in the estimation of domestic product by the expenditure method ? Can gross domestic product be greater than gross national product ? Explain. |
| Answer» Solution :Exports are not taken into CONSIDERATION but it is net exports which are considered while estimating national INCOME. Net Export is the difference between exports and imports of a country. ... Yes, GDP can be greater than GNP in the SITUATION when when net factor income from ABROAD (NFIA) is NEGATIVE. | |
| 3258. |
Show that AR curve and demand curve are the same. |
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Answer» SOLUTION :A buyer.s demand curve graphically represents the quantites demanded by a buyer at various prices. In other words, it SHOWS the various levels of average revenue at which DIFFERENT quantities of the GOODS are sold by the seller. Therefore, in economics, it is customary to refer AR curve as the Demand Curve of a firm. Average Revenue `=("Total Revenue")/("Quantity")=("Price"xx"Quantity")/("Quantity")="Price"` AR=P(Price) |
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| 3259. |
Give reason that Law of demand does not hold true when the prices are expected to go up further. |
| Answer» Solution :Law of demand states that if the PRICE of a commodity rises its demand will fall, the other THINGS REMAIN the same. But if, the CONSUMERS expect that the price of a commodity will keep rising in future also, they may, in fact, purchase the increased QUANTITY at a higher price to insure themselves against future rise in prices. | |
| 3260. |
All combinations on an IC are achievable by a consumer. |
| Answer» SOLUTION :FALSE : All the combinations on a budget LINE are ACHIEVABLE and not points on IC. | |
| 3261. |
whatis deficientdemand ? |
| Answer» SOLUTION : whenADfallsshortof Aggrefatesupplyat fullempoyment'levelthedemandis SAIDTO beadeficientand thediffernce( GAP)is calleddeflationgap . | |
| 3262. |
whatisdeficient demand? |
| Answer» SOLUTION : whenAD is FORA levelofoutputwhichis LESSTHAN' fullemploymentlevelof UTPUT' it iscalleddeficientdemand. | |
| 3263. |
How does technological progress affect the supply curve of a firm ? |
Answer» Solution :When there is technological PROGRESS in the firm, then cost of production will DECREASE , which leads to INCREASE in the profit margin of the firm and thereby shifts the supply CURVE rightward as SHOWN. 
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| 3264. |
Mention two drawbacks of barter system |
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| 3265. |
Ex- postinvestmentisgreater thanex- anteinvestment . |
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Answer» |
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| 3266. |
Explain why an Indifference curve has a negative slope (i.e. IC slope down - wards to the right). |
Answer» Solution :Every IC is based on the assumption that various combinations of two COMMODITIES gives equal satisfaction to a consumer . In order to remain at the same LEVEL of satisfaction, the consumer will have to reduce the CONSUMPTION of ONE commodity if the wants to INCREASE the consumption of another commodity. 
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| 3267. |
The central bank takes steps to control rise in the price of forgeign exchange in economic volues it involves as far as far the common man is concered.E |
| Answer» Solution :Controlling rise in price of foreign EXCHANGE MAKES imports cheaper. The economic , VALUE is that common mannow has to pay LES for goods and servies imported | |
| 3269. |
Compensation of employees from ROW is a credit component of BOP on capital account. |
| Answer» Solution :False because it is a credit COMPONENT of BOP on CURRENT account. | |
| 3270. |
The way by which the government can finance its budgetary deficit |
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Answer» DEFICIT FINANCING |
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| 3271. |
How will an increase in the price of petrol affect the demand curve of a car? |
| Answer» Solution :The DEMAND curve of a CAR will SHIFT to the LEFT. | |
| 3272. |
All the financial institutions can also be termed as banking institutions. Comments. |
| Answer» Solution :The given STATEMENTS is incorrect. A financial institution can be a banking institutions only when it PERFORMS the FUNCTIONS of accepting DEPOSITS and ADVANCING loans. | |
| 3273. |
What are official reserve transactions? Explain their importance in the balance of payments. |
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Answer» Solution :Official reserve transactions refer to transactions by the central bank that cause changes in its official reserves of foreign EXCHANGES. Such transactions take place when a country WITHDRAWS from its stock of foreign EXCHANGE reserves to finance DEFICIT in its overall balance of payments (BOP). A country with surplus in its overall BOP leads to rise in foreign exchange reserves. Official reserve transactions are very important as they HELP to bring a balance in the country's overall balance of payments. So, such transactions act as accommodating item in BOP. |
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| 3274. |
Under diminishing returns to a factor, total product continues to increase till marginal product reaches zero. |
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Answer» Solution :True: Total PRODUCT continues to INCREASE till marginal product reaches zero. As soon as marginal product becomes NEGATIVE (LESS than zero), total product will start DECLINING. It is so because Total Product `= sum MP_(L)` (Marginal Product). |
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| 3275. |
Theonerupee note and coinsare issuedby : |
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Answer» RBI (CENTRAL BANK) |
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| 3276. |
Are the following statements true or false ? Give reasons. Both 'Expected Obsolescence ' and 'Unexpected Obsolescence' are considered for determining the amount of depreciation. |
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Answer» |
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| 3277. |
Distinguish between autonomous consumption and induced consumption. |
| Answer» SOLUTION :Autonomous consumption REFERS to EXPENDITURE taking place when disposable incomes level are at zero. These causes consumers to BORROW money or withdraw from saving accounts.Induced consumption is the portion of consumption that varies with disposable income. When a change in disposable income induces a change in consumption on goods and services, then that changed consumption is called Induced consumption. | |
| 3278. |
Which of the following sources of receipts in government budget increases its liabilities ? |
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Answer» DIRECT taxes |
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| 3279. |
Explain the geometric method of measuring price elasticity of supply. Use diagram. |
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Answer» Solution :Case I : More than Unitary Elastic Supply ES `=("Intercept on X-axis with INITIAL quantity")/("Quantity supplied at that price")=(QR)/(OQ)` Thus, we can get the value of elasticity of supply by dividing QR by OQ. Since, in the figure , `QR gt OQ`, `ES=QR//OQ` will be greater than `1`.  Case II : Less than Unitary Elastic Supply `ES=("Intercept on X-axis with initial quantity")/("Quantity supplied at that price")=(QR)/(OQ)` extended MEETS X-axis to the right ofthe point of origin so that `QR lt OQ`. Therefore, the elasticity of supply `QR//OQ lt 1`  Case III : Unit Elastic Supply `ES=("Intercept on X-axis with initial quantity")/("Quantity supplied at that price")=(QR)/(OQ)` In the given diagram, supply curve when extended meets the X-axis exactly at the point of origin. So that `QR=OQ`. Therefore, there PES will be EQUAL to 1 
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| 3280. |
How can the problem of double counting be avoided ? |
| Answer» Solution :There are two alternative WAYS of avoiding double COUNTING : (i) TAKE value of FINAL output , (ii) Take value ADDED of each firm. | |
| 3281. |
Comment on the shape of the MR curve in case the TR curve is a (i) positively sloped straight line, (ii) horizontal straight line |
Answer» Solution :(i) When TR curve is positively SLOPED STRAIGHT line , MR is a horizontal line. MR coincides with the demand curve. Price or AR is constant at each level of OUTPUT.  (ii) When TR is a horizontal straight line MR is ZERO. It is because horizontal TR means when price falls , quantity demanded rises in the same PROPORTION. Thus, MR is zero . MR curve coincides with the x-axis. 
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| 3282. |
What is 'aggregate supply' in macroeconomics? |
| Answer» Solution :Aggregate SUPPLY REFERS to the total output PRODUCED in the country or the total NATIONAL product of the country at a given level of employment. | |
| 3283. |
Differentiate between National Income at current prices and at constant prices. |
| Answer» Solution :When GOODS and services produced in a year are VALUED at MARKET PRICES prevailing in the year of their production, it is called National Income at current prices. When goods and services produced in a year are valued at price of the base, it is called National Income at constant prices. | |
| 3284. |
Are the following statements true or false ? Give reasons. Increase in fiscal deficit does not affect the primary deficit . |
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Answer» Solution :False . Increase in fiscal deficit will also increase the primary deficit. NOTE : As per CBSE guidelines , no marks will be given if REASON to the ANSWER is not explained . |
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| 3285. |
Borrowing and lending in the international money market is a part of current account balance of payment. |
| Answer» Solution :FALSE because borrowing and LENDING is a PART of capital account balance of payment. | |
| 3286. |
Economic activities harm the environment through : |
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Answer» AIR pollution |
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| 3287. |
Transfer to the rest of world is a debit component of payment on current account. |
| Answer» SOLUTION :True because transfer to ROW being a NEGATIVE ITEM, is reflected in the debit SIDE of BOP on current account. | |
| 3288. |
Consider the demand for a good. At price Rs. 4, the demand for the good is 25 units. Suppose price of the good increases to Rs. 5, and as a result, the demand for the good falls to 20 units. Calculate the price elasticity ? |
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Answer» Solution :`{:("ORIGINAL QuantityOriginal Price"),("(Q) = 25 units(P) = Rs. 4"),("Fall in QuantityRise in Price"),((Delta Q)=-5" units(DP) = Rs. 1"),("New QuantityNew Price "(P_(1))),((Q_(1))=20 "units"=Rs. 5),("Elasticity of Demand (ED) " = ?):}` Price Elasticity of demand (ED) `=(Delta Q)/(Delta P)xx(P)/(Q)=(-5)/(1)xx(4)/(25)=(-)0.8` `ED=(-)0.8`(Demand is less elastic as `ED lt 1`) Negative SIGN indicates the inverse relationship between price and QUANTITY demanded. |
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| 3289. |
Illustrate with the help of a hypothetical numerical example the process of credit creation. |
| Answer» Solution :The credit creation by commercial banks is DETERMINED by amount of initial deposit and the legal reserve ratio. Suppose CUSTOMER deposits Rs 1000 in bank. Bank has to PAY interest on this amount for which bank should lend this MONEY to someone. A part of the amount is to be retained with bank to meet its customer's obligations. Say, if LRR is 20%, the banks will keep 20% of deposits as reserves and will lend remaining 80% i.e. Rs 800. Those who borrow will spend this money and same Rs 800 will come back to banks in form of deposits. This raises the total deposits to Rs 1,800 now. Banks again keep 20% of 800 as reserve and lend Rs 640 to those who needs. This will further raise the deposits with banks. In this way deposits will go on increasing @ 80% of the last deposit. The number of times the total deposit will become, is determined by money MULTIPLIER i.e.1/LRR = 1/0.2=5 times. Total deposits will be Initial Deposits `xx` Money Multiplier= Rs 1000 `xx` 5 =Rs 5,000 | |
| 3290. |
The law of scarcity |
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Answer» Does not APPLY to rich, DEVELOPED countries. |
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| 3291. |
Explain the conditions of producer's equilibrium with the help of a numerical example |
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Answer» Solution :Producer's equilibrium refers to a combination of price and QUANTITY of output which YIELDS the producer the maximum profit. For achieving this comination two conditions need to be fulfilled. (i) The difference between total cost and total revenue must be the maximum. (ii) At the point where, the difference between TC and TR is maximum, MR and MC should also be equal. Any DEPARTURE from this position will not ensure maximum profit. In the Table, the difference between TR and TC is maximum at 3 units as well as at 4 units but the point of equilibrium is 4 units because at this point MC = MR. & MC must rise. These two conditions can be explained with the help of a table given below : 
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| 3292. |
............. (choose the correct alternative) isa revenuereceipt of the government. |
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Answer» FUNDS raised by the GOVERNMENT by issuing NationalSaving Certificates. |
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| 3293. |
How is cancellation of coal blocks allocation by Supreme Court ot India likely to atfect our current account deficit (CAD)? |
| Answer» Solution :The Supreme Courts decision to CANCEL coal blocks is likely to cause a FALL in SUPPLY of coal, particularly for production of electricity. A cut in domestic supply of coal is bound to cause a rise in imports. This will increase our import payment of FOREIGN exchange which will further increase our CAD, other THINGS remaining unchanged. | |
| 3294. |
Identify the following as Normal Residents of India : Indians working in USA ambassy in India. |
| Answer» SOLUTION :NORMAL RESIDENTS. | |
| 3295. |
Explain effect of technological changes on supply of a product. |
Answer» Solution :Case I- TECHNOLOGICAL Progress : When there is technological progress in the firm, then cost of production will decrease, which LEADS to increase in the profit margin of the firm and thereby shifts the SUPPLY curve shift rightward as shown below :  Case II : Outward Technology Supply of those goods which are being produced with OLD and inferior technology causing increase in cost of production will decrease the total output and shift the supply curve to the LEFT. 
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| 3296. |
Define indifference map ? |
| Answer» SOLUTION :A SET of INDIFFERENCE CURVES is called indifference MAP. | |
| 3297. |
Total utility is maximum when |
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Answer» MARGINAL UTILITY is zero. |
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| 3299. |
Categorise the following into revenue expenditure or capital expenditure Expenditure on collection of taxes . |
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Answer» |
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| 3300. |
How does fall in marginal production affect total output? |
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Answer» SOLUTION :Fall in marginal product affects the total output in the FOLLOWING two manners: (i) When marginal product falls, but remains positive, total product increases at a DIMINISHING rate. (ii) When marginal product falls and become zero, total product falls in its ABSOLUTE terms. |
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